Ohio puts teeth in its payment law
Speedy payment may become the norm
You’ve all been there, expecting payment from that managed care organization that once convinced you that doing business with them would benefit your hospice. That trust has been answered by payment delays and denials.
Many have complained and have pointed to state laws that require prompt payment within 30 days, but the protests seem to fall on deaf ears. Yes, state laws require prompt payment, but those same laws lack the teeth that would force managed care payers to pay on time.
In Ohio, a group of providers, including hospices, took their fight to the state legislature, which revised its prompt payment law. It now includes fines for each claim that goes unpaid after 30 days. The law was passed in the summer of 2001 and becomes effective next July.
The new law will not only require payers to pay within 30 days, but also to notify providers within 15 days that a submitted claim doesn’t meet their requirements for a clean claim. Failure to pay within the 30-day period will result in a fine calculated at an annual 18% rate for each day the claim is late, which is paid directly to the provider.
"Any hospice that is having trouble with managed care should get together with other providers to lobby their state lawmakers to pass prompt payment laws," says Lisa Spoden, vice president of Strategic Healthcare, a hospice consulting firm in Columbus, OH.
But hospices and other providers cannot simply go to lawmakers with a complaint. To be effective, providers not only need to prove that managed care organizations are making late payments, but that the claims were filed properly and that payers have been unresponsive to provider concerns.
According to Spoden, providers should do the following within their own organizations:
• Track claims. Follow each claim through the process, recording the date it was submitted to the payer. Specifically, providers should be looking for trends in the duration between submission and payment, frequency of denials, reasons for denials, and the duration between submission and notification that a claim was deficient.
• Seek remedy from insurers. Evidence collected from claims tracking should be brought to the attention of insurers in an attempt to get the insurer to make internal changes that address provider concerns.
• Go to state insurance authorities. If insurers do not make the necessary changes and delayed payment continues, hospices can take the evidence they have gathered to their state’s department of insurance to file formal complaints. Use the evidence gained from tracking claims to detail the problems in the complaint. Provide as much detail as possible.
• Go to employers who purchase the insurance. If a particular payer is the problem, hospice could get beneficial results by approaching the large employers who purchase health insurance for their employees. Hospices should stress the deleterious effects withheld payments can have on a hospice program, especially for nonprofit programs that have limited resources.
Providers share responsibility
Ohio’s revised law doesn’t place responsibility for prompt payment entirely on the shoulders of the managed care industry. Providers, including hospices, must take some responsibility as well.
Ohio’s law will eventually apply to providers who submit their claims electronically. This coincides with federal requirements that take effect in 2003. According to Spoden, studies have shown that claims submitted electronically are processed more efficiently compared to claims submitted by mail. Insurers report a cost of 70 cents for each claim processed electronically, while paper claims cost insurers about $7 to process by hand.
Just as Ohio hospices and other providers are being asked to bear some responsibility for delayed payments, hospices around the country must do the same. The first area hospices should consider reviewing is the frequency with which claims are submitted each month. Many hospices batch their claims, meaning they submit claims once a month. As a result, services performed at the beginning of the month sit waiting to be submitted at the end of the month. Thus, even with prompt payment, payment is received 60 days or more following the actual date of service.
"If a hospice is still submitting its claims once a month, it should consider billing at least every two weeks," Spoden says.
While HMOs have their own processes that can lead to delays in payment, most payment delays result from poor claims, denials, and appeals. To speed up payment and improve cash flow, a hospice must examine its own processes. Many hospices will find that very little is known about managed care within the hospice walls. So, before processes can change, staff must be educated about managed care, followed by education about the managed care contracts the hospice has with a managed care organization (MCO).
Leaders should explain the different types of MCOs and the various relationships that can occur with them. For example, elaborate on the kinds of plans that exist, such as HMOs, PPOs, and Medicare risk, to name a few. Explain the subtle financial relationships that can occur, such as a physician group being the payer for services given to patients enrolled in an HMO.
Having explained the basics of managed care to staff, the next step is to familiarize them with the contracts your hospice has with managed care organizations. If a hospice is negotiating a contract with a managed care organization, key staff should be kept abreast of the requirements the contract specifies. A billing department manager, for example, can provide the necessary input to help facilitate error-free claims.
Negotiators must know hospice capabilities
"I can’t stress this enough," says Mark Fields, chief financial officer for Hospice of Northern Virginia in Falls Church, which is a member of the Hospice Alliance. "Clearly, whoever is negotiating contracts with a hospice may not be aware of what the hospice’s billing capabilities are. They could impose a fee schedule that the billing department cannot follow."
If a hospice’s billing capabilities don’t met the feed schedule requirements of the MCO, the hospice could be left with having to make costly revisions or billing manually, which could lead to errors.
Billing staff must become familiar with each contract’s language. They also should be involved in contract negotiations by questioning the payer about specific claims submission requirements. For example, billing staff should find out whether an HMO requires claims to be submitted on a Uniform Bill 1992 (UB92) or if the HMO has its own form, and what documentation must accompany the claim.
After the contract has been signed, billing representatives should meet quarterly with the payer to discuss any system changes, address changes, and personnel changes that could lead to a claims error.
Admissions staff are another example of key personnel who should be included in negotiations. Information from negotiations will provide admissions nurses with information such as whether the hospice is at risk for the cost of care and whether that risk is shared with another provider, or whether the managed care company is assuming financial risk.
In other words, the admissions staff will better understand the relationship between the hospice and its managed care payer. This will help them avoid many common errors that lead to payment delays, such as the following scenario:
Hospice A has a contract with Physician Group B to provide services to patients that the physician group refers to the hospice for end-of-life care. The patients, however, are enrolled in Health Plan C, which has entered into a capitation arrangement with the physician group to provide prepaid care to its enrollees. In this situation, Physician Group B becomes the payer, because it has assumed financial risk for the care of the patient.
The hospice admissions nurse — who doesn’t know about the physician group’s capitation contract with the health plan — assumes that because the patient is an enrollee of Health Plan C, the MCO is the payer. She calls the health plan case manager for approval of services; because the services fall under the health plan’s coverage guidelines, they are approved and the patient is admitted. But when the time comes to submit the bill, health plan reimbursement staff reject it because the physician group is at risk and has already received a per-member-per-month payment for that patient.
In this scenario, the claim should have been sent directly to the physician group. On top of the already-delayed payment, the hospice now faces further delays from the physician group, because proper authorization for services was not obtained from the physician group case manager.
Develop a payer matrix
These kinds of errors can be avoided if everyone understands the benefits and requirements of each MCO. To help staff learn the requirements of each MCO, hospices should develop a payer matrix that can be used by all staff members, especially the admissions nurse. This is a chart that lists each contracted managed care organization at the top of each column and important contract topics in the far left of each row. Topics might include authorization contacts, billing addresses, and reimbursement type. Billing staff should receive a similar document with more detailed information.
The next step is that admission staff should obtain a copy of the beneficiary’s insurance card. The back of the card will identify the payer and the address the claim should be sent to. The admissions staff can check the matrix to determine whom to contact for authorization. With both parties properly notified of a patient’s admission along with agreed-upon care, the hospice has a made a solid first step to a clean claim.
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