Achieving transparency in the claims payment process: payers and providers are looking for the same end result: claims that are submitted and paid quickly, accurately and consistently

Health Management Technology, Nov, 2004 by Rana Mendicino, Akshay Gupta

Amanda Peterson is admitted to Northeastern Hospital for a routine cholecystectomy, but complications arise, resulting in a more complex surgery and a longer hospitalization. Finally, Amanda's status improves and she is discharged. The same canner be said for the status of the billing and reimbursement issues that follow.

All the necessary steps to ensure claim payment occurred. Patient registration confirmed eligibility and received benefit information. Utilization management pre-certified the initial hospitalization and additional length of stay. The surgeon's office received authorization to perform the surgery. Yet both the hospital and the surgical practice experienced denials and payment discrepancies, resulting in expensive rework and frustration, while the patient was left with numerous medical bills and uncertainty of how much she might owe.

Many of these issues stein from conflicting expectations that result from increasingly complex agreements between payers and providers, and the lack of clarity and consistency in administering them. While many of these agreements appear to make sense during the contracting process, the reimbursement methodologies and payment logic contained within them are neither explicit nor detailed enough for accurate administration by either party. They are also difficult to automate via the current billing and payment systems used by providers and payers. Both parties often resort to using manual processes, resulting in greater inconsistency and inaccuracy in reimbursements.

Providers want to know exactly what they will be paid for a claim upfront or why it was denied or modified on the back end. Transparency would help eliminate what providers perceive as arbitrary denials and adjustments, and reduce the need to resubmit claims or write down receivables. A better understanding of the applicable rules and requirements would also help both providers and payers simplify billing and reimbursement administration.

Frustrated by their experience and the belief that payers are unresponsive to their needs, providers have increased the extensiveness of their implementation demands. Provider associations and departments of insurance have been promoting the standardization and publishing of claims adjustment rules, the ability to predetermine eligibility, authorization and price prier to or by the time the patient has left their office, and administration of the claims in compliance with applicable contracts. These organizations are also demanding that payers improve their responsiveness to provider inquiries, support independent appeals procedures when challenging claim decisions, and notify them of claims administration policy changes.

Amanda's Surgery: Providers' Experience

Northeastern Hospital and Cromwell Surgical Group each generated bills related to Amanda Peterson's care. Both organizations established a method to predict the payment they will receive from National HealthPlan.

Northeastern expects to receive payment for three hospital days according to the multilevel per diem rate as specified in its National HealthPlan agreement. However, the hospital receives a much lower rate of reimbursement than anticipated. After researching the discrepancy, the hospital discovered that the plan remitted payment at the outpatient grouper rate and disallowed the additional days in error due to lack of authorization. Both the hospital and the plan incurred unnecessary administrative tests to correct the payment discrepancy and added negative strain to their contractual relationship.

Cromwell Surgical submitted its claims to National HealthPlan for payment; the claims included charges by the primary surgeon and charges for the emergency assist. However, Cromwell received a denial on the assistant surgeon charges because the plan does net routinely pay for surgical assists on cholecystectomies. Cromwell thought it submitted the claims with the appropriate modifier, but later discovered it was net the modifier generally accepted by National HealthPlan. After many phone calls, Cromwell finally concurred with the denial; the confusion was related to National HealthPlan's inconsistent application of the payment policy for the modifier in question.

Amanda's Surgery: Payer's Experience

National HealthPlan received several claims for Amanda Peterson's recent episode of care. The claim from Northeastern Hospital was pended because the plan's legacy system could not support the payment logic necessary to calculate the contractual rate on a multilevel per diem. Then the claim was routed to a claim specialist for manual adjudication. Using a hard copy of the contract, the specialist used his best judgment to calculate the rate of payment.

The claim from Cromwell went through the plan's autoadjudication system and was reduced according to the systematized edits as established by the plan. Cromwell was not aware of the plan's policy on the use of modifiers on emergency assists and used what it thought to be the correct modifier. Only upon investigation did Cromwell discover National HealthPlan's policy.