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Slide 1
ERN/NCRA   2010 Annual Legislative Update
  ERN / The National
      Council of
   Reimbursement
      Advocacy




                                  Annual Legislative Update
                         USUAL, CUSTOMARY AND REASONABLE CHARGES
                                                  Ed Norwood
Slide 2
ERN/NCRA   2010 Annual Legislative Update


             The Sign of the Times



                 “Our greatest glory is not in never
                failing, but in rising up every time
                                we fail.”
                          -Ralph Waldo Emerson
Slide 3
ERN/NCRA   2010 Annual Legislative Update


             The Sign of the Times



                       Healthcare is a law to be
                              defended.
Slide 4
ERN/NCRA        2010 Annual Legislative Update


                   The Sign of the Times
                                      Revenue                     Net income
           Health Plan                (in millions)                 (in millions)      Earnings Per Share




                              2008             2009         2008             2009     2008         2009
   Aetna                  $30,950.7          $34,764.1   $1,384.1        $1,276.5   $2.83          $2.84
                                               (12.3%)                                             (0.4%)

   Cigna                  $19,101.0          $18,414.0   $292.0          $1,302.0   $1.05          $4.73
                                               (-3.6%)                                             (350.5%)

   Health Net             $15,366.6          $15,713.2   $95.0           -$49.0     $0.88         -$0.47
                                               (2.3%)                                              (-153.4%)

   UnitedHealth Group     $81,186.0          $87,138.0   $2,977.0        $3,822.0   $2.40          $3.24
                                               (7.3%)                                              (35.0%)

   WellPoint              $61,251.1          $65,028.1   $2,490.7        $4,745.9   $4.76          $9.88
                                               (6.2%)                                              (107.6%)
Slide 5
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times



   Underpayments by health care service plans and their
   capitated providers exacerbate an already fragile health
   care delivery system.
Slide 6
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times

   On September 14, 2009, the DMHC expanded its
   routine audits to specifically address claim payment
   issues pertaining to plans and capitated providers, with
   an emphasis on claims for emergency services.

   The DMHC's regulatory efforts will initially concentrate on
   the health plans and capitated providers who meet one or
   more of the below criteria:
Slide 7
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times

   1. Health plans and capitated providers that have lowered
      their payment methodologies since October 15,
      2008. Any decrease in claim payment levels will need to
      be justified.
   2. Health plans and capitated providers whose claim
      payment methodologies result in the lowest payment
      levels to providers.
   3. Health plans and capitated providers that are the
      subject of substantive and/or repeated complaints
      regarding their reasonable and customary
      methodologies.
Slide 8
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times


    4. Health plans and capitated providers that routinely
       have low initial payments.
    5. Health plans and capitated providers that have no
       meaningful dispute resolution processes, or have other
       unfair payment practices.
Slide 9
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times

      Recent courts have determined that payors cannot set
      reimbursement rates in an arbitrary and capricious
      manner. In the California Supreme Court's Prospect
      decision, the Court stated:

      "Prospect has provided no authority, statutory or
      otherwise, for this court to conclude that it can set
      the rate of emergency rooms physicians pursuant to
      any across-the-board mechanism, whether the
      Medicare rate or any other rate." (Prospect Medical
      Group, Inc. v. Northridge Emergency Medical Group et al. (136
      Cal. App. 4th 1155, 2006.))
Slide 10
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times


      The Prospect decision makes it clear that any fee dispute
      involving emergency services rendered in non-contracted
      facilities must be resolved pursuant to the promulgated six-
      part regulatory test cited in 28 CCR 1300.71 (a)(3)(b) which
      states:
Slide 11
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times
      “Reimbursement of a claim” means: For contracted
      providers without a written contract and non-contracted providers,
      except those providing services described in paragraph (C) below:
      the payment of the reasonable and customary value for the
      health care services rendered based upon statistically credible
      information that is updated at least annually AND
      TAKES INTO CONSIDERATION: (i) the provider's training,
      qualifications, and length of time in practice; (ii) the nature of the
      services provided; (iii) the fees usually charged by the provider; (iv)
      prevailing provider rates charged in the general geographic area
      in which the services were rendered; (v) other aspects of the
      economics of the medical provider's practice that are relevant;
      and (vi) any unusual circumstances in the case.

      OUR CONCERN IS: WHO IS MONITORING THIS?
Slide 12
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times


    In a recent compliance audit, ERN/NCRA has discovered that
    two of the largest health plans in the State of California utilize
    the following methodologies in determining emergency
    reimbursement to non-contracted providers:
Slide 13
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times
   HEALTH NET:
     "Health Net uses the greater of the OSHPD or the
     Medicare reported cost to charge ratio for each
     facility to calculate the maximum allowable
     amount. The OSHPD cost to charge ratio is
     calculated as follows:Total Operating Expenses-
     Other Operating Revenue/Gross Patient
     Revenue. Health Net will pay a facility the
     maximum allowable amount based upon the greater
     of: (a) 165% of a facility's OSHPD cost to charge
     ration; or (b) 165% of a facility's Medicare cost to
     charge ratio; provided, however in no event, will
     Health Net pay more than 100% of a facility's
     charges."
Slide 14
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times
    BLUE CROSS:
       "To determine benefits on a customary and
       reasonable basis for non-contracting institutional
       providers, a percentile of billed charges from the
       Anthem Blue Cross (ABC) database is used to
       calculate the benefits, subject to the following:The
       allowed benefit WILL NOT BE: 1) less than covered
       charges multiplied by the cost to charge ratio the
       institution reports to OSHPD multiplied by a
       specific percentage; or 2) More than covered
       charges multiplied by the cost to charge ratio the
       institution reports to OSHPD multiplied by
       another specific percentage; or
Slide 15
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times

   BLUE CROSS CONT…:
       3) More than the full 100% of the institution's
      charges. The ABC database takes into consideration
      various factors, such as the billed charges of
      providers for services based on Diagnostic Related
      Group (DRG) codes for inpatient claims and Current
      Procedural Terminology (CPT) codes and
      Healthcare Common Procedure Coding System
      (HCPCS) codes for outpatient claims."
Slide 16
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times

      We do not believe that the OSHPD cost to charge ratio
      (calculated from Annual Disclosure reports) can be used
      solely to satisfy the six-part regulatory test under 28 CCR
      1300.71 (a)(3)(b) to determine reasonable and customary
      rates.
Slide 17
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times

      A FEW THINGS TO REMEMBER:

      1. The DMHC has very limited resources for reviewing each
      health plan and capitated provider’s UCR methodology (pg. 2)

          THE DMHC WILL NOT REVIEW UCR
       UNDERPAYMENTS UNLESS YOU BRING THEM
               TO THEIR ATTENTION.
Slide 18
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times

      2. The DMHC will focus its regulatory efforts on health plans and
      capitated providers as identified by the 5 factors (pg. 3.)

           YOU MUST ROVIDE THIS PAYMENT DATA TO
                        THE DMHC.

      NO ONE CAN IDENTIFY PAYORS WHO MAKE
       EMERGENCY UNDERPAYMENTS AND MEET
         ONE OF THE 5 FACTORS LISTED EXCEPT
                     PROVIDERS.
Slide 19
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times

                          WE NEED YOUR HELP.

      1.) We ask for your identification of any payor UCR payment
      methodologies that fail to consider the Gould factors in
      1300.71 (a) (3) (b) and result in routinely low payments.

      2.) We urge you to file complaints through us or internally
      with the DMHC if you have an in-house Compliance Officer.

             IDRP VS. ONLINE COMPLAINT PROCESS
Slide 20
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times

   The DMHC’s pilot Independent Dispute Resolution
   Process (IDRP) employs a voluntary "baseball style"
   arbitration model that encourages the plan and the provider to
   negotiate realistically before an arbitrator (CHDR), or risk
   having the other side's proposal accepted. For the IDRP, the
   provider's original billed amount and the payer's original paid
   amount will be used to determine which amount better reflects
   the reasonable and customary value of the services performed.

   BUT YOU HAVE TO PAY FOR IT AND THE PLAN
   CAN REFUSE PARTICIPATION.

            THE DMHC COMPLAINT PROCESS – H&S 1371.39
Slide 21
ERN/NCRA   2010 Annual Legislative Update




                         xxxxxxxx
Slide 22
ERN/NCRA   2010 Annual Legislative Update
Slide 23
ERN/NCRA   2010 Annual Legislative Update




    xxxxx



    xxxxx
Slide 24
ERN/NCRA   2010 Annual Legislative Update




                     xxxxx
                     xxxxx
Slide 25
ERN/NCRA   2010 Annual Legislative Update

             The Sign of the Times


              Untimely payment has a negative effect on
                        patient level of care.
              Violation of the Knox Keene Act is a
            considered a crime against public health
                            and safety.
Slide 26
ERN/NCRA   2010 Annual Legislative Update

         Thewe must be as passionate about
       Together,
                 Sign of the Times
       violations of health and safety as the Red Cross is
       about disaster.
Slide 27
ERN/NCRA   2010 Annual Legislative Update

                      Why We Exist


      CHAPTER MISSION
       “To position and strengthen healthcare
       professionals for legislative change and industry
       advancement through advocacy, education,
       training and service.”
Slide 28
ERN/NCRA   2010 Annual Legislative Update

                      Why We Exist
  CHAPTER VALUES
   Advocate passionately for medically appropriate
    healthcare in the State of California pursuant to
    Business and Professions Code §510.
   Challenge HMOs, PPOs and Government payors to
    facilitate change and improvement.
   Influence the outcomes including public-policy,
    reimbursement and quality of care decisions that
    directly affect American citizens.
   Instill an incurable passion for results in others to
    effectuate change in the healthcare delivery system.
   Create strategic networking and volunteer
    opportunities that fortify member marketability and
    transfer to paid jobs.
Slide 29
ERN/NCRA   2010 Annual Legislative Update

                               Join Us



           WE WOULD BE HUMBLED
            TO HAVE YOU JOIN OUR
                 MOVEMENT
                       EMAIL US AT
            EDNORWOOD@ERNENTERPRISES.ORG
           OR CALL (714) 995-6900 EXT. 6926 FOR
                         MORE INFO.

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ERN NCRA AAHAM NoCal UCR Legislative Update.5.14.10

  • 1. Slide 1 ERN/NCRA 2010 Annual Legislative Update ERN / The National Council of Reimbursement Advocacy Annual Legislative Update USUAL, CUSTOMARY AND REASONABLE CHARGES Ed Norwood
  • 2. Slide 2 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times “Our greatest glory is not in never failing, but in rising up every time we fail.” -Ralph Waldo Emerson
  • 3. Slide 3 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times Healthcare is a law to be defended.
  • 4. Slide 4 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times Revenue Net income Health Plan (in millions) (in millions) Earnings Per Share 2008 2009 2008 2009 2008 2009 Aetna $30,950.7 $34,764.1 $1,384.1 $1,276.5 $2.83 $2.84 (12.3%) (0.4%) Cigna $19,101.0 $18,414.0 $292.0 $1,302.0 $1.05 $4.73 (-3.6%) (350.5%) Health Net $15,366.6 $15,713.2 $95.0 -$49.0 $0.88 -$0.47 (2.3%) (-153.4%) UnitedHealth Group $81,186.0 $87,138.0 $2,977.0 $3,822.0 $2.40 $3.24 (7.3%) (35.0%) WellPoint $61,251.1 $65,028.1 $2,490.7 $4,745.9 $4.76 $9.88 (6.2%) (107.6%)
  • 5. Slide 5 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times Underpayments by health care service plans and their capitated providers exacerbate an already fragile health care delivery system.
  • 6. Slide 6 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times On September 14, 2009, the DMHC expanded its routine audits to specifically address claim payment issues pertaining to plans and capitated providers, with an emphasis on claims for emergency services. The DMHC's regulatory efforts will initially concentrate on the health plans and capitated providers who meet one or more of the below criteria:
  • 7. Slide 7 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times 1. Health plans and capitated providers that have lowered their payment methodologies since October 15, 2008. Any decrease in claim payment levels will need to be justified. 2. Health plans and capitated providers whose claim payment methodologies result in the lowest payment levels to providers. 3. Health plans and capitated providers that are the subject of substantive and/or repeated complaints regarding their reasonable and customary methodologies.
  • 8. Slide 8 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times 4. Health plans and capitated providers that routinely have low initial payments. 5. Health plans and capitated providers that have no meaningful dispute resolution processes, or have other unfair payment practices.
  • 9. Slide 9 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times Recent courts have determined that payors cannot set reimbursement rates in an arbitrary and capricious manner. In the California Supreme Court's Prospect decision, the Court stated: "Prospect has provided no authority, statutory or otherwise, for this court to conclude that it can set the rate of emergency rooms physicians pursuant to any across-the-board mechanism, whether the Medicare rate or any other rate." (Prospect Medical Group, Inc. v. Northridge Emergency Medical Group et al. (136 Cal. App. 4th 1155, 2006.))
  • 10. Slide 10 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times The Prospect decision makes it clear that any fee dispute involving emergency services rendered in non-contracted facilities must be resolved pursuant to the promulgated six- part regulatory test cited in 28 CCR 1300.71 (a)(3)(b) which states:
  • 11. Slide 11 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times “Reimbursement of a claim” means: For contracted providers without a written contract and non-contracted providers, except those providing services described in paragraph (C) below: the payment of the reasonable and customary value for the health care services rendered based upon statistically credible information that is updated at least annually AND TAKES INTO CONSIDERATION: (i) the provider's training, qualifications, and length of time in practice; (ii) the nature of the services provided; (iii) the fees usually charged by the provider; (iv) prevailing provider rates charged in the general geographic area in which the services were rendered; (v) other aspects of the economics of the medical provider's practice that are relevant; and (vi) any unusual circumstances in the case. OUR CONCERN IS: WHO IS MONITORING THIS?
  • 12. Slide 12 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times In a recent compliance audit, ERN/NCRA has discovered that two of the largest health plans in the State of California utilize the following methodologies in determining emergency reimbursement to non-contracted providers:
  • 13. Slide 13 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times HEALTH NET: "Health Net uses the greater of the OSHPD or the Medicare reported cost to charge ratio for each facility to calculate the maximum allowable amount. The OSHPD cost to charge ratio is calculated as follows:Total Operating Expenses- Other Operating Revenue/Gross Patient Revenue. Health Net will pay a facility the maximum allowable amount based upon the greater of: (a) 165% of a facility's OSHPD cost to charge ration; or (b) 165% of a facility's Medicare cost to charge ratio; provided, however in no event, will Health Net pay more than 100% of a facility's charges."
  • 14. Slide 14 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times BLUE CROSS: "To determine benefits on a customary and reasonable basis for non-contracting institutional providers, a percentile of billed charges from the Anthem Blue Cross (ABC) database is used to calculate the benefits, subject to the following:The allowed benefit WILL NOT BE: 1) less than covered charges multiplied by the cost to charge ratio the institution reports to OSHPD multiplied by a specific percentage; or 2) More than covered charges multiplied by the cost to charge ratio the institution reports to OSHPD multiplied by another specific percentage; or
  • 15. Slide 15 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times BLUE CROSS CONT…: 3) More than the full 100% of the institution's charges. The ABC database takes into consideration various factors, such as the billed charges of providers for services based on Diagnostic Related Group (DRG) codes for inpatient claims and Current Procedural Terminology (CPT) codes and Healthcare Common Procedure Coding System (HCPCS) codes for outpatient claims."
  • 16. Slide 16 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times We do not believe that the OSHPD cost to charge ratio (calculated from Annual Disclosure reports) can be used solely to satisfy the six-part regulatory test under 28 CCR 1300.71 (a)(3)(b) to determine reasonable and customary rates.
  • 17. Slide 17 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times A FEW THINGS TO REMEMBER: 1. The DMHC has very limited resources for reviewing each health plan and capitated provider’s UCR methodology (pg. 2) THE DMHC WILL NOT REVIEW UCR UNDERPAYMENTS UNLESS YOU BRING THEM TO THEIR ATTENTION.
  • 18. Slide 18 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times 2. The DMHC will focus its regulatory efforts on health plans and capitated providers as identified by the 5 factors (pg. 3.) YOU MUST ROVIDE THIS PAYMENT DATA TO THE DMHC. NO ONE CAN IDENTIFY PAYORS WHO MAKE EMERGENCY UNDERPAYMENTS AND MEET ONE OF THE 5 FACTORS LISTED EXCEPT PROVIDERS.
  • 19. Slide 19 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times WE NEED YOUR HELP. 1.) We ask for your identification of any payor UCR payment methodologies that fail to consider the Gould factors in 1300.71 (a) (3) (b) and result in routinely low payments. 2.) We urge you to file complaints through us or internally with the DMHC if you have an in-house Compliance Officer. IDRP VS. ONLINE COMPLAINT PROCESS
  • 20. Slide 20 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times The DMHC’s pilot Independent Dispute Resolution Process (IDRP) employs a voluntary "baseball style" arbitration model that encourages the plan and the provider to negotiate realistically before an arbitrator (CHDR), or risk having the other side's proposal accepted. For the IDRP, the provider's original billed amount and the payer's original paid amount will be used to determine which amount better reflects the reasonable and customary value of the services performed. BUT YOU HAVE TO PAY FOR IT AND THE PLAN CAN REFUSE PARTICIPATION. THE DMHC COMPLAINT PROCESS – H&S 1371.39
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  • 25. Slide 25 ERN/NCRA 2010 Annual Legislative Update The Sign of the Times Untimely payment has a negative effect on patient level of care. Violation of the Knox Keene Act is a considered a crime against public health and safety.
  • 26. Slide 26 ERN/NCRA 2010 Annual Legislative Update Thewe must be as passionate about Together, Sign of the Times violations of health and safety as the Red Cross is about disaster.
  • 27. Slide 27 ERN/NCRA 2010 Annual Legislative Update Why We Exist CHAPTER MISSION “To position and strengthen healthcare professionals for legislative change and industry advancement through advocacy, education, training and service.”
  • 28. Slide 28 ERN/NCRA 2010 Annual Legislative Update Why We Exist CHAPTER VALUES  Advocate passionately for medically appropriate healthcare in the State of California pursuant to Business and Professions Code §510.  Challenge HMOs, PPOs and Government payors to facilitate change and improvement.  Influence the outcomes including public-policy, reimbursement and quality of care decisions that directly affect American citizens.  Instill an incurable passion for results in others to effectuate change in the healthcare delivery system.  Create strategic networking and volunteer opportunities that fortify member marketability and transfer to paid jobs.
  • 29. Slide 29 ERN/NCRA 2010 Annual Legislative Update Join Us WE WOULD BE HUMBLED TO HAVE YOU JOIN OUR MOVEMENT EMAIL US AT EDNORWOOD@ERNENTERPRISES.ORG OR CALL (714) 995-6900 EXT. 6926 FOR MORE INFO.