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Many challenges remain for patients, payors, and providers within the healthcare system. Major government regulations at the state and federal have tried to bring clarity to a costly system. However, these same regulations only added further challenges for everyone.
Before the No Surprises Act, many states enacted state balance billing laws, aimed at protecting patients. Due to ERISA and the Airline Deregulation Act, states lacked the authority to apply or enforce these laws regarding self-insured plans or air ambulance providers. Each state created its framework of laws some without consistency across the states. Before CMS began exploring the enforcement of these state laws, there were 18 states with comprehensive laws, 15 with partial laws, and 17 with no laws. With CMS enforcement occurring, CMS is only recognizing 4 comprehensive state laws for state enforcement and 18 states where there is a split process between the state and the federal government. The remaining 28 states plus the District of Columbia and territories all are handled through federal law.
This creates a greater challenge for the providers and payers for compliance and conformity. Insurance cards do not indicate if a patient is fully insured or self-insured. This means a provider would be unaware if state law or federal law applies. Some states allow a self-insurance company to opt into the state law but unless a provider searches the state’s website, the provider may not know the self-insured plan opted into the state law. Then some states may allow for payers and providers to utilize public payer programs or usual and customary rates to determine reimbursement, which is prohibited under federal law. Then the state laws only apply if the insurer sells insurance in that state and the insured’s policy was issued out of the state and it is for a plan type that is covered under the state law. Some states may protect HMO plans but not PPO plans or some states may only provide coverage for certain services and specialties. Some states may even define facility more loosely than federal law, thereby recognizing clinical labs as a facility. Currently, 10 states have protection for ground ambulance services that do not exist under federal law.
What about good faith estimates? While federal law indicates when notice and consent are required and by which providers, it also indicates specific timeframes and a requirement for good faith estimates. These good faith estimates must be so precise that any amount billed to a patient that is more than $400 different from the good faith estimate can be challenged by the patient through the independent dispute resolution process. This creates a significant problem for providers. Not all services are cut and dry. For example, an anesthesiologist cannot predict how long an operation will take. Those procedures can go longer if complications occur or the procedure changes during the operation. What about inpatient services based on a DRG? Hospitals do not know before the admission if the patient will be there for 1 day or 30 days. A DRG code is assigned based on the principal diagnosis and secondary diagnoses, present on admission indicator, and any principal procedure codes (ICD-10-PCS). However, the DRG does not consider the number of resources utilized or the length of stay.
Transparency in coverage is one of the biggest changes to healthcare and the most challenging. It effectively made the contracts between a payer and a provider open source. This means that neither party can hide behind a non-disclosure agreement or gag clause. Hospitals had to post their prices and contracted rates as early as 2021 but payers had to post their rates by July 1, 2022. Payers must post more information than facilities. However, some states may also require individual physicians or physician practices to post rates as well. This opens their rates to both sides and the patients. This information can be used to attempt to renegotiate contracts, but it could also be used during the federal law’s open negotiation process and independent dispute resolution process. They can also be used in the state mediation or arbitration process. The question remains will this information cause property and casualty insurers or states to explore fee schedules or changes to state reimbursement logic for workers’ compensation or auto insurance medical coverage?
Mike Strong has been working in healthcare for nearly 20 years with payers and providers. He is a former healthcare fraud investigator for the payers with millions in recoveries, a former EMT-B, and a certified coder. His experience includes commercial, Medicare, Medicaid, workers’ compensation, and auto medical claims. With publications and presentations in healthcare coding and billing, Mike has a diversified background in healthcare reimbursement and payment integrity.
At Exponent Health we harness the power of technology to eliminate cost inefficiencies and maximize the value of every healthcare dollar. Driven by an entrepreneurial spirit since 2001, Exponent Health has been challenging the status quo to provide innovative cost containment solutions that improve our clients’ bottom line. Our medical cost containment business utilizes a dynamic cost optimization approach designed to find the best discount, not the first discount. This is supported by industry-leading person-to-person negotiation perfect for high-touch situations. Our pharmacy cost containment business driving lowest net cost strategies through active formulary management, channel optimization, enhanced purchasing power. Everything is supporting with our leading-edge data analytics platform that gives you clarity and insight to actively optimize your business.