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Magical Words in Claim Negotiation: “Please Send Claim Back for Processing”

On July 19, 2017
I negotiate healthcare claims and I have been doing this off and on for nearly 15 years, so I have learned a few things along the way.  Lately, I am picking up on an uptick of a trend with providers and particularly with their third-party billers. Here’s the shtick:  The provider or rep advises of a low discount requirement (this is nothing new), but if you don’t accept that rate, they shut down and politely tell you to “please send claim back for processing.”  What is that all about?

I am a negotiator and I have been hired to present objective third-party data (and we have gobs of it) about the reasonable value of healthcare services to compel another party to willingly settle a claim with a signed agreement.  My raison d’etre is to minimize reimbursement and help health plans contain costs. In contrast, a third party biller’s job is to maximize revenue and cash flow – so they either believe that a settlement will accomplish their goals, or they don’t.  

When a provider representative tells you to send the claim back, they know the insurer has to pay the benefits outlined in the health plan, and so they are basically saying… “nice data, superior parsing of code edits, impressive legal argumentation, very persuasive, but I don’t think the plan has the language to support that level of reimbursement or that they will even apply the limits if they do exist…I think will likely get more money if the payer processes their payment, so please send claim back for processing.”  And you know what?  On average, and sadly, they are absolutely right.   

So what to do?  Two things: 1) make sure your plan language gives you the ability to pay a reasonable referenced-based price (RBP) for out-of-network (OON) services, and 2) if facing an “unreasonable” provider or one that basically says “buzz off” … you need to pay your RBP rate.  In a world where one party can just say flat-out no to settlement, and get paid more money, why would they ever say yes?  Your negotiation is only as good as your end-game.  

Believe you me, if you selectively enforce your RBP end-game (when it makes sense, and allowed by the Plan) you will find that seemingly abusive providers will be more malleable for settlement on your next claim.  As for balance-billing, you will experience it more rarely than you might expect.  Most providers follow the trend of high billing (since “everyone else is doing it…”) to maximize payments from payers but rarely intend to squeeze hapless patients directly.  If they do want to go down this route, there are ways to enforce the consumers’ rights and get the “balance” (that no one ever actually pays) absolved.  

At Phia, we try to have a meaningful meeting of minds to try and come to mutually acceptable agreements with providers, and we work with our clients to help guide them through the often nonsensical world of claim settlement.  Understandably, however, many of our clients have simply given up with even trying to engage in settlement, and they are moving directly to RBP on OON claims, dealing with the levels of balance-billing which can be managed appropriately (with our assistance).  In light of this change, maybe we will see providers start saying “please send back for negotiation.”  

Full Billed Charges: A Question of Geography

On June 21, 2017
By: Jon Jablon, Esq.

It is increasingly common within the self-funded industry for medical providers to demand full billed charges for non-contracted claims. As we know, no one is actually required to pay full billed charges – but when push comes to shove, that tends to be the prevailing demand.

What about when the plan document limits payment at a percentage of Medicare? Say, 150%? The fiduciary has a duty to strictly abide by the terms of the plan document when making payments – and the definition of a non-contracted claim is that there is no contract to provide services at an agreed-upon price. Interestingly, though, and perhaps rendering it a misnomer, a non-contracted claim is still subject to two distinct contracts – an assignment of benefits, and the all-important plan document.

The plan document, of course, defines the Plan’s payment mechanisms and explains beneficiaries’ rights. When the plan document says that the Plan will pay $X, and the Plan does pay $X, the Plan has followed the terms of the plan document to a T. Or to an X, anyway. Let’s boil that down as simply as possible: X = X. What could be simpler than that?

Next, the assignment of benefits is an agreement between the patient and the provider. The patient says “I will transfer you all health plan benefits due to me ($X), and I promise that if $X does not compensate you fully, I will pay whatever balance you think makes sense.” In return, the medical provider promises to provide valuable medical services. We at The Phia Group have discussed the concept of assignments of benefits ad nauseum, and for good reason; this is the mechanism by which medical providers become beneficiaries of Plan benefits, and are due $X from the Plan.

Question: does an assignment of benefits give providers the right to receive full billed charges from the Plan, even though the Plan limits its benefits to an amount less than billed charges? There are a lot of moving parts in the self-funded industry, and this is yet another; the answer you may not have expected is maybe: it depends on the Plan’s geography.

Is the Plan domiciled in Fantasyland, home of laughable arguments, unexplainable oddities, and absurd logic? Then yes – billed charges will be due on every non-contracted claim, regardless of plan document language.

Or, is the Plan domiciled in Realityville, where general legal and market principles do exist, words have actual meaning, and hospitals and attorneys can be expected to be at least reasonably informed? If that’s where the Plan is, then no – of course an assignment of benefits doesn’t guarantee payment of full billed charges.

What are you, nuts?

You Are Not Going to Sue Us, Are You?

On May 10, 2017
…is what a nice lady asked me when we were discussing the charges her office submitted for drug addiction treatments. You see, this office billed $3,800.00 per day for inpatient detox, and separately, under a different corporate name (but same billing office), they billed our client for drug screenings at a whopping $4,000.00 per screen – with one screen performed per day.

Our communication with their office (written and sent by one of our attorneys) was stern but professional; we seriously questioned the propriety of those charges and made it clear that our client would not pay for them since they are considered part of the per diem for detox.  

“You are not going to sue us, are you?”  They were worried about a class action.  Think about that.  The provider representative’s guilty conscience was palpable.  We settled the claims at a small percentage above the Medicare equivalent rate, and we closed the account...no lawsuit needed.  Everyone walked away happy.

We are seeing more and more of these types of billing practices sprouting up in sunbelt regions.  

Treating addiction is a serious issue, and I am absolutely not diminishing the need for this type of service. In fact, I am married to a family and marriage therapist, so I understand mental health issues better than most.  That said, it is somewhat ironic that this particular example is of addiction claims, as it would seem that such high billed charges and ridiculous margins are a serious form of corporate addiction within the provider community. Effectively, we have addicts treating addicts.

If you have claims from providers that are “getting high”… let us know. We can help.  

Transparency – It’s Not Just for Ghosts

On April 26, 2017

By: Kelly Dempsey, Esq.

If you’re paying any attention to the news these days, you know that the healthcare industry as a whole has been facing some pretty large issues.  In addition to “repeal and replace,” we’re also faced with the skyrocketing cost of healthcare in the United States.  Both topics are focused on money – either loss of money by insurers who are now threatening to leave the Marketplace or the high costs of new drugs that have hit the market, that have the potential to cripple employer health plans.  While both of these are clearly issues that need attention, let’s look at something other than the turmoil in the Marketplace or shiny new things that are also fueling the fire.  

What about the costs of standard medical procedures?  When your doctor says you need a medical procedure and you actually think to ask “how much will this cost,” do you get a straight answer?  In some cases, you might. Maybe you’ll get a ballpark figure. But most of the time, the response will be wishy-washy because the procedure is unique to you and the providers cannot foresee complications that may change the projected cost.  

You may be thinking, “Ya, ya, ya.  I’ve heard this speech about price transparency before.”  In the past I had the same thought, but then I experienced the radical difference in charges for the same service and my view has been forever shifted.  I received the same procedure two years apart, at two different facilities, in two different states.  It’s been quite a while since these procedures happened, but I still think about it often.  

A few years ago (ok, maybe more than a few, but who’s counting), I had flu-like symptoms and also some sharp-shooting pains on both the left and right side of my abdominal area that I just couldn’t shake with extra rest and sleep.  My mom (a nurse) suggested that my issues may have been related to my gallbladder, so I took some over-the-counter medicine and my symptoms disappeared.  But a week later, I was back to where I started despite still taking the medication.  I reluctantly went to the doctor (in northeast Ohio), who said that there were many possibilities, but that it could be appendicitis.  My doctor told me that the last time she had seen someone with sensitivity to the abdominal region (i.e., sensitive to the touch), she didn’t send them for a CT scan, but the end result was appendicitis and emergency surgery was performed.  I didn’t have the classic symptoms of appendicitis, but a CT scan was ordered just to be sure.  I won’t bore you with the details, but the CT scan showed that it was appendicitis and I had a scheduled surgery to remove my appendix.  Weeks later the bills started rolling in, including a bill for the CT scan…$1,900.  I’d never had a CT scan before, so I had no idea what to expect, but $1,900 clearly wasn’t it (and I think this was after the PPO discount).    

Two years later, I found myself feeling under the weather.  I went to the doctor and an ultrasound was ordered.  Of course my appointment was on a Friday and it was a holiday weekend, so I had to wait to get the ultrasound, but I had a trip to Niagara Falls planned and I wasn’t cancelling it.  Unfortunately before I could have the ultrasound done, I woke up early on a Saturday morning with more sharp-shooting pains, but this time more in my side and back.  Being out of state, I didn’t know where else to go except to the emergency room at the hospital in Niagara Falls, New York.  The doctor who saw me took one look at me and said “kidney stone, but we’ll do a CT scan to confirm.”  A few hours later a kidney stone was my official diagnosis.  I spent six hours in the emergency room before I was discharged.  By this time I was working in the industry and dreaded the bills I knew I would be getting.  To my surprise, the bills weren’t nearly as large as I had anticipated.  Of course there were three: the hospital, the ER doctor, and the interpretation of the radiology report, totaling a little over $3,000.  This wasn’t nearly as high as I anticipated.  The hospital bill was itemized, and as I read through it, I stumbled upon the CT scan charge… “$234.”  I thought to myself, “ummmm, excuse me?  That can’t be the only fee for the CT scan.”  I decided that this couldn’t be accurate and waited for another radiology bill to arrive.  No additional bills ever arrived.  

I’m not a medical professional and I’m sure there were differences in the CT scans (maybe the type of machine, etc.), but how could I be charged $1,900 for a CT scan and two years later be charged $234 for a CT scan?  Considering the second procedure was in New York, and Niagara Falls is twice the population than my tiny suburban city outside of Cleveland, Ohio, I was sure the New York charges would be higher, but they weren’t.  The difference in charges for the same (or very similar procedure) is an issue that has stayed with me.  

In doing more research and looking at the figures, it’s amazing to see the variances in the cost-to-charge ratio (i.e., how much a provider charges compared to how much it actually costs them to do a procedure) from provider to provider.  The ACA’s price transparency provision really never got off the ground and other proposed bills haven’t had much success – it’s also unclear if the current administration is motivated to support price transparency.  As the self-funded industry looks at cost containment measures as a whole, medical tourism is growing in popularity, especially when there are high value providers that are willing to offer services at lower costs and be more transparent with pricing.  Medical tourism and other cost containment methods, as well as consumer education, can help employer health plans contain costs; however, there is a need to look at the bigger picture and strive for more price transparency to help stabilize and support our fragile healthcare industry.   

I Fought The Law and…Unpredictable Results Ensued

On April 12, 2017
By: Jon Jablon, Esq.

Are you a landlord? If so, you might know that the law is not on your side. Or, are you a criminal? The law isn’t on your side either, but that one might be more obvious. Last question: are you a benefit plan with members being balance-billed?

There are certain legal protections that our country’s various legislative and regulatory bodies have put in place, such Section 501(r) of the Internal Revenue Code, so-called “surprise billing” legislation, and others – but in general, the majority of medical providers are not subject to legal restrictions in terms of whether they can balance-bill patients. In other words, in most circumstances, a medical provider is permitted to balance-bill a patient for the full balance on a non-contracted claim.

There are many health plans, TPAs, and brokers who want nothing more than to show a facility who's boss and refuse to pay another cent. Are there tactics and arguments that can be used to combat balance-billing? Of course there are! But, if a medical provider calls the plan’s bluff and continues to balance-bill, there is the real threat of collections and potentially a lawsuit, which many of us have witnessed first-hand, and it can be a nightmare for the patient.

For health plans that want to stand strong and not negotiate, litigation is an option! Litigation instituted by the health plan or the patient, that is. Even just the threat of litigation can have great effects on balance-billing support; many facilities, when faced with allegations of egregious billing and evidence that their charges are dozens of times Medicare rates, will close out accounts, or look to sign a direct contract for open and future claims.

Look out, though – because if a medical provider says “let’s dance” in response to a threat of litigation, the plan sponsor or patient will need to either back down or follow through. If the latter, it’s truly unpredictable how the court might react. On the one hand, non-contracted claims must, like all other non-contracted transactions in any other market, be billed at some measure of the fair market value. On the other hand, the patient generally signs the provider’s standard assignment of benefits form that says, in small print, “if your insurance doesn’t pay this whole bill, you agree to pay the rest.” In that case, can the claim truly be called non-contracted, after the patient has agreed (read: contracted) to pay the balance?

There are certain factors that work in the plan’s and patient’s favor, but there are perhaps just as many factors that work against them in a given case. It’s a tough call; whether or not to litigate should depend on many factors, including claim size, balance size, and the bill as a percentage of Medicare. For a $3,000 claim billed at 180% of Medicare, I’d recommend against litigation – but for a $150,000 claim billed at 1,300% of Medicare, it might be worth rolling the dice…

Bidding Against Themselves: $750K Air Ambulance Claim Adventure

On March 29, 2017
I have a weird claim on my desk right now involving an Air Ambulance (AA) carrier that is billing a client $750K for a flight from the east coast to the west coast.

It is not uncommon for an AA carrier to argue that their charges are reasonable and even show us some so-called usual, customary, reasonable (UCR) charge data to justify their charges.  We find ourselves commonly reminding them that their calculation of UCR is not relevant to the Plan’s payment – but rather the reimbursement will be based on the terms of the Plan Document.  We also counter with data of our own (because we want do want to be fair), and we end up settling at a rate that everyone can live with.  

…usually

In the case I mentioned above, the AA carrier is sticking to their UCR plastic guns, and they are presenting a 10% discount proudly, as if the employer should be thankful.  To be clear, the AA carrier has a UCR database that is showing their charges are “normal.” $750K! UC-R you kidding me?  

If it were up to me, we would send them a check and tell them where to stick their 10% discount, but our client, as is common, would like an agreement on the claim to protect the member from harassment.  This is a classic ransom scenario; the balance-billing and credit-ruining boogieman is meant to scare the employer into paying more than a reasonable amount for this flight.  Regardless, our directives are to use our legal and claim data expertise to “persuade” the AA carrier to accept a lower reasonable price.  

In this case, to do this, we secured two quotes from other competitive AA carriers for the same flight (distance, resources, etc.) and the quotes came in at $35K and $50K.  Yes, you read that right – basically $700K less than these billed charges.  For good measure, we also consulted another UCR publisher, which quoted UCR at $47K – right in line with the quotes received.  Now, we understand that pre-service quotes are less than post-service charges, but certainly this is enough data to get them “in range.”  

…uh…no

We presented these market-based quotes and other UCR data to the AA carrier as a benchmark of “fair market value.” They scoffed, refusing to budge, and they are now saying they want to take this to court because of their “ironclad” UCR data.  

Here’s the best part.  We managed to secure a quote from the very same AA carrier that billed $750K (everything is the same).  The SAME carrier. The SAME flight.  They offered in writing, $35K (insert nausea).  

Believe it or not, we are still trying to get this matter resolved. Moral of the story? Don’t let anyone else (despite their best intentions) exclusively define and calculate UCR for you, because they may get it wrong, as this case clearly shows.  Instead, make sure your plan documents have a comprehensive definition that is fair to the provider, the member, and the Plan based on objective, real-world, fair market measures. At best, an unreasonable UCR calculation shocks the conscience; at worst, it can obliterate your wallet.

Bidding Against Themselves: $750K Air Ambulance Claim Adventure

On March 28, 2017
I have a weird claim on my desk right now involving an Air Ambulance (AA) carrier that is billing a client $750K for a flight from the east coast to the west coast.

It is not uncommon for an AA carrier to argue that their charges are reasonable and even show us some so-called usual, customary, reasonable (UCR) charge data to justify their charges. We find ourselves commonly reminding them that their calculation of UCR is not relevant to the Plan’s payment – but rather the reimbursement will be based on the terms of the Plan Document. We also counter with data of our own (because we want do want to be fair), and we end up settling at a rate that everyone can live with.

…usually

In the case I mentioned above, the AA carrier is sticking to their UCR plastic guns, and they are presenting a 10% discount proudly, as if the employer should be thankful. To be clear, the AA carrier has a UCR database that is showing their charges are “normal.” $750K! UC-R you kidding me?

If it were up to me, we would send them a check and tell them where to stick their 10% discount, but our client, as is common, would like an agreement on the claim to protect the member from harassment.  This is a classic ransom scenario; the balance-billing and credit-ruining boogieman is meant to scare the employer into paying more than a reasonable amount for this flight. Regardless, our directives are to use our legal and claim data expertise to “persuade” the AA carrier to accept a lower reasonable price.

In this case, to do this, we secured two quotes from other competitive AA carriers for the same flight (distance, resources, etc.) and the quotes came in at $35K and $50K. Yes, you read that right – basically $700K less than these billed charges. For good measure, we also consulted another UCR publisher, which quoted UCR at $47K – right in line with the quotes received. Now, we understand that pre-service quotes are less than post-service charges, but certainly this is enough data to get them “in range.”

…uh…no

We presented these market-based quotes and other UCR data to the AA carrier as a benchmark of “fair market value.” They scoffed, refusing to budge, and they are now saying they want to take this to court because of their “ironclad” UCR data.

Here’s the best part. We managed to secure a quote from the very same AA carrier that billed $750K (everything is the same). The SAME carrier. The SAME flight.  They offered in writing, $35K (insert nausea).

Believe it or not, we are still trying to get this matter resolved. Moral of the story? Don’t let anyone else (despite their best intentions) exclusively define and calculate UCR for you, because they may get it wrong, as this case clearly shows.  Instead, make sure your plan documents have a comprehensive definition that is fair to the provider, the member, and the Plan based on objective, real-world, fair market measures. At best, an unreasonable UCR calculation shocks the conscience; at worst, it can obliterate your wallet.

It will be my pleasure to balance bill the patient $1.3 Million…

On March 1, 2017

…Is what a Hospital VP of Accounts Receivable said to me when I called to discuss a reference-based pricing (RBP) claim that was referred to The Phia Group for handling.  Upon review, the health plan had issued a reasonable percentage above Medicare on a large claim, and this was perfectly in line with the Plan Document’s language.  In fact, payment for this episode of care was subject to a percentage above a particularly high Diagnosis-Related Group (DRG) pricing, so the payment greatly exceeded the average commercial insurance reimbursement at this facility.

You see, hospitals report their complete financial information to the Centers for Medicare and Medicaid Services (CMS).  This publicly-available information is submitted in accordance with generally accepted accounting principles, and verified by the hospital to be accurate.  At The Phia Group, we use Medicare payment rates along with this data to assess the fair market value of services (what payors actually pay).

Back to my story. I would have understood had the Hospital VP said “I am sorry, Jason, but I have a policy that requires me to balance-bill the member,” or “We can’t write off the balance but let’s explore ways to close this account together,” or anything like that.  I get it – there are always policies to follow.  But to say “It will be my pleasure to balance bill the patient 1.3 million…”  Come on.

There is a lot of rhetoric out there about no one being happy with “the way things are” and how everyone wants to “do the right thing” as the market changes, but I don’t believe that.  I routinely see the ugliness of corporations gorging themselves on unreasonable reimbursements at the threat of destroying patients’ credit scores.  Patient credit is the ransom in exchange for payment of ridiculously high charges.  Thankfully, this generally proves to be the exception, as I deal with reasonable and helpful providers all the time; to those valued and reasonable healthcare providers: I salute you.

This particular interaction really shook me, and it stands as a stark reminder of the issues we need to address in achieving transparency and affordability in healthcare.

Secrets to Making Reference-based Pricing Work

On January 18, 2016
MyHealthGuide Source: Adam Russo, Esq.,1/14/2016, Thompson Information Services Blog

In order for reference-based pricing (RBP) to work, health plan sponsors should do it in a way that involves implementing best practices for cost analysis, claim repricing, plan design, patient advocacy (including balance billing protection when necessary), and member education.

Ways to Make RBP Succeed

Employers, administrators, brokers and courts have begun to realize that determining the value of a health care service must involve something more than considering only a provider’s billed charges. More and more courts are accepting evidence based on the reasonable and customary value of the claims and not what the facility actually billed.

A health care provider’s billed price for particular services is not necessarily representative of either the cost of providing those services or their market value. The reasonable value of services (to be used to set the RBP payment your plan will pay) must consider evidence of the full range of fees that hospitals charge and actually accept as payment from private payers, Medicare or patients themselves.

Since Medicare reimbursement is almost universally accepted in the market, paying any willing provider the Medicare rate plus a percentage is an objectively reasonable approach to providing the broadest possible provider access for RBP plan participants. The problem is that these same facilities have been getting so much more than this from large insurers and networks for so long.

Toss Out the Red Herring

Since U.S. Department of Labor issued frequently asked questions on RBP in 2014, the argument was made that RBP must be illegal since the Affordable Care Act limits the out-of-pocket maximum that a patient can have. But the issue is that the agency wrote the ACA rule with in-network claims in mind.

Part of this confusion stems from the reality that networks have been so pervasive for so long that people cannot conceive of a world without them.

It is important to understand that a claim subject to RBP in many cases has no network and would be viewed under a typical network scenario as an out-of-network claim. Thus, according to DOL, balance billed amounts resulting from non-network claims are not included in the individual’s out-of-pocket cost limitations.

Protect Members from Balance Billing

This doesn’t make balance billing the patient desirable. The plan doesn’t want to be price gouged by facilities but also doesn’t want its patients to be balance billed. Plans have to play a balancing act, which is not easy to do.

If you are the patient, you start thinking that you are a pawn in a chess match when it comes to RBP. We repeatedly hear patients say they thought they had insurance and that getting balance billed must be a mistake. The upset patient runs to his or her HR department demanding answers, and in the end doesn’t care what the plan pays as long as he or she doesn’t get his or her credit scores ruined.

Employers typically do care about the employees’ well-being but also care about the plan’s finances. They realize that the more the plan has to pay, the pricier health insurance becomes. However, they have to balance this with understanding that balance billing is bad for business and for public relations.

Patient Advocacy Advised

The best RBP programs should have a patient advocacy process. The process should involve providers of all types. Any such negotiation would still require the plan administrator to determine any maximum payable amount within the parameters the plan defines for reasonable and appropriate reimbursement. Also, the plan administrator should be able to offer to cover any patient deductible.

Also, a comprehensive patient advocacy program will have information on providers in many service areas across the country and will help RBP plan members find providers that are unlikely to balance bill for their services.

Medical tourism is a favored aspect of RBP plans for the same reason that RBP plans are better for members who travel outside their normal service area. An RBP plan member who seeks care outside his or her regular service area is more likely to be able to find a provider that will accept RBP as payment in full.

Plan sponsors don’t want to pay beyond their RBP payment, especially if their stop-loss carrier limits its reimbursement to RBP levels. Under that circumstance, payments beyond RBP would sap the plan and not the stop-loss insurer.

Bring Providers Along

Good RBP programs have direct contracts with out-of-network facilities, and plan documents that give the plan administrator leeway to negotiate with providers.

Specifically, successful RBP plans have contracts in which out-of-network facilities agree to accept the plan’s RBP rates. At the same time, however, a readiness to negotiate claims when needed can prevent balance billing and collections. Facilities accepting the plan’s RBP rate sets off a virtuous chain of consequences: no balance, no patients being balance billed, no complaints and no scrutiny.

Further, plan language must:
1. allow for the use of RBP;
2. describe the sources of pricing data to be used by the plan; and
3. address assignment and appeals.
If those and related questions are not answered, third parties will be able to find ways to refute the plan’s payment methods. In order to do this correctly, you need to have great plan drafters, as well as experts at facilitating provider contracting and claim negotiations.

Patients must be educated about the process and understand the type of RBP practices involved. They must know whether the plan has a physician-only network or a narrow network, and what direct provider contracts exist. The plan should teach them what to do if they are balance billed, including: (1) who pays the balance and (2) what the worst case scenarios are.
Percentage of Medicare
Traditional networks have failed to stem the rising costs of health care. This has the overall effect of reducing access to health care. Further, networks have encouraged a pricing system where providers charge one thing for their services but accept an entirely different payment from plans with which they contract.

More and more plans are amending their plan language to Medicare-plus pricing if the patient goes out of network. This benefits the plan because it pays less per claim, and it does not pay the balance, because the patient chose to go outside of the network. It also doesn’t have to pay a vendor to negotiate these claims with the providers.

A typical RBP plan offers reimbursement at rates between 120 percent and 180 percent of Medicare. According to the American Hospital Association, Medicare payment, on average, covers only 86 percent of actual costs in treating Medicare patients. This means that to cover costs, providers need to receive, on average, 116 percent of Medicare payment or more.

Leverage Facilities’ Collections Issues

Last, but not least, we have to take a look at the provider’s mindset. Hospital billing departments are extremely busy these days. The problem is that they aren’t collecting a whole bunch of money. Collection of amounts that patients owe is large problem for many providers. Easing cost-sharing requirements offers a powerful incentive to providers to accept RBP, especially pricing that is well in excess of what many of those same providers receive from the Medicare and Medicaid programs.

Some hospitals and health systems are starting to review and revise their prices to make themselves more attractive to individual consumers, who increasingly experience sticker shock when they pay for services out of pocket under certain high-deductible health plans. The reality is that many hospital leaders are publicly admitting to scrutinizing their own charge masters. The master price list often just serves as the basis for rate negotiations with insurers in order to see how prices compare against the actual cost of delivering services.

As more consumers have to pay more things out of pocket, these pricing issues are gaining an increasing share of health systems’ attention. The reality is that patients are starting to buy into transparency of pricing. If you’re a patient at one facility and you go to four different hospitals and you get the same service and the bill is different, you begin to wonder why. Hospital charge masters have been widely criticized for irrational pricing. Yet hospitals and insurance companies continue to use those master price lists in some negotiations.

For many years, providers have relied on a PPO’s logo on a patient’s insurance identification card to determine a network plan’s reimbursement terms. Identification cards created for RBP plans have no PPO logo but they do contain detailed notice of the reimbursement terms stating that the payment will be based on a certain percentage above Medicare.

In Conclusion

Unlike network discounting from unrealistic gross charges, RBP plans use bottom-up pricing based on costs. Plan sponsors and drafters have a fiduciary duty to be prudent with plan assets. As more and more patients begin to look at the overall cost of care and the actual billed charges, it is getting harder for plan administrators to preach the benefits of network discounts since the bottom line is that most plan funds are coming from the contributions of members’ paychecks.
About the Author
Adam V. Russo, Esq. is the Co-Founder and Chief Executive Officer of The Phia Group LLC; an experienced provider of health care cost containment techniques offering comprehensive claims recovery, plan document and consulting services designed to control health care costs and protect plan assets. The Phia Group’s overall mission is to reduce the cost of plans through its recovery strategies, innovative technologies, legal expertise, and focused, flexible customer service.