By: Jon Jablon, Esq.
Our consulting team recent came across a network agreement that had the interesting nuance of indicating that the provider would bill amounts that were in line with market standards.
Language like that is a killer. There’s no way around it. It’s so ambiguous as to be all but useless when trying to decide which amounts are properly billed. What exactly are the appropriate market standards? Who is empowered to decide that? When the payor and medical provider inevitably have wildly different opinions on that, how can they possibly resolve the matter when the contract language is so infuriatingly unhelpful?
In this example, the provider had unbundled certain charges, and argued that the market did in fact bear that billing methodology, since most private payors such as this one accepted it – and therefore it was proper pursuant to the contract. The plan, however, contended that a large portion of the provider’s business (and a large part of the total local market) was made up of Medicare claims, and CMS guidelines do not bear that type of unbundling – and therefore it was not proper pursuant to the contract.
Due to this tragically-unclear contractual provision, the payor and provider have been forced to either compromise (which neither wants to do), or take it to court (which neither wants to do, either). It’s going to come down to which option the parties hate less.
Another tragic aspect of this story is its moral. The moral of the story should be to make sure you read your contracts and have them reviewed by an expert prior to signing – but as many of us have found out the hard way, it’s not always possible to view a copy of the provider-facing network agreement. If the payor agreement that you sign talks about billing standards, make sure they’re clear and unambiguous; if it doesn’t, try asking to see the provider agreement. The worst anyone can say is no.
Food for thought: if you’re being asked to sign your name to terms that are clearly ambiguous, or terms the other party won’t even show you, maybe that vendor is not the right fit for your business…
By: Jon Jablon, Esq.
Reference-based pricing (or RBP) tends to be one of those things that there’s little ambivalence about; in general, if you are acquainted with reference-based pricing, you either love it or hate it. And, like so many hot topics, some of the intricacies are not quite clear. That’s partially due to the sheer complexity of the industry and reference-based pricing in general, but also partially due to the competing sales efforts floating around. Since the RBP stew has so many ingredients, like any stew recipe, there are tons of different ideas of what makes a good stew – but that also means it’s fairly easy to cook a bland one.
Some have historically advocated sticking to your guns and never settling at more than what the SPD provides. This is a mentality that has largely dissipated from the industry, but some still hold it dear, and many plan sponsors and their brokers adopt reference-based pricing programs with the expectation that all payments can be limited to a set percentage of Medicare with no provider pushback. That can best be described as the desire to have one’s stew and eat it too; in practice, it’s not possible for the Plan to pay significantly less than billed charges while simultaneously ensuring that members have access to quality health care with no balance-billing. The law just doesn’t provide any way to do that.
Plans adopting reference-based pricing programs should be urged to realize that although it can add a great deal of value, reference-based pricing also necessarily entails either a certain amount of member disruption, or increased payments to providers or vendors that indemnify patients or otherwise guarantee a lack of disruption. It is not wise, though, to expect that members will never be balance-billed, and that the Plan will be able to decide its own payment but not have to settle claims. Provider pushback can be managed by the right program, but unless someone is paying to settle claims, there is no way to avoid noise altogether and keep patients from collections and court.
Based on all this, it has been our experience that reference-based pricing works best when there are contracts in place with certain facilities. Steering members to contracted facilities provides the best value and avoids balance-billing; when a provider is willing to accept reasonable rates, giving that provider steerage can be enormously beneficial to the Plan. Creating a narrow network of providers gives the Plan options to incentivize members, and gives members a proactive way to avoid balance-billing.
There are of course other ingredients that need to go into the RBP stew – but having the right attitude is incredibly important, and knowing what to expect is vital. Expectations are the base of the stew; you can add all the carrots (member education?) and potatoes (ID card and EOB language?) you want – but if the base is wrong, then the stew can’t be perfect.