The Emergency Room Conundrum and Other MCO Payment Games

The Emergency Room
Conundrum and Other MCO
Payment Games
What Can Providers Do?
Carole Christian
Roz Cordini
July 25, 2013
Medicaid Managed Care Ky.
November, 2011
550,000 Medicaid patients were transitioned from a feefor-service model with a primary care case management
component to “risk-based” managed care
Medicaid Managed Care Ky.
Region 3
Has operated under a separate CMS waiver as a riskbased managed care arrangement since 1995 (Passport
Health Plan)
Waiver expired 12/31/12
Implementation Timeline
CMS Approval
Assignment to Plans
Initially, Kentucky Spirit had the highest assignment
due to its lower overall capitation rates
As of July 9, 2012, following the switching period,
Coventry saw the highest
CMS enrollment
Incentives were offered by Plans to entice enrollment
Initially, Coventry didn’t charge co-pays
Provider Networks
As of June, 2012,
73% of the state’s hospitals had contracted with all three Plans;
25% of the state’s hospitals had contracted with two Plans; and
2% of the state’s hospitals had contracted with just one Plan
CMS Approval
Few PCPs and fewer specialists have contracted with all
three Plans, creating access issues
Capitation Rates
Kentucky’s Department of Medicaid Services pays each
Plan a per-member-per-month capitation rate
The MCOs then pay providers negotiated rates
CMS Approval
Rates paid to MCOs were established by
each Plan developing its own rate based upon experience in
other states; Bids
Price Waterhouse Cooper independently offering a range of
rates they believed adequate to meet the managed care goals of
the state;
each Plan’s negotiations with the state
Capitation Rates
Region 1 (Initial)
CMS Approval
Capitation Rates
Did the Plans underbid their contracts with the state?
short-term losses leading to long-term gains with the expanded
Medicaid provisions of the ACA?
receipt of incomplete state data?
rates determined before CMS
with providers was
MLRs in the first
Bids2 quarters following implementation:
Capitation Rates
Initial contracts called for risk-adjustment
State implemented risk-adjustment on 4/15/12 resulting in increased
rates for Coventry and WellCare and a decrease in rates for
Kentucky Spirit
CMS Approval
January 2013 – State gave Wellcare and Coventry a 7% rate
increase in exchange for a release of claims
MCO Dashboard
11/1/11 – 10/31/12
(From State records)
Suspended Claims
% Suspended
Paid per Member
Paid Loss Ratio
Capitation per
CMS Approval
Paid Claims Report 58
Claims Payment
KY Spirit
Report 60
90% paid in 30 Days
Report 60
99% Paid in 90 Days
MCO Dashboard
11/1/11 – 10/31/12
(From State records)
PIAs Report
No Rx
MCO Paid Amount
COB Amount
% of Claims Paid
CMS Approval
% Denied
COB Cost Savings
Medicaid Cost
KY Spirit
Denied Amount
Ky MCO Laws
907 KAR 17:005 – 17:030
as of 5/14/13
Emergency Care
Post-stabilization services
Urgent Care
Enrollee Non-liability for Payment
Utilization Management
Prior Authorization
Medically Necessary
Prompt Payment of Claims
Grievance Procedures
Emergency Care
42 U.S.C. 1396u-2(b)(2)(B)
Emergency services care is assured
each state contract with an MCO must assure that coverage is provided
for emergency services without regard to prior authorization or the
emergency care provider’s contractual relationship with the organization
or manager, and to comply with federal guidelines established related to
coordination of post-stabilization care section
What are emergency services?
covered inpatient and outpatient services
furnished by a provider that is qualified to furnish such services under
this subchapter, and
are needed to evaluate or stabilize an emergency medical condition
Emergency Care
42 U.S.C. 1396u-2(b)(2)(B)
What is an emergency medical condition?
A medical condition manifesting itself by acute symptoms of
sufficient severity (including severe pain) such that a prudent
layperson, who possesses an average knowledge of health and
medicine, could reasonably expect the absence of immediate
medical attention to result in—
placing the health of the individual (or, with respect to a pregnant
woman, the health of the woman or her unborn child) in serious
serious impairment to bodily functions, or
serious dysfunction of any bodily organ or part.
Emergency Care
Federal Law
Where can an MCO Enrollee Receive
Emergency Care?
At a health care facility most suitable for the type of injury, illness
or condition, whether or not the facility is in the MCO network –
907 KAR 17:015(2)(6).
Whether in or out of network, emergency services is a covered
service – 907 KAR 17:020(2)(5)(c).
Emergency Care Provided by an Out of Network
MCO must cover out-of-network services
Provider must accept regular Medicaid rate
- 42 U.S.C. 1396u-2(b)(2)(B).
Emergency Care
MCOs cannot define an emergency medical condition on
the basis of a list of symptoms or diagnoses
MCOs cannot refuse to pay for emergency services
because a provider didn’t seek authorization within 10
days following the service
The treating provider determines whether a patient is
stabilized and ready for either transfer or discharge
MCO must accept this determination and accept responsibility
for coverage and payment
-42 CFR 438.114
Emergency Care
Post-stabilization Services
covered services related to an emergency medical condition
provided to an enrollee
after they are stabilized in order to maintain that stabilized condition
provided to improve or resolve the enrollee’s condition
Payment for Post-stabilization Services
The MCO Is financially responsible for post-stabilization care
both in and out of network
even if not pre-approved if—
The MCO organization does not respond to a request for pre-approval
within 1 hour;
The MCO organization cannot be contacted; or
The MCO organization representative and the treating physician cannot
reach an agreement concerning the enrollee's care and a plan
physician is not available for consultation.
Urgent Care
Care for a condition not likely to cause death or lasting harm but for
which treatment should not wait for a normally scheduled
appointment – 907 KAR 17:005
Access Standard
within 48 hours of request – 907 KAR 17:015
Urgently needed services means covered services that are not
emergency services, provided when an enrollee is
temporarily absent from the MCOs service area or,
in the service or continuation area but the organization's provider
network is temporarily unavailable or inaccessible (under unusual and
extraordinary circumstances)
as a result of an unforeseen illness, injury, or condition; and
it was not reasonable given the circumstances to obtain the services
through the organization offering MCO Plan
– 42 CFR 422.113
Utilization Management
907 KAR 17:025
Review, monitor and evaluate the appropriateness and medical necessity of
care and services
Have a written UM Plan
Identify and describe mechanisms used to
detect the under or over utilization of services and
act after identifying under or over utilization of services
Adopt nationally-recognized standards of care and written criteria
Only a physician with clinical expertise in treating an enrollee’s condition or
disease is authorized to deny a service in an amount, duration or scope that
is less than requested by the enrollee or his physician
Medically Necessary
907 KAR 3:130
Based on an individualized assessment of the recipient’s medical needs;
Reasonable and required to identify, diagnose, treat, correct, cure, palliate,
or prevent a disease, illness, injury, disability, or other medical condition,
including pregnancy;
Appropriate in terms of the service, amount, scope, and duration based on
generally-accepted standards of good medical practice;
Provided for medical reasons rather than primarily for the convenience of
the individual, the individual's caregiver, or the health care provider, or for
cosmetic reasons;
Provided in the most appropriate location, with regard to generally-accepted
standards of good medical practice, where the service may, for practical
purposes, be safely and effectively provided;
Needed, if used in reference to an emergency medical service, using the
prudent layperson standard
Clinically Appropriate
907 KAR 3:130
Pursuant to the nationally-recognized clinical criteria
known as Interqual developed by McKesson Health
Service Authorization
907 KAR 17:025
The MCO identifies what constitutes medical necessity
and establishes P&P including a timeframe for making
authorization decisions
Must make an authorization decision
as expeditiously as the enrollee’s health condition requires, and
within 2 business days following a request for service
Timeframe can be extended
By the enrollee or their provider, or
By the MCO if
they justify to DMS, upon request, a need for additional information
and how the extension is in the enrollee’s best interest
No more than an additional 14 days
907 KAR 17:025
Written notice to the enrollee (and provider) within 2 business days
of the request
Must include
Action the MCO intends to take
Reason for the action
Right to file an appeal
Right to request a state fair hearing
Procedure for filing an appeal and requesting a state fair hearing
Right to have benefits continue pending resolution of the appeal, how to
request benefits be continued and the circumstance under which the
enrollee may be required to pay the costs of these services
Triage Payments
KY Spirit
May 2012 Letter to Providers
Payment for ED services will be made for “claims coded with a
diagnosis that represents a disease or condition that is recognized
as a medical emergency”
Others will receive a $50 triage fee
Later Correspondence
Letter? What letter?
“We pay according to the ‘prudent layperson’ standard”
Triage Payments
Less Obvious
Requires submission of documentation for ER claims with nonemergent diagnosis codes
Clinical staff will review the submitted clinical support for proper
ACEP E&M coding
Claims not satisfying the “prudent layperson” standard will be
paid at a $50 triage rate
Cabinet – “the MCOs’ policies satisfy the ‘prudent
layperson’ standard”
Other Payment Games
We Have Heard Of . . .
90% or 65% of Medicaid rates for OON providers
Churning Claims
paying, then recouping, then paying at a different rate multiple times
Changing codes, adding modifiers and denying claims based on
changed codes
Denying services for lack of pre-authorization, even where obtained
Denying line items of claims that have to be re-submitted due to
Referral to agents or subsidiaries handling particular types of claims
Claiming right to year-end settlement of outpatient costs without
contract right
Denying all cross-over claims, or paying as Medicaid would
Adjusting velocity of payments based on MCOs public report filings
This list is not exhaustive and includes only those that have been
identified to date and reported to the speakers
Other Concerns
Reimbursement Delays
Administrative barriers
Late claims payment
Increase in suspended claims
Prior Authorization
Slow, burdensome process
CMS Approval
fax or snail mail
quantity of information requested - complete records
Unclear authorization criteria
Same criteria, butBids
applied differently or inconsistently
Decisions based Due
upon more information than known to the admitting
Denials without clear indication of what criteria failed
Inconsistent Coding Standards
Other Concerns
Interim Rates
FQHC’s and RHC’s reimbursed on a prospective rate
CAH’s reimbursed on a cost-basis
CMS Approval
Rates not regularly reconciled by the state
delays in reimbursement adjustments resulting in cash flow
State began issuing monthly checks based on estimated claims
data from the previous year
No plan to reconcile claims based on actual claims data
Naveos Preliminary Findings
Two Hospitals, Two Payors
Improper assignment of DRG values & payment
Use of Medicare version 29 grouper to assign DRG, then crosswalking
to version 24 with translation table, can produce different DRG
Inaccurate base rate after 2012 revision
Improper use of the High Volume Per Diem add-on payment
Improper calculation of outlier payment
Outdated CCR ratio
Incorrect threshold
Improper calculation for carved out charges
Improper lab fee schedule when paying for hospital base lab
Use of outdated fee schedule
Use of a non-hospital lab fee schedule
Naveos Preliminary Findings
Two Hospitals, Two Payors
Use of lower of payor-specific fee schedule or CCR for select nonlab procedures
Use of lower of CCR or lab fee schedule when paying designated
lab service
Improper retro-eligibility denial
Improper bundling of multiple procedure codes into a single, unpaid
bundled code
Use of payer specific fee schedules in lieu of CCR for lab
procedures outside of designated range
Use of improper CCR when paying outpatient claims
Exclusion of procedure codes from claims payment process
(missing Hospital codes from payer adjudication)
What Can Providers Do?
Dispute Resolution
State Fair
Grievance: An expression of dissatisfaction about a
Enrollee must file a grievance within 30 days from the
date of the event causing satisfaction
MCO must acknowledge receipt of the grievance within 5
days and provide an expected date of resolution
Investigation and resolution within 30 calendar days of
the date the grievance was received by the MCO
MCO Appeals
Enrollee has 30 calendar days from the date of receiving a notice of
adverse action from an MCO to file an appeal
MCO must provide written acknowledgement of receipt of appeal within 5
working days of receipt of the appeal along with an expected date of
MCO must resolve the appeal within 30 calendar days from the date the
initial appeal was received by the MCO
MCO can extend the resolution timeframe by 14 calendar days if either
the enrollee requests it, or
the MCO requests it for need of additional info, and
the extension is in the enrollee’s best interest
MCO must continue benefits to the enrollee, if the enrollee requested
continuation, until
the appeal is withdrawn by the enrollee;
14 days have passed since the date of the resolution letter if the resolution was
against the enrollee and no state fair hearing was requested or taken other
further action; or
a state fair hearing decision adverse to the enrollee was issued
State Fair Hearing
Only available after the enrollee exhausts the MCO’s
internal appeal process
Must be postmarked within 45 days from the date of the
MCO adverse action letter issued at the end of the
appeal process
Pursuant to KRS Ch. 13B
Judges are attorneys in the Administrative Hearings
Must have a Kentucky lawyer
Medicaid Appeals
Medicaid Appeals
Number of Appeals
Medicaid Appeals
2012 MCO Appeals
Number of Appeals
Type of Case
IP Psych
Hospital Stay
Disposable Medical Supplies
2013 Administrative Hearings Branch
Pursuant to 907 KAR 1:563
Administrative Hearings Branch MCO Appeals (1/1/13 - 5/31/13)
Number of Appeals
Coventry Cares
Kentucky Spirit
Coventry Cares
Kentucky Spirit
Prompt Pay Remedy
- Court or Administrative?
Judicial Doctrine
Exhaustion of Administrative Remedies Required First
Is there an administrative remedy?
KRS 446.070 – Person injured by violation of a statute may sue for
Insurance statute says insurer cannot require appeal where claim
not paid at contract rate
Amounts owing are often legal issues beyond agency expertise
Judicial decision pending in ARH v. KY Spirit
Prompt Payment of Claims
907 KAR 17:030
Clean claim means one that can be processed without obtaining
additional information from the provider of the service or from a third
It does not include a claim from a provider who is under investigation
for fraud or abuse, or a claim under review for medical necessity
90 percent of all clean claims must be paid within 30 days of the
date of receipt
99 percent of all clean claims must be paid within 90 days of the
date of receipt
All other claims must be paid within 12 months of the date of receipt,
42 CFR 447.45
Plus interest if late
HB 5
2013 Session
Made the Department of Insurance (DOI) the enforcer of
the prompt pay laws related to MCOs
Any provider to be able to file a complaint with the DOI
What Can be Done?
Wait for Governor Beshear’s Plan to complete
Negotiate your contracts to address these issues
File a complaint with the Department of Insurance
File an appeal
Collect evidence for a lawsuit
Governor Beshear’s Plan
Prompt pay disputes to be reviewed by Ky. Dept. of Insurance
all responsibility for governmental review of provider complaints relating to
prompt payment of medical claims has moved from DMS to DOI
MCOs to meet with every hospital in state to reconcile accounts
Each of the three statewide MCOs – Wellcare, Coventry, and Kentucky Spirit –
has agreed to meet individually with every hospital in Kentucky with which they
contract to review and reconcile all outstanding accounts. This effort will begin
immediately and continue until every hospital’s accounts receivable has been
reconciled. All MCOs have also agreed to meet with any other provider upon
Targeted audit of each statewide MCO by Ky. Dept. of Insurance
the audits will seek out whether systemic changes are needed to address areas
such as claim or complaint handling, prior authorization practices, or emergency
medical service payments. MCOs will pay for the examinations, and reports are
expected to be complete no later than August 15.
Education forums on best practices/ER Improvements
Face to face meetings between the DOI, providers and the MCOs
File a Complaint with the DOI
File a Complaint with the DOI
Contract Strategies
More Leverage Than You Think
MCO Contracts with States
Requires MCOs to pay “90%” or “no less than 90%” of Medicaid rates
for OON services (Emergency – 100%)
State strategy to force providers into contracts, but gives MCOs unfair
Worse, KY Spirit ultimately reduced OON payments to 65% in
December 2012; state has not intervened
March 2013 – Judge Forester ruled that the contract term between
State and Coventry related to OON payment was not binding on
Coventry owes ARH its “reasonable value of services”
quantum meruit
Appalachian Regional Healthcare, et al. v. Coventry Health and Life
Insurance Company, No. 5:12-CV-114-KSF, U.S. District Ct., Eastern
District of Kentucky (3/28/13).
What is “Reasonable Value?”
TBD in a future hearing
Could be
Commercial rates
Actual cost plus margin
Actual cost
Medicaid rates
Something else
Possible suit if you have been OON
Beware Accord and Satisfaction
or the remittance advice that purports to settle as payment in full
Other Contract Issues
Prior Authorization
But authorization services only available M-F during normal business hours
Consider a provision where authorization is automatic if provider does not hear
back from MCO within “X” days
Medical Necessity
Based on whose patient assessment?
consider a provision that it is based upon the treating provider’s assessment
of the patient (or limited to facts known) at the time services were ordered
Do you have to exhaust internal procedures first?
What is the deadline for filing for arbitration? Is it reasonable?
Effect on breach of contract claims
Consider a provision clarifying that any internal grievance process is in addition
to any other rights provider may have under state or federal law, or the
arbitration provisions in the agreement
Other Contract Issues
Provider Manual and Policies
Agreements frequently refer to other documents, have you read them?
Consider provision that states the agreement rules when there is a
conflict between the two
Opportunity to terminate if provider manual revised and you don’t agree
Prompt Payment
Does the Agreement language match state law requirements?
Consider a provision allowing immediate termination if the MCO doesn’t
pay clean claims in the designated timeframe
Provisions for PCLs, reconciliation
Rate Changes
consider a provision requiring advance notice of rate changes and
requirement that provider agree to rate or is permitted to immediately
terminate if an agreement is not reached
If contract rates tied to Medicaid, include a provision to adjust rates
retroactively if you win Medicaid rate appeal
Other Contract Issues
Provisions Upon Termination
Transition coverage of patients
Provider’s right to notify patients, public
Requirement for Plan to notify Members
Agreement that Termination is cause for Members to move
Consider timing of open enrollment so MCO can’t “bait
and switch”
Ongoing Disputes
Kentucky Spirit’s Exit
Outstanding Amounts Owed By
KY Spirit
$25M Bond
State has counterclaims
Centene, parent corporation, is big enough to satisfy claims
Possible exceptions to general rule against “piercing the corporate
Class Action lawsuit?
Could Cabinet be held liable for a shortfall?
ARH v. Coventry
April 2013
Coventry notifies ARH of termination of LOA
claimed Cabinet created crisis by not enforcing network adequacy
rules with KY Spirit, forcing movement of high-risk Members, and
errors in data book
Coventry VP says it will not contract with ARH or authorize OON
services “until we can get the Commonwealth to do the right thing”
ARH sues Coventry and State
alleging violation of state and federal laws regarding network
adequacy and prompt pay laws; breach of contract; unfair trade
practices and tortious interference; and bad faith
ARH v. Coventry
June 2012
Judge Forester enters injunction against Coventry’s termination
of contract through the end of open enrollment
6th Circuit Court of Appeals dismisses Coventry’s appeal
Court rules for ARH on OON payment rates
KDMC added as a plaintiff
CMS added as a defendant on theory that it violated federal law
in approving the state plan
After paltry initial FOIA response, CMS has now produced 9,000
pages of documents
Inpatient Medicaid Rate Disputes
KRS 205.560(2)
Payments for hospital care, nursing-home care, and drugs or other
medical, ophthalmic, podiatric, and dental supplies shall be on bases
which relate the amount of the payment to the cost of providing the
services or supplies
River Valley Behavioral Health v. Commonwealth of Kentucky
Cabinet for Health and Family Services, et al., No. 09-CI-0797,
Franklin Circuit Ct (5/30/12)
DMS rate methodology in violation of KRS 205.560 where rate did not
“relate” to actual costs
Rates based on previous year’s allowable costs and did not take into
consideration changed circumstances, resulting in an inadequate per
diem rate
This decision follows a similar 2004 case involving Northkey Community
Inpatient Medicaid Rate Disputes
May 31, 2013
Cabinet denied relief to 58 hospitals who had overdue dispute resolution
proceedings dating back to 2007 inpatient rates
Cabinet also filed a lawsuit in Fayette Circuit Court seeking declaration
that it does not have to pay on bases that relate to cost
All 58 hospitals united in filing an appeal from their denials in
Franklin Circuit Court and motion to dismiss or transfer the Fayette
Franklin Circuit Court is wise to the Cabinet’s shenanigans
advised counsel that it will follow the River Valley and Northkey cases
Successful appeals could mean better MCO rates
Carole Christian
Roz Cordini