Thoughts on the American Association of Preferred Provider Organizations Pacific Regional Chapter 2009 Educational Forum
by Ron E. Peck, Esq. of The Phia Group, LLC
Three days have passed since I was soaking up the Arizona sun in lovely Tucson. The only thing more interesting than the blue skies, mountainous terrain, and dry heat was the discussion taking place in the Hilton “El Conquistador” resort’s “Coronado” conference room. In that room, an esteemed panel took it upon themselves to expose the conflict that has festered in darkness, existing between medical service providers, health insurance carriers, third party administrators, benefit plans, and PPO networks.
John Rivers, CEO and President of the Arizona Hospital Association spoke for the physicians and hospitals. Todd Archer, President of Mutual Assurance Administrators and HCAA member provided the TPA perspective. Benton Davis, Regional Vice-President of United Health Care, offered a view from the fully funded insurance carrier’s world. Finally, Adam Russo was more than happy to address the conflicts between providers, administrators, and plans, when PPO payment instructions conflict with the terms of the applicable plan documents.
John got the ball rolling by explaining that, in the past, providers were more concerned with large insurance carriers avoiding bills by claiming the submission was never received. This conflict was not particularly sophisticated; it was a basic “he said / she said” dispute. The provider would claim the bill was sent; the carrier would advise it hadn’t been submitted. Unlike this simple clash of yore, today’s conflicts are much more sophisticated.
A big problem then arises from the complete lack of innovation on the part of the billing entity, and the lack of incentive to be innovative. Why should providers develop new technologies and procedures to properly bill various entities, when they can simply raise rates and demand payment outside the terms of the applicable document, by enforcing a PPO agreement they feel “trumps” the plan or policy?
These days, every payer implements unique rules and providers are hard pressed to understand them all. As far as they are concerned, when a hospital or physician provides a service, they expect to be paid at the rate they arranged ahead of time. The purpose of PPO agreements, as far as they are concerned, is to simplify the process and ensure they get paid what they think they deserve. Getting what they deserve, however, is easier said than done when large carriers and Medicare pay bargain rates. To ensure the bottom line closes in the black, they will manipulate their numbers to ensure they are compensated – somehow, by someone.
In this, size matters. The bigger your pool of patients, the more negotiation power you have, and the burden is shifted to the little guys.
Furthermore, as far as providers are concerned, a convenient and familiar billing process is as important to providers as the amount they are paid. In fact, some doctors would rather there be a single payer nationwide; even if they are paid less for their services, they need only concern themselves with a single billing process. The result is that many providers actually prefer large insurers despite the lower rates involved.
This is why they hate the TPA, self-funded benefit plan, stop-loss carrier, PPO network confusion. They truly don’t have a grasp on (1) what is covered, and (2) how much is available. When providers and PPOs refer to a TPA as a payer, those of us in the industry recoil – we know that TPAs process claims using the sponsor’s money, and thus, the sponsor is the payer. Indeed, we’re confident they are referring to TPAs in such a manner with malicious intent. The truth is, many simply don’t understand how the relationship is structured. The network is dealing with the TPA, not the benefit plan sponsor; they want someone to be responsible for seeing their claims paid, and so they target the party seated in front of them – the TPA.
The bottom line is that the sheer number of players involved is driving providers mad, and they will not accept whatever terms we slide before them, because to do so is to risk payment. There are not enough billing staffers employed, and the hassle factor is quickly becoming a bigger issue than profit margins.
Thus, as far as they are concerned, the issue orbits around who pays and how; not how much.
Todd Archer picked up the ball where John left off. Todd explained that TPAs are like quarterbacks. Usually they don’t call the plays; they are bound by the playbook (aka the plan document). Sometimes, they need to improvise, but always they represent the team’s interests as they manage all the other players on the field. And, like a quarterback, if anything goes wrong, they are the ones that get sacked, and find themselves on their butts.
TPAs are blamed by each party when another party slows the process. They are at the mercy of the billing entities, paying entities, and administrative red-tape strung between them. Meanwhile, each party thinks the TPA has far more power to direct the direction of proceedings than it actually does posses.
For instance, plan sponsors think they are immune to regulations that affect insurance policies. This is not always true. On the other side, providers think benefit plans must cover all services insurance carriers are responsible for, per State regulations. Likewise, not always true. The TPA, more often than not, is stuck in the middle.
TPAs need to focus on getting claims paid timely, and correctly. Unfortunately, these two tasks almost always conflict. While it is true that the plan sponsors have a right to dictate what is covered, how much is available, and how it is paid, TPAs must also appease brokers by providing competitive network rates. Again, they face two tasks that contradict.
Finally, TPAs need to deal with the provider lack of technology mentioned above. When they are receiving paper bills, or providers are misinformed as to when complete, adequate claims have been received, delays occur.
TPAs are also concerned by the advent of things like never events and fraud. As far as they are concerned, discounts are supposed to equate to a payment less than what they would pay without a discount offer. TPAs and their vendors have identified the tricks implemented by providers, to inflate charges, and unbundle these inflations. The issue is then, do providers have a right to demand the PPO rate, or the amount the Plan – and its TPA – feel is available per the plan document?
Add to this the fact that stop-loss carriers will not reimburse a plan if that plan has failed to examine the provider charges with a fine tooth comb (woe be the plan, and its TPA, that simply pays what the PPO charges), and you see why Plans are concerned and defensive.
Benton Davis then spoke, and explained that even large carriers have substantial self funded interests. He feels that there is not enough cooperation, given that all of the parties involved will bear the costs of these inefficiencies. If a plan pays the PPO rate, which may exceed the amount actually payable, that plan will go fully funded, lean on Medicare, or simply dissolve. The result of that event is future payments to the provider decrease substantially, or disappear entirely.
The key is to simplify how plans cover charges, and make more efficient the billing process.
We must, Benton advised, empower physicians to update their practices, but also incentivize them to do so by increasing pricing regulations and transparency – thus creating competition.
As for the Plans, there are too many variations in the standard of care, usual and customariness, etc.
By clarifying what is covered, and how much is available, ahead of time, providers have a goal – to reduce costs so that the amount available will be enough to keep the provider’s enterprise profitable.
Even Medicare needs to get in line, and aid in the pricing stability.
The key? Education, competition, uniformity, technology – for providers, patients, payers and administrators.
Adam closed the game by discussing the conflicts between PPO agreements, and the plans that dictate how (and how much) administrators can pay.
When a PPO agreement calls the TPA “payer” and states that the TPA is the plan fiduciary, with authority to determine what the plan means, what the plan covers, and what the plan can and cannot do, it exposes serious ignorance. Anyone that has picked up a plan document in their life knows the plan sponsor is the fiduciary, has the final say, and those powers (listed above) belong to it – not the TPA. Yet, based on this misconception, the PPO network agreements go on to state that should a claim go unpaid, the TPA is responsible to resolve the amount due.
Indeed, as Adam eloquently expressed the issue in a nutshell, you simply cannot enforce either the terms of the Plan document or PPO agreement, without violating the other.
The solution, according to Adam, is to educate providers and networks in regards to the relationship between parties, and update PPO agreements to state that the Plan will pay (through the TPA) only the amount allowed in accordance with the Plan. That if providers feel more is due, they will have to balance bill the patient, and deal with the negative publicity. The philosophy that a PPO agreement is a guarantee of payment, entirely separate from the Plan, is wrong and must be changed. Based on ERISA, contract law, and fiduciary duties, Plans cannot be forced to pay more than the Plan document allows, and TPAs cannot be held responsible for that fact.
In conclusion, I feel that each entity has valid concerns. The opinions voiced do not actually conflict, and rather, all point towards the same issues. There is a lack of education, and there is too much confusion arising from infinite levels of variation. Everyone must sacrifice a little, in order to resolve this conflict. PPOs must acknowledge the limitations placed on Plans and TPAs. TPAs must be more efficient and willing to make tough decisions. Plans must be willing to reduce variations and accept a little more uniformity in coverage. Providers must supply adequate information, be more patient, and accept that Plans will only pay what their terms allow. Finally, no one can treat another entity unfairly, and expect to receive anything but contempt as a result. Pricing transparency and uniform billing practices will eliminate the need for plan audits, and second guessing, and ensure consistent, timely payment.
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