Full Disclosure?

TDI Issues Rules on How Insurers Determine Physician Payments

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Law Feature -- November 2002

By Walt Borges
Associate Editor            

What you don't know can hurt you. Especially when you are a physician and what you don't know is how an insurance company, managed care organization, or third party administrator decided how much to pay you.

The problem is severe, physicians say. In an interactive survey of about 200 physicians attending a panel discussion on prompt pay and managed care at the Texas Medical Association Summit 2002 in September, 52 percent said insurers never provided sufficient information to calculate how much they would be paid. Another 39 percent said the disclosures allowed them to anticipate their reimbursement some of the time. Only 9 percent said the information was sufficient to figure out if they were correctly paid all or most of the time.

That's why TMA pushed hesitant insurance regulators for three years to disclose the fee and claims processing information so doctors will know what they are paid for their services.

TMA backed House Bill 610, prompt pay legislation passed in 1999, but implementation of its disclosure provisions was delayed when the Texas Department of Insurance (TDI) balked, saying it didn't have the authority to compel disclosure. TDI finally began writing disclosure rules this summer, only after Texas Attorney General John Cornyn said in a legal opinion in June that HB 610 did give TDI the necessary authority.

But when TDI released its final rules in late September, physicians wondered how much had been gained from the extended battle. Lingering loopholes and loose language in the rules threaten to diminish doctors' ability to request and obtain fee information.

"It took three years and an attorney general's opinion to force TDI to issue these rules," said TMA President Fred Merian, MD. "The big question now is how the health plans will try to wriggle out of these rules, and how diligently TDI will enforce them."

Details Lacking

What concerns TMA leaders is that TDI chose not to specify in the rules what information is required. Instead, faced with near unanimous opposition to the disclosure rules from health plans and health maintenance organizations (HMOs), TDI did not list the specific fee, bundling and downcoding information necessary for doctors to make those calculations.

For example, health plans may bundle incidental procedures with more complex primary procedures, and pay only for the primary procedure. Without knowing specifically which procedures are considered incidental to which primary procedures, doctors will be unable to calculate whether they have been paid correctly.

Among those opposing the rules when the draft version was made public were the Texas Association of Health Plans, UniCare, Aetna U.S. Healthcare, Scott & White Health Plan, the Texas Association of Preferred Provider Organizations, and the Texas Association of Business. They objected that disclosing their fee schedules and bundling and downcoding edits would enhance billing fraud, add to their administrative expenses, and would be unwieldy.

"Other commenters believe that the proposal will give providers a competitive advantage in health plan negotiations, and will make information widely available that will gradually erode provider discounts," Insurance Commissioner Jose Montemayor noted in the order making the rules final.

TDI rulemaking requires issuance of an initial public draft rule, followed by a comment period. In issuing the final rule, TDI lists the comments it receives and how and why it dealt with each suggestion. 

TMA asked TDI to specify the required information so that there would be no lengthy court battles and negotiations over what information must be disclosed. The association also had problems with TDI's decision to require physicians to ask for the fee and claims processing information in writing.

In a July letter to Commissioner Montemayor, Dr. Merian said a "lack of detail is the most pernicious flaw" of the approach ultimately adopted by TDI.

TMA was joined in supporting modifications to the initial version of the rules by physicians, medical practices, and organizations, including the Texas Hospital Association, the Office of Public Insurance Counsel, United Healthcare of Texas Inc., American National Insurance Co., and several county medical societies.

The rulesallow the information to be sent to physicians by e-mail, facsimile, or paper documents. Because the health plans said it would be expensive to make the information available on paper, TDI is allowing them to place the information on their Internet sites for electronic access.

"With adoption of the rules, they allowed us to file [the information] electronically and they did not require us to attach the information to every copy of the contract, so they have addressed many of our concerns," said Leah Rummel, executive director of the Texas Association of Health Plans.

"Unless we have the code-level edits, we cannot figure out how we were paid," said David Rogers, MD, an Allen gynecologist on TMA's Council on Socioeconomics. "If they won't give us those edits, then they are not giving us the necessary methodology to calculate the reimbursements."

Commissioner Montemayor said the rules are a compromise between insurers on one side and physicians on the other.

Will health plans provide enough specific information? Only time will tell, TMA leaders say, but previous insurer resistance to providing fee and edit information makes physicians skeptical that insurers will provide the information without fights over what level of disclosure is sufficient.

Mark Lane, a spokesperson for Blue Cross Blue Shield of Texas said the company has given physicians samples of maximum allowable fees in the past. Its goal is to respond to requests within 21 days, although a large number of requests sometimes delays the disclosure, he said.

Piercing the Veil of Copyright

TMA's other major objection is that TDI does not require managed care organizations to reveal the details of licensed or copyrighted claims processing programs, allowing the health insurers to release summaries of the edits and fee schedules instead.

The Federal Copyright Act protects the original expression or form of a product or communication, but specifically excludes protecting a process. (Such protection for processes are available through a patent.) Given that, Dr. Merian questioned the legal basis for TDI's determination that copyrighted products should not be disclosed in detail.

Attached to the TMA letter to TDI was an example of disclosure from a health plan relating to the insurer's use of ClaimCheck, the most common claims processing program.

The description of the ClaimCheck edits does not provide sufficient information to calculate reimbursement, Dr. Merian pointed out.

For example, the summary indicates that a primary edit is "Procedure Unbundling," which "occurs when two or more CPT procedures are used to describe the procedure performed when a single, more comprehensive procedure code exists that accurately describes the entire procedure." The summary is of little help to a physician, however. Without knowing which specific procedures on a claim have been unbundled, physicians will be unable to determine if they have been paid correctly.

For licensed products, TMA argued that disclosure of detailed claims processing information should be sufficient to determine reimbursement, and that any exemption for disclosure should be limited to one year to allow health plans using licensed products to comply with the HB 610 policy favoring disclosure of reimbursement information.

TDI's final rules, however, rejected the one-year exclusion limit, but explained that, "a carrier can reveal the function any computer program is intended to perform without violating a licensing agreement. Any other conclusion suggests that the carrier is ceding control of the claims payment process to its software vendor, which is neither likely nor acceptable."

However, TDI made it clear it will not referee fights over the sufficiency of information excluded under copyright and licensing: "The rule does not preclude carriers and physicians or providers from engaging in a dialogue concerning the adequacy of any particular piece of information furnished, and the department expects that parties will air and resolve their concerns without the department's involvement."

Dr. Rogers said the potential for conflict is great, "and I think we will see many costly fights over what needs to be disclosed."

Gag rule?

TDI also is limiting the use of the disclosed fee schedules and claims processing edits to bill calculation and practice management. This prevents doctors and other medical professionals from using it to publicize reimbursement problems, file suits based on the information, or lobby legislators for health care reform.

"Some commenters suggest that… physicians and providers should be allowed to disclose information for purposes of legislative or regulatory change, civil actions, or other legal remedies and purposes. Another commenter believes that this subparagraph improperly limits the physician's use of the information to something less than is allowed by law," the TDI order said.

"The department disagrees," it continued. "The commenters' concerns are outside the scope of this rule. If, for example, someone were required to produce this information as a part of a civil action, other consideration, such as the contract between the parties, private confidentiality agreements, contractual or civil penalties, would govern disclosure of this information for purposes other than determining the payment to be made by contract."

TMA leaders and attorneys believe the provision may be too restrictive. While contract provisions may govern disclosure of the information - and TDI suggests that insurers protect their information through contract clauses - to block the use of disclosed information for lobbying purposes may violate the free speech rights guaranteed by the federal and state constitutions.

"I thinks that's a violation of free speech, and I don't know how that can be enforced," Dr. Rogers said. "I don't expect TDI to help us. These disclosure issues ultimately will be addressed in the legislature and the courts. We've got to be prepared for battle on all fronts."

The rules are on the TDI Web site at http://www.tdi.texas.gov/.

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