Where's the Guarantee? Physicians Slow to Take Advantage of Payment Verification

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Medical Economics Feature -- March 2005  

By   Ken Ortolon
Senior Editor  

Texas physicians aren't taking full advantage of the state's powerful new prompt pay law, state insurance officials say, even though rules implementing the 2003 legislation have been in place for 18 months.

A Texas Department of Insurance (TDI) advisory committee says physicians have been slow to use a provision allowing them to seek a guarantee of payment from patients' health plans before providing services. The reason may be that many physicians still are unaware of their rights under the verification process.

But physicians, group practice administrators, and even health plan representatives say the plans themselves are quite confused about how the new process works. And, many physicians complain that the plans have been slow to inform them on how to access the verification systems within their networks.

A Slow Start  

In a September 2004 report to the legislature, TDI's Technical Advisory Committee on Claims Processing said physicians and other health professionals requested 28,269 payment verifications between September 2003 and June 2004 -- the first nine months after rules implementing the prompt pay law (Senate Bill 418) took effect. Of those requests, 16,297 verifications were issued, meaning physicians and others were guaranteed payment. Nearly 12,000 were declined.

Audrey Selden, TDI senior associate commissioner for consumer protection and provider ombudsman, says the agency is disappointed more physicians have not taken advantage of the process. "As a department, we'd like to see more verifications requested and more issued."

TDI rules allow physicians to seek a payment guarantee before providing services by submitting 13 data elements to the health plan. They include the patient's name, plan identification number, birth date, enrollee or subscriber name, patient's relationship to the enrollee or subscriber, presumptive diagnosis or presenting symptoms, a description of proposed procedures or procedure codes, and proposed date of service.

The insurer has five days to respond to the request. In some emergency situations or when a concurrent hospitalization is involved, a response must be issued within 24 hours.

If the plan issues verification, it must pay for the service unless the physician misrepresents or fails to perform the service. An insurer can decline verification for several reasons, however, including policy deductibles, benefit limitations or exclusions, and preexisting conditions.

Just because payment verification is declined, however, does not mean the insurer will refuse to pay if the service is provided and a claim is filed. Teresa Devine, director of the Texas Medical Association Health Care Financing Department and a member of the TDI Technical Advisory Committee, says nearly half of all early declinations resulted from employers' failure to pay their health plan premiums on time. Under state law, employers have a 30-day payment grace period before a policy is canceled.

On the Hook  

Ms. Devine says physicians who use it like the verification provision because it lets them know up front if the health plan will pay or if they should seek payment from the patient. "It allows the physician to have those financial discussions with the patient sooner rather than later," she said. "Once you provide the service and you find out on the back end that the plan is not going to pay, it's much more difficult to get the patient to pay."

Plans don't like it because it puts them "on the hook" for payment with little or no wiggle room, she says. Texas Association of Health Plans (TAHP) representatives have complained that the verification process is expensive, particularly since fewer than 30,000 verifications had been requested, while several million claims were filed during the same period.

Still, TAHP Executive Director Leah Rummel says insurers "are trying to make the process as easy as possible. Right now, we're all in a learning process."

Because the plans are not yet fielding large numbers of verification requests, many are handling the process "manually," she says. Physicians have to telephone their verification requests to an insurer's provider relations office.

Ms. Rummel says many companies are working to establish electronic verification systems.

Verify What?  

County medical society officials and physician practice administrators say insurers have done little to publicize telephone numbers, Web site addresses, or other information necessary to contact staff authorized to receive verification requests. An exception is Blue Cross and Blue Shield of Texas, which published its verification process data in the second quarter 2004 edition of its Blue Review newsletter.

Pam Potter, practice administrator for the eight-physician Bone & Joint Clinic of Houston, says even when she gets someone on the phone, he or she frequently does not know anything about the verification process or does not know whether the plan is subject to the regulations.

State law normally applies only to traditional insurance products where the insurance company is at risk for losses. Health plans fully funded by the employer, and therefore exempt from state regulation under the federal Employee Retirement Income Security Act, are not subject to SB 418.

Another problem is confusion over whether the rule applies to out-of-state insurance plans. Verification is specific to Texas, but many Texas residents are insured by out-of-state companies. Generally, Texas laws and regulations do not apply to health plans that are not licensed by TDI.

Although TDI has received few complaints from physicians about the verification process, the Senate Health and Human Services Committee has heard some. An interim committee on health care information technology urged TDI to create an online repository for carrier verification protocols.

"Currently, the verification process by which providers can receive a guarantee of payment from carriers is not heavily utilized," the committee said. "Broadly speaking, each carrier has a different verification protocol that providers are required to follow when requesting verification. Some stakeholders attribute the low utilization of the verification process to the obscurity and complexity of the miscellaneous verification protocols. It has been suggested that having a single location for all verification phone numbers and protocols would increase utilization."

Ms. Selden says TDI will consider implementing the recommendation.

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail at Ken Ortolon .  


Health Plans Report Verification Information

The Texas Medical Association asked several of the state's largest health plans to submit information on how physicians can access their verification process. At press time, only Blue Cross and Blue Shield of Texas had responded.

Physicians can request verification from Blue Cross and Blue Shield by calling its Customer Service Department at (800) 451-0287 for BlueChoice (PPO/POS) and (877) 299-2377 for HMO Blue Texas. Physicians will receive a response both by fax and mail.

Written requests may be submitted by completing the Request for Verification form available in the "Downloadable Forms Section" of the Blue Cross and Blue Shield Web site at www.bcbstx.com/provider and mailing it to BCBSTX or HMO Blue Texas, Request for Verification, PO Box 833908, Richardson, TX 75083.

Physicians can request verification from PacifiCare by calling (877) 847-2862 or by writing Provider Correspondence, PO Box 400046, San Antonio, TX 78229. A verification or declination may be issued by telephone or in writing. If issued by telephone, a written response will be faxed within three calendar days of providing the verbal response.

The Texas Department of Insurance has posted the information physicians need to use the prompt payment regulations on its Web site at www.tdi.state.tx.us./consumer/doctors.html .

TMA has created demand letters physicians can use to notify insurers that a claim has not been processed within the time allowed by the law. They are available on the TMA Web site at www.texmed.org/pmt/prs/sal.asp.