Surviving the Veto: TMA Offers Advice on Getting Paid Without HB 1862

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Medical Economics Feature -- September 2001  

By Walt Borges
Associate Editor

With the prompt pay provisions of House Bill 1862 lying in the governor's trash pile, physicians may find that operating a practice in Texas resembles a weird game of "Survivor," with insurers using slow-pay, no-pay practices to "vote" physicians off the island of sound finances.

Gov. Rick Perry promised a fix when he vetoed the bill and ordered Texas Insurance Commissioner José Montemayor to "be more aggressive in assisting physicians and health care providers in claims disputes." The Texas Department of Insurance (TDI) responded on July 24, issuing several proposed rules that would ease, but not eliminate, the physician's burden to prove clean claims.

Among the proposed rules are changes that prohibit insurers from circumventing state law by contract, limit information required by insurers to data contained in a patient's medical file, and penalize insurers who "lose" claim forms sent through the mail.

"We hope that the plans will seek to comply, although their recalcitrance in the past makes us somewhat cautious," Texas Medical Association President Tom B. Hancher, MD, said in a statement about the proposed rules.

TDI is accepting comments on the rules until Sept. 4, and agency officials say the rules could be adopted as early as the next day.

To be considered, written comments on the proposal must be submitted to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, TDI, PO Box 149104, Austin, TX 78714-9104. An additional copy of the comments must be submitted simultaneously to Pat Brewer, HMO Project Director, Mail Code 103-6A, TDI, PO Box 149104, Austin, TX 78714-9104.

Staying Solvent  

What can physicians do to survive in the claims-processing wilderness? TMA physicians and the TMA Health Care Financing Department assembled some tips and tools to aid doctors in the prompt pay arena as part of its "Clean Claim Hall of Shame" workshops in July and August.

"TMA put together the workshops to help physicians and their staff understand the best way to ensure prompt payment from insurers," said Robert Gunby, MD, chair of the TMA Council on Socioeconomics. "TMA also offers forms, checklists, and other tools that allow doctors and their staff to request information from insurers, evaluate proposed contracts, file claims, and appeal insurer decisions.

"It's important for physicians to know that TMA continues to go to bat for them and fight for them in the meetings that we have with the carriers," Dr. Gunby added. 

The following pearls of wisdom are drawn from those workshops.



1.  A clean claim is a readable claim.  

Every time a physician files an inaccurate, incomplete, or illegible claim form, prompt payment of the claim is doomed. At the very best, processing the claim will be delayed. At worst, payment will be denied.

Physicians and their insurance claims staff members must assume the lead in making sure claims filed on paper will not be rejected because of physical flaws. TMA Health Care Financing Director Teresa B. Devine recommends using original claim forms printed with red drop-out ink (ink that will not be picked up by claims-processing scanners) to file paper claims.

In the wake of fines announced Aug. 1 by TDI against 17 insurers for prompt pay violations, Ms. Devine recommends strongly that physicians file claims that meet all requirements of the insurer. If TDI is signaling that regulators will not tolerate clean claim strategies adopted by insurers, the insurers are likely to be less tolerant of errors made in filling out and filing the forms, Ms. Devine predicts.

TMA distributes a sample of the Health Care Financing Administration Form 1500 -- the standard form -- with highlighting in the required and conditional fields. Instructions for and explanations of each field are printed on the back of the sample forms, which are available from TMA for use in dealing with group health plans or Medicare.

Some other tips for a readable form: Ditch the paper clips, post-it notes, and margin notes, and don't highlight portions of the claim. If possible, don't file a handwritten claim; if you do, make sure the print is legible. Although the claim form fields are cramped, stay within the borders of each block, use capital letters, and make sure the information prints darkly. You are trying to counter the tendency of the insurance company scanners to malfunction at the slightest irregularity.

If you have to mail the claim, use a flat envelope to avoid folding it. Folds don't do well in scanners.

If you are thinking that filing by electronic means will reduce the problems, you're right. But other steps must be taken to ensure that the claim is processed correctly. Make sure your claims-filing software transmits the HCFA Form 1500 correctly.

Don't assume that your software is consistent with the Texas clean claim rules. Check it out with your software vendor. Most importantly, keep a file of all transmission reports and verifications -- just in case a claim gets lost. You also may need to track claims that are processed through a clearinghouse.

2.  File claims, and follow up on time.  

The first commandment of prompt payment is to know the deadlines and meet them. Each health insurer and each contract has a different deadline, and the physician needs to know how long after treatment the window remains open for filing a claim. Within 45 days of the insurer's receipt date, the insurer should send a payment, a written denial, or a notice asking for additional information. If the insurer hasn't responded, then it's time for the practice's claims administrator to contact the insurer for an explanation.

3.  Don't resubmit claims without trying to figure out what went wrong.  

Submitting duplicate claims is costly and can be considered abusive. If your claim is lost, make a follow-up phone call to check its status. If you filed electronically, make sure the summary report doesn't indicate that the claim was rejected at the time of transmission.

Ms. Devine strongly recommends that all claims be filed electronically and that all claims reported lost be resubmitted electronically.

Some practices submit and resubmit claims by certified mail. In addition to the downside of the cost of each mailing, there is a major loophole as well. Sending certified mail certifies the mailing of a package, but it indicates nothing about the contents of the packet. Electronic filing, on the other hand, confirms the receipt or rejection of each individual claim within a submission, Ms. Devine points out.

Sometimes an insurer may inform a doctor that a claim has been lost after the filing deadline. A number of legal decisions support the concept that claims that can be proved to have been mailed must be assumed to have been delivered, but Ms. Devine says some physicians who have argued this approach have failed to persuade insurers.

4.  Use template letters for your appeals.  

TMA has developed a series of template letters to help physicians appeal denials or delays of claims payment. The letters state the legal basis for the appeal and the consequences of and penalties for failure to pay. The form letters are designed to help save your staff the time and effort necessary to draft individual letters for each appeal.

5.  Use TMA tools.  

TMA offers a number of tools to help physicians with claims problems. In addition to the color-coded HCFA Form 1500 and the templates for appeal letters, TMA has developed a managed care contract review checklist, letter templates for requesting insurer utilization review and claims-processing policies, and an evaluation and management coding tool. These electronic tools are online at Click on the doctor's bag at the bottom of the TMA home page.

6.  Know the law.  

Changes in prompt pay laws directly affect your practice, so you should keep up with the changes. TMA's lobbying efforts resulted in the passage of House Bill 610 in 1999, which established the initial framework of the state's prompt pay laws. But HB 610 and subsequent rules contained glaring loopholes that allowed insurers to change the definition of a clean claim by contract. The ill-fated HB 1862 addressed that problem; now it's up to TDI.

Physicians also should be aware of judicial decisions that alter the interpretation of prompt pay laws and rules regarding claims processing.

Doctors also should know that HB 610's payment provisions don't cover claims submitted to Medicare, Medicaid, workers' compensation insurers, TriCare, school health plans, or self-funded employer health plans set up under the Employee Retirement Income Security Act (ERISA). Indemnity policies are covered but are subject to other state laws governing payments.

7.  Review your contracts with health insurers.  

When a physician signs a bad contract, trouble lurks ahead. But what do you look for?

First, don't accept contracts that include policies and procedures that may be "incorporated by reference," unless you first obtain those policies and procedures in writing from the insurer. When disputes arise, both you and the insurer will at least be talking about the same contract and policy language.

Second, Ms. Devine recommends that physicians get a copy of the fee schedule for at least the top 25 current procedural terminology (CPT) codes for which they bill. Many physicians never see the fee schedule before signing a contract. Insurers resist providing the constantly changing schedules or even specifying which of many variations is in effect.

Third, request copies of utilization review and claims-processing policies and procedures from each insurer. TMA has template letters that you can use. TMA leaders and lobbyists continue to urge TDI and insurers to recognize that fee schedules and utilization review edits must be disclosed and updated to give physicians full knowledge about the contracts they are signing. Such disclosures will make auditing insurer payments possible. At present, TDI continues to resist that interpretation of the Insurance Code and does not require specific information to be made available.

Fourth, compare your contract with the American Medical Association's model managed care contract for alternative contract language.

8.  Don't agree to arbitration that limits your rights.  

Arbitration agreements in contracts can limit your right to go to court or contact regulatory agencies, your own attorney, or professional associations. Ask for details of the arbitration structure, and don't sign contracts that limit discovery of evidence or limit damages that the managed care organization may owe. (See " In a Bind .")

9.  Evaluate whether the insurer is necessary for your practice.  

Physicians should evaluate insurers critically to make sure that continued participation in a plan is not going to be a fatal economic drag on the practice. Monitoring factors such as average claims turnaround time, percentage of denied claims, percentage of appeals required, fees paid versus fees billed, and the aging of accounts receivable will provide valuable clues as to how well the insurer is performing.

Dropping an insurer may not be an option if that insurer accounts for more than 20 percent of a practice's revenues. Ms. Devine says the "20 percent rule" should trigger consideration of whether the practice can afford to lose or terminate the contract. If the revenue share is large because the physician or practice is the major contractor for an insurer in a community, then the physician may actually gain some leverage in negotiating contract terms.

10.  Complain effectively.  

TDI has a complaints process and a recently established ombudsman to handle the burgeoning load of physician complaints. Complaints about health maintenance organizations, preferred provider organizations, and traditional indemnity plans fall under its jurisdiction. An online complaint form can be found at mpform/prcompform.html . The complaint can be filed online; however, supporting documents must be faxed or mailed to TDI.

The TDI ombudsman is Audrey Selden, who can be reached at (512) 463-6169 or toll-free at (800) 578-4677.

Complaints regarding self-funded ERISA-type policies should be sent to the U.S. Department of Labor, Division of Technical Assistance and Inquiries, 200 Constitution Ave. N.W., Room N-5619, Washington, D.C. 20210. The telephone number is (202) 219-8776.

TMA keeps a  hassle factor log  to identify trends and generate topics for discussion when TMA leaders and staff meet with insurance carriers, insurance regulators, and legislators.



TMA Advantage: Major TMA Tools and Resources on Prompt Payment

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