Docs: Insurers' Payment Delays, Downcoding a 'Revenue Grab'

Ken Terry

October 13, 2021

Despite reporting record profits during the COVID-19 pandemic, major insurance companies are delaying claims payments and making it more difficult for hospitals and physicians to get paid the full amount of claims, observers and physicians say.

Kaiser Health News recently reported that hospitals, in particular, are affected by the slowdown in claims payments from Anthem Blue Cross, the nation's second largest health insurer. The investigative piece did not focus on outpatient or independent practices. Medscape's research shows that the health plans' new policies are also reducing cash flow and raising costs for ambulatory care groups. In addition, we found that other payers besides Anthem have engaged in the same practices.

"What we've seen is that with complex claims, such as those with -25 modifiers, plans are routinely requiring documentation," Jim Donohue, senior manager and associate principal at ECG Management Consultants, told Medscape Medical News. "It's not a denial, it's a request for more information for medical records prior to processing payments. That has the effect of slowing down payments."

This is exactly what one internal medicine group in the Southeast has noticed. The internist who heads the practice, who asked not to be identified, says that about 4-6 months ago, United, Humana, and other payers started to require documentation for prepayment review on a higher percentage of complex claims such as 99214 (established patient), 99204 (new patient), and claims with -25 modifiers. (The latter are appended to evaluation and management [E/M] claims in which patients had comorbidities that were addressed in the same visit as the main complaint.)

"That's really frustrating, because you have to print out or take the record for that particular visit and computer fax it to them," the practice leader notes. "And invariably, they'll say they didn't get a certain percentage of them. It's our fault because they lost the claim."

In the past, he says, health plans would occasionally ask for the note related to a complex visit where they saw issues, and they've always done random postpayment chart audits. But the percentage of prepayment reviews has significantly increased in recent months, he says.

Until a plan does this review, the claim can't be processed because it's not regarded as a clean claim. And this has implications for insurers' compliance with laws that, in most states, require them to pay claims within 30-40 days of submission. (Medicare's limit is 30 days.) According to Donohue, the clock doesn't start ticking on this requirement unless and until a claim is clean. So by requiring documentation on complex claims, the plans can not only justify downcoding a claim, but can also delay payment without triggering state penalties.

Insurer Admits "Challenges" With Claims Processing

VCU Health, a health system affiliated with Virginia Commonwealth University, recently filed a complaint against Anthem with Virginia's insurance commissioner, asking that the Virginia Bureau of Insurance investigate the company's claims processing delays. The complaint claimed Anthem owes VCU more than $385 million, of which $171 million is over 90 days old. Much of that consists of commercial claims, which are subject to the state's 40-day claims payment rule.

VCU cited several problems it said Anthem had created that slowed claims payments:

  • Any claim over a certain dollar limit requires an itemized bill.

  • Anthem requests detailed medical records prior to considering payment of even clean claims.

  • Documents must be uploaded to a web portal that has technical problems, and Anthem has lost some documents as a result.

  • Claims are being incorrectly processed for some professionals, "resulting in multi-million-dollar underpayments of anesthesia, nurse practitioners, pathology and behavioral health providers."

In addition, as the Kaiser Health News article points out, hospitals have blamed the increase in payment delays or denials partly on "pre-authorization hurdles for routine procedures and requirements that doctors themselves — not support staffers — speak to insurance gatekeepers."

In response to an inquiry from Medscape, an Anthem spokesman admitted that some payments to providers have been delayed, partly due to changes in the company's claims processing system. "We recognize there have been some challenges as we work with care providers to update claims processing, and readjust and adapt to a new set of dynamics as we continue to manage the pandemic," said the spokesman.

The Kaiser Health News piece reported that Anthem's CFO had told stock analysts on a conference call that the company had slowed claims payments to build up its financial reserves during the pandemic — a statement that some physicians called "outrageous." But the Anthem spokesman told Medscape the quote was taken out of context and that the CFO was talking not about reserves but about "days in claims payable." The spokesman said, "The payment delays that the article focuses on are not the primary driver or even a material driver of the increase in our overall reserves or DCPs [defined contribution plans] relative to historical levels. In fact, the vast majority of our claims are being processed in a timely manner."

Some Claims Routinely Downcoded

Even if that were the case, it would not explain why some physicians are seeing their higher-cost claims routinely downcoded. Will Sawyer, MD, a family physician in Cincinnati, told Medscape, "Anthem has been downcoding relentlessly since October 2020." More often than not, when his office submits a claim with a 99214 code (office visit, 30-39 minutes, moderate medical decision-making), it's changed to 99213 (office visit, 20-29 minutes, low medical decision-making) before processing, he says.

This has resulted in a significant diminution of his income, he notes. Anthem pays him less than Medicare for E/M visits, and the downcoding reduces his payment from $86 to $68 for a complex visit that may have taken half an hour or more.

In some cases where his office manager has noticed the downcoding, Sawyer says, she has resubmitted the claim with a copy of the encounter form. But Anthem hasn't budged. And the refiling effort takes a toll on his solo practice, which doesn't have sufficient staff, as it is.

Sawyer acknowledges that he has sent in a higher percentage of complex claims in the past year than he did previously. But much of that is the result of two factors beyond his control: First, many patients avoided coming into the office early in the pandemic, and when they returned, their preventive and chronic care needs were greater. Second, he says, "There are many comorbidities and mental health aspects, which exacerbate many issues and become an issue. We're not dealing with engines here; they're human beings. And it takes time."

In response to Sawyer's comments, Anthem said that it uses "analytical tools to review evaluation and management (E/M) codes during the claims adjudication and processing process." Physicians who believe that certain claims should not have been downcoded can dispute these decisions; they must supply a statement explaining why they disagree with the decision along with documentation to support their statement, the company said. Anthem added that it reviews claims to lower costs for its members.

"Revenue-Grab Strategy"

Sawyer believes that what Anthem is doing to him and other physicians reflects its desire to increase profits by netting extra revenue and keeping physicians' money while it delays payments to them — a practice known in the trade as "the float." Moreover, he says, the company depends on many practices not keeping track of their finances during the pandemic.

"When practices are running at warp speed, trying to keep people healthy and getting burned out, they aren't paying as close attention to the details of payment. It's an absolute revenue-grab strategy that's unconscionable," says Sawyer.

The Southeast internist also thinks that insurance companies other than Anthem — including United and Humana — are profiting from the float. Besides delaying his payments with gratuitous demands for documentation, he said, they also downcode many claims, forcing the practice to refile the claims and appeal. That forces the practice to pay overtime or bring on more claims staff, which raises administrative costs.

The plans' strategy, the internist says, is this: "If they downcode millions of claims, a certain number of physicians will give up without appealing, and they'll raise their profits."

A United spokesperson told Medscape, "We pay claims appropriately under members' plans and within the required timeframe." Humana did not respond to Medscape's request for comment at press time.

Challenge to Practice Economics

Insurer policies that delay payments or downcode claims, ECG's Donohue points out, are especially harmful to primary care and other ambulatory practices that have many small-dollar claims.

"That's where it's challenging, because it's not like a $10,000 case where you add $100 to it [to meet records requests]. You're talking about something that's relatively low dollar, where the practice makes a small surplus, and when you add administrative costs, it can change the economics," he says.

While the economic burden on ambulatory care practices may be greater, Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association (MGMA), said that the payment delays and demands for documentation — along with prior authorization — particularly affect inpatient care. The health plans are questioning big-ticket items more than ever, he said, and most of those services occur in hospitals.

However, the greater level of insurer scrutiny also affects physicians who treat patients in the hospital, including surgeons and emergency department physicians who contract with the facilities, he adds.

Gilberg views the current situation as an exacerbation of the health plan policies that physicians have long struggled with. "It's not new to have insurers play the float and not pay claims on time. Unfortunately, this is something that medical practices are used to."

Ken Terry is a healthcare journalist and author. His latest book is "Physician-Led Healthcare Reform: A New Approach to Medicare for All."

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