Claim Audit Exposes Managed Care Reimbursement Levels

2016 audit of BCBSTX claims shows paid amounts for “emergent” services were in excess of ten times Medicare fees…….

The 2016 Sagebrush audit report of the Edinburg ISD self-funded health & welfare plan is an interesting study of BCBSTX claim processes and reimbursement levels.

Highlights In The Report Include:

  • An analysis of the claims data for the four emergency room provider groups revealed that the individual providers are not in the BCBSTX network. Moreover, per BCBSTX policy, BCBSTX paid the emergency room physicians 100% of their billed charges for claims where BCBSTX considered the diagnosis to be emergent. The paid amounts for “emergent” services were in excess of ten times Medicare fees.
  • BCBSTX did not apply the plan benefits to
    Emergency Room and Outpatient surgical claims as ECISD intended
  • BCBSTX allowed $824,806.08 for these services. If the allowed amount was cut back to a more reasonable fee such as 200% of the Medicare fee schedule, the total allowance would be $190,181. The savings to ECISD for cutting back the prices to 200% of Medicare would be $634,625.08.
  • We used the claims data to identify all outpatient hospital and emergency room claims allowed at 100%, including the four provider groups above. The total allowed is $867,027.71. If the allowed amount was cut back to a more reasonable fee such as 200% of the Medicare fee schedule, the total allowance would be $210,568. The savings to ECISD for cutting back the prices to 200% of Medicare would be $656,459.71
  • Sagebrush identified all professional claims for pathology, radiology, therapy, inpatient care, and emergency room where the allowed amount was great than 200% of Medicare. Sagebrush calculated the excess expense for these claims as Paid minus (Medicare Allowed – Patient Responsibility). The total excess for the combination of BCBSTX payment policy, combined with higher rates for in-demand specialists, is $512, 685.
  • The number of transactions and number of subscribers is consistent from year to year, suggesting that utilization of services is also consistent. However, the price is trending at more than 20%.

Overall Conclusions

Based on the responses provided in the questionnaire, our understanding of BCBSTX operations, and our testing of claims in the statistical claim audit, we conclude that BCBSTX generally has appropriate and adequate systems, guidelines and processes compared to performance guarantees and industry standard.

Sagebrush tested the BCBSTX 2015 network pricing for non-ancillary professionals by comparing the average and median BCBSTX fees to the 2015B Medicare fee schedule for Rest of Texas. In general, these BCBSTX fees appear to be reasonable.

However, based on specific findings in the sampled claims and our analysis of the data, there is room for improvement. BCBSTX’s failure to implement specific ECISD plan provisions over its internal processes designed improve auto-adjudication rates resulted in additional expense to the plan. Specifically and significantly, BCBSTX paid its definition of emergent services at 100% of allowed rather than apply ECISD’s more conservative benefits.

Sagebrush also observed regional economic factors and changes to the local health care delivery system that contributed to the upward medical expense trend. There is additional pressure on the ongoing shortage of providers, resulting from population growth and an increasing number of insureds through the implementation of the ACA.

The provider community has recognized and is responding to the shortage by increasing easy access to care through clinics and freestanding emergency rooms; care is more available through these outlets but more expensive.

The provider shortage also creates a need for contract providers, commuting from other cities and states. These providers are typically out-of-network ancillaries, including pathology, radiology, and emergency room specialties. The contract providers demand higher prices. BCBSTX allows ancillary providers at billed charges if in a network facility as a matter of policy to avoid balance bills to the patient for an ancillary provider that the patient did not select.

In summary, our analysis revealed that BCBSTX performed satisfactorily with the exception of its application of its emergent care policy rather than ECISD’s benefit plan. This mistake contributed to ECISD’s expenses, especially as word spread among employees about the enhanced benefit and access to emergency room services increased locally. However, the price of non-network services, combined with increased numbers and access to non-network providers also played a significant role in ECISD’s rising expenses

For a compete copy of the Sagebrush audit report write to RiskManager@RiskManagers.us

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