There is significant interest in Medicare Plus repricing. Though this idea has been floating around the market for some time, it only now appears to be gaining more mainstream attention.
Medicare Plus Repricing –
Not for the Faint of Heart
MyHealthGuide Source: Corte Iarossi, The Self-Insurer, 12/2012, The Self-Insurer © Self-Insurers’ Publishing Corp., www.SIIA.org
There is significant interest in Medicare Plus repricing. Though this idea has been floating around the market for some time, it only now appears to be gaining more mainstream attention. In general, the concept of Medicare Plus repricing is to use Medicare allowable PLuS some factor to pay providers for services rendered in lieu of a primary PPO network, or as an alternative for repricing out-of-network medical bills.
The upside of Medicare plus repricing Significant savings. The government has already done the hard work for us by creating a pricing scheme that drives down the cost of care for the majority of eligible services. And most providers have accepted this reimbursement model as the price for treating Medicare patients, which as we know, is a growing segment of our population.
Today, PPOs are the standard for generating discounts for health plans. Unfortunately, we also know that the savings achieved through PPOs can vary greatly. Additionally, just because the PPO has a significant discount off billed charges, does not mean that the discounted fee is reasonable. We have all seen provider charges increase over time to offset the discounts being provided. The value of Medicare Plus is that it focuses on a price, rather than a discount percentage. This makes it a question of whether the cost is reasonable and acceptable, without focusing on the discount percentage. What some employers have done is replace the primary PPO using a multiple of the Medicare Allowable (for example, 150% of Medicare) as the payment for services. The thought is that the savings will be materially greater than that of the typical PPO, but the payment will be higher than what Medicare pays the provider; a Win- in for everyone, right? And when there is no Medicare allowable for covered services (e.g. OB services, pediatric care, certain injectable medications, etc.), then another pricing solution will be used, including but not limited to, rBrvS or a percentage of uCr.
So, if this is the answer to our health plan cost woes, why isn’t everyone jumping on board?
It’s not for the Faint of heart In other words, as an employer, to make this program successful you will need to stand firm against push back from providers, and weather concerns from employees.
Listed below are several key considerations in determining if Medicare Plus repricing is a good alternative to primary PPOs for your group (or your Clients).
- Plan Documents. One of the CRITICAL issues is insuring that your Plan documents effectively support the application of the Medicare Plus repricing. In all likelihood, you will need to have the documents rewritten. We recommend using a firm that has experience and success in crafting the right language so that the Plan is protected against provider push back. As part of the process, we recommend you place supporting language on the ID cards so that providers are notified in advance that some application of Medicare fees will occur.
- Employee Education.Just as critical as having the correct Plan documents, is insuring that the employees understand the program, including providing them with responses to providers who may try to put the patient in the middle of the reimbursement discussion. This may include threats to balance bill or even start the collection process. If the employee/patient doesn’t understand the objective of the program AND/Or does not have guidance on how to respond to the providers, including directing them to a designee to address the issues, you will quickly lose the support of the employees and your leverage in managing the payments to the providers.
- Prospective Provider Interaction.Another tactic that may smooth the transition to Medicare Plus repricing is to proactively contact providers. The objective is to make them aware of the program, and to create incentives for them to accept the payment. This could include soft steerage, advance or prompt payment, and/or elimination of deductibles and coinsurance, just to name a few. This approach can typically be more effective when the employee population is centrally located, giving you an opportunity to identify highly utilized providers. For populations that are geographically dispersed with no significant penetration in the provider market, this may be more challenging.
- EOB Supporting Language. It may seem intuitive, but it is worth mentioning that the EOB language accompanying the payment should reflect similar language used on the ID card to explain the program. The objective is to present to the provider a consistent message in as thorough a way as possible.
- Patient Support & Advocacy. Providing the employee/patient information to help respond to the provider’s inquiry is only part of the equation. You may also want to provide a service that engages the providers directly when they appear unwilling to accept the payment, or have specific questions or issues that can’t be or shouldn’t be addressed by the employee/patient. By providing this service you can help keep the employee from being placed in an adversarial position with the provider, and likely have more success in resolving the provider’s reimbursement issues favorably.
- Legal Intervention. Though the majority of provider inquiries will typically be addressed through open communication, there is the chance that a disgruntled provider may take a more aggressive position, potentially requiring legal support. The program should include a provision for legal intervention on behalf of the employee, since the Plan language should effectively limit any action against the Plan. however, please note that should the provider and/or patient take legal action against the Plan, the vendor will be required to disengage with the patient and support the Plan.
- Determining the Medicare Payment Factor. In part this may be a function of the market. If there are other Medicare Plus plans in place, this may assist in determining the factor of Medicare that providers have been willing to accept. If there is no such experience, and there is a strong BCBS or carrier presence, you may be able to gain anecdotal information on how their fees compare to Medicare. We have seen Plans set their reimbursement ranging from 125% to 200% of Medicare. This will be an important consideration in making the program palatable to providers.
- Repricing Non-Medicare Covered Services. unfortunately, not all Plan covered services will be included under Medicare. Therefore, you will need to make sure you have a methodology to reprice covered non-Medicare services, and which is also supported by the Plan language. having a program to address these costs is just as important as repricing Medicare covered services for the success of the program.
- Hold your ground. One of the biggest challenges for the employer will be to stand firm when the provider threatens collections for the patient, or even legal action. But if you’ve done your homework, generated the supporting Plan language, educated your employees, and have a vendor that can intervene and even negotiate with the provider, you should be in a good position to manage the results. The first time that you don’t maintain your stance with a provider, you endanger the effectiveness of the whole program. Once it can be shown that you have conceded (not to be confused with a negotiating with the provider), then your ability to maintain other price determinations can be impacted.
- Avoid Discrimination. Again, this may seem intuitive, but it is important that if the Plan applies Medicare Plus pricing, it needs to do so for all services covered under Medicare. In other words, if the Plan applies Medicare on select services (e.g. dialysis), but not for other services covered under Medicare, it could be argued that the process is discriminatory. This would be a nightmare for the Plan. An alternative is to carve out the select services and treat them s a separate benefit.
- Addressing Severity/Complexity of Care. There have been recent court cases that suggest that applying a fee schedule (uCr or even Medicare) without taking into consideration extenuating circumstances (severity, complications, etc.) may facilitate legal action against the Plan by the provider. It is important that your vendor has the ability to adjust the payment based on variations in complexity or severity.
- Vendor Fee Structure. Since this type of program is so new, the fees vendors charge for Medicare Plus repricing and support services can vary significantly. It can range from a percentage of savings to a flat per claim fee, to a PEPM rate. The fee will typically be a function of the Client’s expectation of service. If all you request is an application of the Medicare or alternative fees without patient or Plan support, a PEPM or per claim fee may be adequate. however, if the repricing entity is providing the full range of services to include patient advocacy, provider communication and legal intervention, a percentage of savings will likely be the pricing methodology used. Because the entity is taking on the potential legal fees associated with managing and defending the repricing, the costs can be extremely variable. A PEPM or per claim fee will typically not provide enough funding for this service.
Medicare plus as an Option for OON Claims
As you might expect, the challenges to using Medicare Plus to reprice claims that fall outside of the primary PPO are fewer. The Plan language still needs to support this type of payment application, but the employer’s responsibility for protecting the patient may be less an issue. Employee education is still critical. As long as the employees understand that if they choose to seek care from a provider not within the primary PPO network (this will typically exclude urgent or emergent care), they are responsible for any balance billing by the provider. That is not to say the employer can’t still engage a service to intervene with the provider on behalf of the employee/patient, but that can also undermine the value of having a primary PPO. It will depend on the objectives of each employer in managing the Plan.
Make an Informed Decision
There appears to be a number of organizations offering a Medicare Plus repricing solution. Some appear to suggest that this is a simple and easy program to implement. unfortunately, as you have seen from the information above, it is a solution that needs to be discussed carefully to determine if it makes sense for your organization or Clients. At this time, we don’t believe it is for every employer, nor every market. We do feel it can have a very significant impact on health plan costs if implemented thoughtfully, and with the right support mechanisms in place.
About the Author
Corte Iarossi is the VP, Sales & Marketing for United Claim Solutions (UCS). He has over 20 years success in the health insurance, managed care and PPO markets. UCS is a Claims Flow Management and Medical Cost Reduction company located in Phoenix, AZ. Corte can be reached at email@example.com. Special Thanks to Ron E. Peck of The Phia Group.