Hospitals Call for Medical Billing, Prior Authorization Reform

August 19, 2019 - CMS recently called on industry stakeholders to suggest ways that the agency can reduce administrative burdens, and hospitals did not disappoint.

The federal agency received over 560 comments in response to a formal request of information on its Patients Over Paperwork initiative, which was launched in 2017 to reduce unnecessary burden, increase efficiencies, and improve the beneficiary experience.

To date, CMS has implemented several reforms through the initiative, such as reforming evaluation and management (E/M) coding, simplifying office visit documentation, and reducing the complexity of Medicare’s Quality Payment Program.

But hospitals and other providers say CMS can do more to not only reduce the burden of providing and billing for care, but also their bottom lines.

In its comment letter, the American Hospital Association (AHA) pointed to a recent study that found providers spend nearly $39 billion a year solely on administrative activities related to regulatory compliance.

READ MORE: Exploring the Fundamentals of Medical Billing and Coding

“In addition to the sheer volume, the scope of changes required by new regulations is beginning to outstrip the field’s ability to absorb them,” the hospital association added.

Other hospitals and providers also used the opportunity to criticize the highly regulated industry.

Medical billing, claim denials, and audits

Medical billing is a major source of administrative burden for providers. A 2018 study in Health Affairs showed that payers challenged up to $54 billion in claims in 2015, and federal healthcare plans (i.e., Medicaid and Medicare) were some of the more complex programs for billing.

Hospitals are looking for relief from complex medical billing practices, the comment letters showed.

The AHA made several suggestions for reducing the burden of medical billing, including:

• Not activating edits for Hospital Outpatient Prospective Payment System (OPPS) providers with multiple service locations
• Rescinding the “JW modifier” for certain drug claims
• Minimizing or eliminating the use of temporary Healthcare Procedure Coding System (HCPCS) level II codes
• Aligning billing requirements with Current Procedural Terminology (CPT) codes to ensure the exact same national CPT code is billed for the same service regardless of payer
• Proactively identifying codes for complex new technologies
• Eliminating the 96-Hour Rule for critical access hospitals

READ MORE: Medical Billing, Patient Access Top Revenue Cycle Risks of 2019

But the AHA also urged CMS to revise Recovery Audit Contractor (RAC) contracts to reduce the burden of claim denials and appeals.

“Medicare RACs are paid a contingency fee that financially rewards them for denying payments to hospitals, even when their denials are found to be in error. This has led to inappropriately high-denials rates, with many reversals in the hospitals’ favor after an exhaustive and costly appeals process,” the hospital association explained.

Therefore, the AHA advised CMS to incorporate a financial penalty for poor performance by RACs. RACs should be subject to the penalty if they incur high Administrative Law Judge appeal overturn rates, the association suggested.

Additionally, the AHA called out claim denials stemming from Office of the Inspector General (OIG) audit protocols. Inpatient rehabilitation facilities and other providers are subject to OIG audits, which the AHA argued are “inaccurate and unreliable.”

“Collectively, OIG’s unreliable accuracy, overstated error rates, and aggressive extrapolation of findings appears to be a great over-reach,” the association wrote. “They highlight systemic problems and the need to improve auditor education on key payment and coverage policies, as well as a review of auditor protocols. Such improvements would eliminate for both providers and HHS the unnecessary and costly burden associated with adjudicating appeals of erroneous denials.”

READ MORE: How Advocate Aurora Health Streamlined Prior Authorizations

CMS should cease OIG audits until officials can review the agency’s protocols and reform them to lower the occurrence of erroneous claim denials.

CMS should also increase oversight of health plan performance, especially in the Medicare Advantage space, to take action against plans that have high rates of payment delays and claim denials, the New Jersey Hospital Association said in its comments.

Requiring Medicare Advantage plans to follow the same Two-Midnight Rule as Medicare fee-for-service would also significantly reduce compliance and administrative burdens, the South Carolina Hospital Association added in its letter to CMS.

“One set of rules is much easier to teach our physicians rather than multiple rules depending on which plan is the payer. You cannot expect a physician at the bedside to be able to keep up with the myriad of payment policies, but we can teach one set of rules for any Medicare Payer,” the association highlighted.

Prior authorizations

Health plans use prior authorizations to ensure appropriate and necessary care for beneficiaries. However, in their comment letters, the Healthcare Business Management Association (HBMA) called the utilization management mechanism a “time-intensive and burdensome practice” and the American Academy of Ophthalmology called it “the most burdensome requirement in Medicare.”

The majority of providers in a recent American Medical Association (AMA) survey said they wait at least one business day to receive a prior authorization decision from their plans. The survey also showed that 28 percent of physicians reported a serious adverse event because of the prior authorization process.

“Prior authorization is a cumbersome process that requires physicians to obtain pre-approval for medical treatments or tests before rendering care to their patients. The process for obtaining this approval is burdensome and costly to physician practices, requiring physicians and their staff to spend an enormous amount of time each week negotiating with insurance companies. As a result, patients are now experiencing significant barriers to medically necessary care, even for treatments and tests that are eventually routinely approved,” the American Association of Neurological Surgeons stated in their comments.

Specifically, hospitals and other providers called for prior authorization reform for Medicare Advantage.

“CMS is moving towards new program integrity efforts that seek to reduce provider burden,” HBMA advised. “Targeted Probe and Educate (TPE) is a perfect example. We believe CMS and MA plans should only require outlier billers receive prior authorization. Programs like TPE and comparative billing reports (CBR) allow CMS to identify providers who are most likely to be improperly billing Medicare. CMS and MA plans can require those providers to receive prior authorization while sparing compliant providers from this added burden.”

America’s Health Insurance Plans (AHIP) was defensive of the utilization management strategy, saying less than 15 percent of covered services, procedures, and treatments required prior authorization.

“AHIP and our members have worked hard to convey the benefits of medical management and prior authorization to providers, patients, policymakers, and others. Its value has been recognized not just in the private sector, but by public programs as well, with both Medicaid and Medicare relying on medical management to improve outcomes and value,” the health plan advocate commented.

However, AHIP did suggest that greater automation would reduce the unnecessary burdens of prior authorizations, which was a view shared by the AHA.

The AHA called for CMS to develop a standardized method for providers to submit and receive prior authorization requests.

“The AHA has worked with both provider and health plan representatives to identify ways to streamline and improve prior authorization processes. One particular area of agreement is the advancement of electronic tools and standards to ease transmission of prior authorization requests and responses,” the hospital association explained.