Claims across physician offices, urgent care centers, and emergency departments have trended towards higher level codes.
Providers are increasingly billing outpatient visits at higher intensity levels which has led to a rise in healthcare spending, according to a report by Kaiser Family Foundation and the Peterson Center on Healthcare's Health System Tracker.
Researchers examined private, large-employer based insurance claims from the Merative MarketScan Commercial Claims and Encounters database from 2004 to 2021 to analyze trends in complexity coding across physician offices, urgent care centers, and emergency departments.
The study found that the share of moderate intensity (level 3) claims across all three sites of care decreased from the majority (60%) in 2004 to less than half (45%) in 2021. Higher intensity level 4 claims, meanwhile, nearly doubled from 19% in 2004 to 37% in 2021. Bills at the highest complexity (level 5) did double from 3% in 2004 to 6% in 2021.
Even for specific diagnoses that are less likely to be worsening over time, the study found claims trended toward higher levels. Urinary tract infections were level 3 claims over half the time (54%) for emergency department visits and 67% for outpatient office visits in 2004. By 2021, level 3 claims accounted for only 31% of emergency department claims and 57% of outpatient office claims. Level 3 claims were the most common for headaches in 2004 in both physician (58%) and emergency departments (41%), but level 4 claims were the majority in both settings by 2021.
The result of outpatient bills trending towards higher levels was 4% higher outpatient evaluation and management spending in both physician offices and emergency departments in 2021, compared to visits being coded at the same levels in 2011.
"Overall, our findings demonstrate that regardless of the driving factors, increasing billing at higher levels for outpatient care has led to substantial increases in outpatient visit spending at the health system level," the researchers wrote. "For consumers who bear the marginal costs of more expensive services—those with co-insurance or deductibles—this trend impacts out-of-pocket costs in addition to overall health system costs."
The report suggest that upcoding isn't all to blame for the trend, which was also highlighted in a recent study published in Health Affairs that found high-intensity billing for treat-and-release emergency department visits had significantly increased over the past 14 years.
However, upcoding is a practice that can be all too common, which is why the Office of Inspector General recently recommended that CMS takes aim at the issue to ensure hospitals bill appropriately moving forward.
A survey finds many will not pay for preventive services if they are no longer covered by health insurers.
Americans won't be quick to reach into their own pockets for preventive care services if courts uphold a ruling that they shouldn't be covered as part of the Affordable Care Act (ACA), according to a survey by Morning Consult.
The business intelligence company polled a sample of 2,199 U.S. adults in January 2023 to gauge the potential ramifications a ruling by a Texas federal judge in September 2022 could have on preventive service utilization.
Judge Reed O'Connor, after previously ruling that the entire ACA was unconstitutional, struck down a key piece of the ACA requiring health insurers to cover 12 preventive services with no cost sharing for members. The ruling on the ACA was ultimately overturned by the Supreme Court, but it could take some time for the recent decision to go through the appeals process and be settled.
If coverage for preventive services are stripped, however, it may result in millions of patients missing out on life-saving care.
The Morning Consult survey found that at least two in five Americans say they are not willing to pay for 11 of the 12 preventive services, with at least half saying they would not pay for services such as tobacco cessation or screenings for HIV, depression, and unhealthy drug use.
Cancer screenings are the preventive service respondents say they would most likely pay out of pocket for, chosen by 46%.
The survey also found that one in three Americans say emergency care is the most important service for insurers to cover. Preventive services were ranked as the most important service for insurers to cover by 23% of respondents, while breastfeeding was chosen as the least important by 35%.
Finally, the survey revealed that half of respondents delayed or skipped care due to cost, with three in 10 saying they did so in the past year. Income was a significant factor, as 32% of respondents living in households making under $50,000 delaying care in the past year, compared to 22% of those who make $100,000 or more.
Adding to patients' healthcare costs by eliminating coverage of preventive services will likely lead to even more patients skipping or delaying necessary care.
American Medical Association Jack Resneck Jr. called the decision by O'Connor "unwise and unthinkable" and strongly stated preventive care requirements must be upheld.
"Providing insurance coverage for drugs that prevent the transmission of infectious disease does not violate anyone’s religious freedom—to the contrary," Resneck said. "This type of preventive care saves lives."
Surveyed providers believe the administrative process imposed by health insurers does more harm than good.
Prior authorization is harming patients and resulting in unnecessary waste of healthcare resources, according to physicians surveyed by the American Medical Association (AMA).
The new poll of 1,001 practicing physicians in December 2022 reveals the ramifications patients and providers have to deal with from health insurers imposing prior authorization practices to control costs.
Nearly nine in 10 respondents (89%) said that the administrative process had a negative impact on patient clinical outcomes, with only 2% answering that it has any positive impact.
Meanwhile, 86% of physicians reported that prior authorization requirements sometimes, often, or always led to higher overall utilization of healthcare resources, as opposed to 12% saying that is the case rarely or never. Specifically, 64% of physicians reported that prior authorization has led to ineffective initial treatments, 62% said it has led to additional office visits, and 46% answered it has led to immediate care and/or emergency room visits.
"Health plans continue to inappropriately impose bureaucratic prior authorization policies that conflict with evidence-based clinical practices, waste vital resources, jeopardize quality care, and harm patients," AMA President Jack Resneck Jr. said in a statement.
"The byzantine system of authorization controls is rife with opportunities for reform and the AMA continues to work with federal and state officials on legislative solutions to reduce waste, improve efficiency, and protect patients from obstacles to medically necessary care."
A third of the surveyed physicians (33%) also said that prior authorization has led to a serious adverse event for a patient in their care, including hospitalization, permanent impairment, or death.
More than nine in 10 respondents (94%) said that prior authorization delayed access to necessary care, while 80% said patients abandoned treatment due to authorization issues with insurers.
Additionally, the survey results illustrate how prior authorization negatively impacts providers. Most physicians (88%) said burdens associated with prior authorization were high or extremely high, and that on average, practices complete 45 prior authorizations per physician per week, equating to almost two business days (14 hours).
Respondents also questioned the clinical validity of prior authorization programs, with 31% saying that prior authorization criteria is rarely or never evidence-based.
At the end of 2022, CMS released a proposed rule which would require payers to implement electronic prior authorization in an effort to streamline the process.
Several medical groups applauded the initiative at the time and have since submitted comments to CMS asking for the regulations to be strengthened further.
One aspect provider groups have focused on is the timeframe for payers to provide prior authorization decisions. In its proposed rule, CMS has given a seven-day timeframe for standard prior authorizations and 72 hours for expedited prior authorizations.
In its submitted comments, AMA urged CMS to require prior authorizations to be processed within 48 hours and expedited prior authorizations within 24 hours.
"We appreciate CMS' acknowledgment that failure to provide timely PA decisions can literally mean life or death for patients, as shown by AMA’s annual PA physician survey," the association wrote.
The Medical Group Management Association (MGMA) agreed with AMA's timeline and asked CMS to also shorten the period to 48 hours for standard requests and 24 hours for urgent requests.
"Although MGMA supports efforts to require these payers to send prior authorization decisions in a timelier manner, we believe the proposed timeframes are unacceptably long and will do little to mitigate the challenges associated with the current wait times," MGMA stated.
The American Hospital Association, meanwhile, recommended that health plans be required to give prior authorization responses within 72 hours for standard, non-urgent services and 24 hours for urgent services.
"As a result of having the clinical information delivered in such an expeditious manner, health plans should have the capability to determine whether the provider has met their established medical necessity threshold in a much timelier manner," AHA said. "Patients should not be forced to wait to receive care for longer than is necessary."
In a letter to CMS, senators call for action to improve patients' ability to access and decipher pricing information.
Shortcomings in the payer price transparency rule have caught the attention of two senators who have asked CMS to close "technical loopholes."
Senators Maggie Hassan (D-N.H.) and Mike Braun (R-Ind.), members of the Senate Health, Education, Labor, and Pensions Committee, penned a letter to CMS highlighting the need for reporting standardization, file size limits, and increased enforcement of health insurers that fail to comply with the price transparency requirements.
"While some insurance companies are complying with CMS' rule, others may be relying on gaps to evade accountability," the senators wrote. "According to reports, insurance companies have provided information in an indecipherable structure, omitted important pricing information, and stuffed the information into files too large for anything but a supercomputer to process."
The letter continued: "As a result, employers and researchers have been unable to use the data to assess the drivers of high health care costs and target solutions."
The senators also previously called out lack of compliance with the hospital price transparency rule, which still has a ways to go to be truly effective since it went into effect on January 1, 2021.
Meanwhile, the payer price transparency rule has been around for less than a year after arriving on the scene July 1, 2022, but it has dwarfed its hospital counterpart when it comes to available data.
Research by Turquoise Health found that payer data accounted for 630 terabytes, which was significantly more than the three terabytes of hospital data.
However, in the same way hospital data has varied wildly in size and reporting, so has payer data—Turquoise Health found payer machine-readable files that varied 50-100 times in size.
To combat that, the senators point to experts offering potential solutions to limit file size, in addition to creating a standardized reporting template and requiring an organizational system and standardized labeling.
Finally, the senators ask for more enforcement of insurers, suggesting a random audit to ensure noncompliant plans follow the law.
A survey finds providers should do more to ensure their patients are satisfied with the billing process.
Patients care about the billing experience—so much so that 56% would switch providers if the experience was poor, according to a study from RevSpring.
The payment solutions company partnered with research firm Keypoint Intelligence for a survey to better understand how the patient experience affects trust, loyalty, and financial outcomes.
Respondents were made up of 1,000 patients who had visited a doctor at least once in the past year, were responsible for paying their own medical bills, and had paid a bill in the past six months.
They were asked if they had encountered a poor billing experience, how likely they would be to seek a new provider as a result. Nearly a third (33%) said they would be somewhat likely, 23% said very likely, 10% said somewhat unlikely, 4% said very unlikely, and 30% were neutral.
Nearly three in four respondents (74%) aged 18 to 26 said they would likely switch providers due to a poor billing experience, while that was the case for 33% of patients aged 65 and above.
Personalization and consistency were regarded as important to the billing and payment experience. Personalization was very important to 42% of respondents and somewhat important to 41%, while consistency was regarded as very important to 59% and somewhat important to 31%.
"We've conducted patient experience surveys every few years since 2016 and it's clear patients have higher standards now, especially when it comes to personalization," said Kristen Jacobsen, vice president of marketing and OmniChannel engagement at RevSpring. "The challenge and opportunity for the industry today is fulfilling those high expectations.
"With combined intelligence, such as demographic and behavioral data, providers can understand patients at scale, not only meeting their preferences to build trust and loyalty but also driving desired actions."
Making bills easily understandable is one primary ways revenue cycle departments can appeal to patients.
A recent survey by revenue cycle firm AKASA revealed that nearly 38% of patients find bills either extremely confusing (19%) or somewhat confusing (19%).
"This makes clear communication around how much patients owe for their care after insurance and their options for payment crucial," Drew Smith, director of revenue cycle at MainStreet Family Care, told HealthLeaders about building patient trust through the billing experience.
Medicare Advantage (MA) plans aren't required by CMS to include indicators in their encounter data, unlike Medicare and Medicaid.
Requiring MA organizations (MAOs) to identify when payment claims are denied would improve oversight of fraud and abuse, according to the Office of Inspector General (OIG).
The HHS watchdog conducted a study to examine whether the lack of an indicator to identify payment denials in MA encounter data makes it harder for proper oversight of MAOs.
While MAOs are not required to include that indicator, CMS' records of services do include denied-claim indicators for Medicare fee-for-service and Medicaid, including Medicaid manage care. The service-level data is used to "detect potentially inappropriate billing patterns and investigate suspected fraud and abuse," OIG said.
Rather than including the indicator, MAOs must submit claim adjustment reason codes when they do not pay the amount billed by the provider. The adjustment codes explain why a claim has had a payment adjustment, such as denials, reductions, or increases in payment.
For the report, OIG analyzed 2019 MA encounter data records to identify which contained payment denials. The organization also interviewed CMS staff, as well as the entities with oversight on MA.
The study revealed that adjustment codes are not enough to identify denied claims in the encounter data because some codes are too vague.
"In addition, oversight entities—including CMS program integrity staff; OIG investigators and analysts; and DOJ health care fraud staff—reported that a denied-claim indicator in the MA encounter data would improve the efficiency, scope, and accuracy of their efforts to combat fraud, waste, and abuse," the report stated.
The absence of an indicator means oversight entities have to make separate requests to MAOs asking them to identify denied claims, which creates burden and adds time.
"The lack of an indicator limits the scope of efforts to determine the full impact of potential fraud activities in MA," the study said.
OIG recommended that CMS require MAOs to provide an indicator on encounter data records to determine when payments have been denied for a service or a claim.
While CMS' MA payment group expressed concern to OIG about requiring MAOs to include an indicator in their encounter records, OIG highlighted that many of the companies covering MA enrollees also have contracts for Medicaid managed care, which is required to include a denied-claim indicator.
CMS "did not concur or nonconcur" with OIG's recommendation.
Both sides have raised concerns to CMS over the ramifications of the Medicare Advantage (MA) advance notice rule.
Payers have unsurprisingly voiced their displeasure with the proposed risk adjustment changes to MA, but providers are also taking issue with the rule's quick coding transition.
The Medical Group Management Association (MGMA) and the American medical Group Association (AMGA) were among the voices from the provider side expressing concern for the MA advance notice rule in comments submitted to CMS.
The rule, which changes MA payment methodologies by updating the risk adjustment model for 2024, expectedly drew the ire of insurers over potential payment cuts.
While providers agree with the rule's purpose to create fair and accurate payments to MA plans, they are concerned with the implementation of the proposed switch in MA diagnosis codes from ICD-9 to ICD-10 in the Hierarchical Condition Categories (HCC) model.
"While MGMA shares concerns about abuse in the MA program, we are concerned that this overhaul of the CMS-HCC model may result in unintended consequences that could impact beneficiary access to care and impede important value-based care initiatives critical to the success of medical group practices," Anders Gilberg, senior vice president of Government Affairs at MGMA, said in a statement.
AMGA echoed these sentiments, saying that the proposed changes should not be implemented until stakeholders can understand the impact on MA plan design and care delivery.
"Modifying the HCC model is not a simple technical update or revision," said AMGA president and CEO Jerry Penso. "It's likely to have significant ramifications, affecting both plans and providers. CMS should recognize that stakeholders can't provide substantive, constructive feedback in such a short timeframe."
For insurers, the attention is on potential pay cuts and the impact that may have on beneficiaries through increased premiums and reduced benefits.
Insurance trade association group AHIP point to a study commissioned by them and conducted by the Wakely Consulting Group, which found that the proposed changes to the MA risk adjustment model would result in an average payment cut to MA plans of 3.7%. On average, the rule would cut payments for dual eligibles by 6.4%.
CMS said it expects plan payments to increase by 1.03%.
"Our most significant concern with the Advance Notice is the flawed revision to the proposed risk model for 2024…. it included an inadequate process for considering such a complex change and a failure to account for the disproportionate and potentially devastating impacts it would have on certain areas and populations, including individuals dually eligible for Medicare and Medicaid," said Matt Eyles, AHIP president and CEO.
Another analysis commissioned by MA advocacy group Better Medicare Alliance (BMA) and conducted by consulting firm Avalere Health found that the rule would cut payments by 2.27%.
"We are especially concerned about proposed changes to the risk model which could negatively impact Medicare beneficiaries, especially those with chronic conditions, those who are low income, and those who are dually eligible for Medicaid. As a result, these changes place at risk the substantial progress made in improving care and outcomes for Medicare beneficiaries," said Mary Beth Donahue, BMA president and CEO.
While insurers and providers have pushed back against the rule, 39 healthcare leaders from public health, public policy, health care executive management, and clinical care voiced their support.
In a letter to CMS, the leaders stated: "These improvements are long overdue and badly needed to assure appropriate financial payments and stewardship for MA funds, fair payments to enable excellent care for sicker patients, sustainability of the overall Medicare program, and security for all beneficiaries."
However, Medicare Advantage (MA) patients experience higher rates of emergency department (ED) direct discharges and observation stays.
MA beneficiaries have a lower risk of hospitalization for ambulatory care sensitive conditions (ACSCs) than traditional Medicare members, according to a study published in JAMA Health Forum.
That tendency may be due to shifting MA patients to other care settings though, with the research also finding that MA beneficiaries are more likely to be directly discharged from the ED or stay for observation.
The study examined 2018 administrative claims and encounter data for patients enrolled in MA and traditional Medicare to compare utilization of hospitalizes, observations, and ED direct discharges with ACSCs.
"Medicare Advantage plans have strong incentives to reduce potentially wasteful health care, including costly acute care visits for ambulatory care−sensitive conditions (ACSCs)," researchers stated.
It's unclear, however, if MA plans lower acute care use compared to traditional Medicare, or if they shift patients to other settings of care.
Based on the study's findings, "apparent gains in lowering rates of potentially avoidable acute care have been associated with shifting inpatient care to settings such as ED direct discharges and observation stays."
MA plans are known to use tools such as prior authorization to treat patients at the lowest cost site of care allowed, the researchers highlighted, pointing to 70% of MA enrollees being in a plan that required prior authorization for inpatient stays in 2018.
A recent report by Kaiser Family Foundation found that more than two million prior authorization requests, accounting for six percent of the 35 million total requests, were denied MA plans in 2021.
Site shifting can save on out-of-pocket costs, but the tradeoff may be in care quality, resulting in MA members incurring higher costs from other care settings.
"Additionally these findings suggest the need for caution in relying on hospitalizations for ACSCs to serve as an indicator of higher-quality care in ambulatory settings," the researchers concluded.
Analysis of hospitals' machine-readable files finds inconsistencies in what and how price information is reported.
Much has been made about the widespread noncompliance to the hospital price transparency rule since it went into effect over two years ago, but the struggle to get hospitals on board is only part of the problem.
The bigger challenge to achieving effective price transparency may be the lack of data standardization and reporting specification, according to a study by Kaiser Family Foundation and the Peterson Center on Healthcare's Health System Tracker.
The analysis revealed shortcomings in price transparency data currently shared by hospitals that makes it difficult for patients to compare prices across hospitals or payers.
Researchers examined price transparency data compiled by Turquoise Health, focusing on machine-readable files and not the shoppable services identified by CMS that can be scheduled by a patient in advance. The study analyzed two payer-specific negotiated prices for two types of care associated with common procedure codes: hip and knee replacement and diagnostic colonoscopy.
Inconsistencies were found in specification of what services prices correspond with, particularly for episodes of care, such as negotiated rates attached to a treatment episode for a hip-knee replacement possibly corresponding to a per diem charge instead of the entire episode.
Data quality also varied significantly, with negotiated rates showing questionably low and high values. Finally, crucial pieces of information were missing, like contracting method and payer class (Medicare, Medicaid, and commercial).
"The issues discussed above result primarily from the way the rule is crafted, particularly from the lack of specificity and uniformity about what should be included with each charge in their machine-readable files and how that information should be laid out," researchers stated. "There are no standards for what needs to be included in the description or whether codes should include commonly used modifiers.
"Although providers are required to include de-identified minimum and maximum negotiated charges, lack of standardization for how these are labeled in the data result in difficult isolation of these values for use in further analysis."
These challenges are not necessarily because many hospitals continue to be noncompliant with the rule, the study highlighted.
A recent report by PatientRightsAdvocate.org showed that 75.5% of hospitals are still not complying with the law, with 5.8% failing to post any standard charges files. However, the report also found a wide variation in data size, further underscoring the need to establish clear standards.
CMS has offered resources to help hospitals comply with the rule, including releasing three sample formats (wide, tall, and plain) for machine-readable files. Those formats are voluntary though, meaning hospitals have no real reason to alter their process until standardization is put in place.
The Peterson-KFF study suggests the reliability and usability of data would improve with "consistent specification" of the following: the charge’s applicable hospital setting (inpatient or outpatient), charge type (facility or professional), associated charge modifiers that affect pricing or payment of a service, the time period covered, any bundles the charge is a part of, the health plan type, and how the charge differs from the base rate.
"Until there is more standardization in how machine-readable files are organized and made available, analysis of these data will be challenging," the researchers concluded. "More fundamental issues surrounding what is included in a negotiated charge remain."
Analysis of health insurer financial performance in 2021 finds Medicare Advantage (MA) plans had significantly higher gross margins.
MA plans reaped over twice as much value as other insurance markets by the end of 2021, according to a report by Kaiser Family Foundation.
As utilization of medical care rebounded following the early stages of the COIVD-19 pandemic, MA gross margins per enrollee returned to pre-pandemic levels while commercial markets fell behind, researchers found.
The analysis examined financial data reported by insurance companies to the National Association of Insurance Commissioners and compiled by Mark Farrah Associates to compare gross margins and medical loss ratios between MA, Medicaid managed care, individual, and fully insurance group markets through the end of 2021.
Gross margins per enrollee is the amount by which total premium income exceeds total claims costs per enrollee per year. Though it doesn't necessarily translate into profitability because it doesn't take into account administrative expenses or tax liabilities, the researchers said, it does give an indication of financial performance.
MA plans averaged gross margins of $1,730 per enrollee in 2021, significantly higher than those in the individual ($745), fully insured group ($689), and Medicaid managed care ($768) markets.
When utilization was low due to the pandemic in 2020, MA plans grossed $2,257 per enrollee, compared to $1,317 for individual, $958 for group, and $845 for Medicaid managed care.
Prior to the pandemic in 2019, MA plans averaged gross margins of $1,819 per enrollee, well ahead of individual ($1,167), group ($832), and Medicaid managed care ($586).
Researchers highlighted that because MA plans cover an older, sicker population, they have both higher average costs and higher premiums, which are mostly paid by the federal government.
"So, while Medicare Advantage insurers spend a similar share of their premiums on benefits as other insurers in other markets, the gross margins—which include profits and administrative costs—of Medicare Advantage plans tend to be higher," the analysis stated.
As more distance is created from the pandemic, researchers posit that healthcare utilization could continue to increase.
Utilization and costs for Medicaid managed care, meanwhile, will be impacted by the upcoming Medicaid eligibility redetermination, which could result in millions losing coverage.
