Catherine Atkins, JD
Staff Attorney and Deputy Executive Director

The Therapist
January/February 2011

CAMFT wanted to bring to your attention two stories that recently hit the mainstream media focusing on managed health care plans and some of the issues which you, as a provider, likely find yourself enmeshed in regularly:

The American Medical Association: Prior Authorizations Harm Patients
According to the American Medical Association (“AMA”), in its national survey released November 22, 2010, the requirement of providers to obtain prior authorization before treating a patient causes patient harm, economic hardships on the provider, and is an inefficient use of the provider’s time.

According to the AMA, “Policies that require physicians to ask permission from a patient’s insurance company before performing a treatment negatively impact patient care.” Further, AMA Past President J. James Rohack, M.D. stated that, “Intrusive managed care oversight programs that substitute corporate policy for physicians’ clinical judgment can delay patient access to medically necessary care.” The released AMA survey produced the following results:

• Thirty-seven percent of physicians experience a twenty percent rejection rate from insurers on first-time prior authorization requests for tests and procedures.
• Fifty-seven percent of physicians experience a twenty percent rejection rate from insurers on first-time prior authorization requests for drugs.
• Seventy-eight percent of physicians believe insurers use prior authorization requirements for an unreasonable list of tests, procedures, and drugs.
• Forty-six percent of physicians experience difficulty obtaining approval from insurers on twenty-five percent or more of prior authorization requests for tests and procedures.
• Fifty-eight percent of physicians experience difficulty obtaining approval from insurers on twenty-five percent or more of prior authorization requests for drugs.
• Sixty-three percent of physicians typically wait several days to receive prior authorization from an insurer for tests and procedures.
• Thirteen percent wait more than a week to receive prior authorization from an insurer for tests and procedures.
• Sixty-four percent of physicians report it is difficult to determine which test and procedures require prior authorization by insurers.
• Sixty-seven percent of physicians report it is difficult to determine which drugs require prior authorization by insurers.
• Physicians spend twenty hours per week on average dealing with prior authorizations.
• Seventy-five percent of physicians believe an automated process would increase the efficiency of the prior authorization requirement.

According to Dr. Rohack, “The AMA is urging health insurers to automate and streamline the current cumbersome preauthorization process so physicians can manage patient care more efficiently.” CAMFT was pleased to see such a large national organization tackle the issue of prior authorization requirements and the negative affect it has on providers and patients. While in 2009 CAMFT produced the results of a membership survey stating that the administrative complexities surrounding authorizations was one of the main hardships providers found with the plans, the reach of the AMA on the national level is much greater. CAMFT is hopeful that as provider groups, such as CAMFT and the AMA, provide the public with a look at the reality of the burden such requirements have on providers and patients, both state and federal legislative and executive bodies will better assist in regulating the health care plans in a manner that can assure efficient and effective patient health care.

California Health Care Plans Fined Five Million Dollars
The Department of Managed Health Care (“DMHC”) recently released the following press release, which announced the nearly five million dollar fine against seven managed health care plans for improper provider payments. The seven plans will be required to review the claims dating back to their latest DMHC medical survey and correct any under or non payments. The press release is as follows:

"California Department of Managed Health Care (DMHC) Director Cindy Ehnes has announced nearly $5 million in fines against the seven largest health plans in the state for violations in paying claims to health care providers statewide. These fines, along with restitution to doctors and hospitals, cap an 18-month investigation of claims practices. In addition to penalties, the DMHC has ordered changes to health plans’ payment practices."

"Our clear and consistent message is that California’s hospitals and physicians must be paid fairly and on time,” said Director Ehnes at a Los Angeles news conference. “Providers are struggling to stay afloat in a very difficult business environment. Improper payment of provider claims runs the risk that our health care delivery system could grind to a halt. Our audits have found that some health plans may consider their mistakes a ‘cost of doing business’, but public disclosure and penalties change that calculation."

All seven plans were found to have violated the minimum legal threshold of paying 95 percent of their claims correctly. The audits found that not only did the plan not pay claims accurately, but the second-chance process of getting paid was also often flawed. Five of seven plans were found to violate provider dispute resolution procedures, which is the method that providers must use to protest an underpayment or claims denial and get a corrected payment. This unfairly puts the burden on the provider to fight for payment, either within the plan, through the DMHC or through the courts.

The health plans receiving fines are Anthem Blue Cross for $900,000; Blue Shield of California for $900,000; United/PacifiCare for $800,000; HealthNet for $750,000; Kaiser Foundation Health Plan for $750,000; CIGNA for $450,000; and AETNA for $300,000 for a total of $4.85 million.

"Patients expect health plans to pay claims to doctors and hospitals fairly and promptly so they can get the care they need. Consumers would rather that the time and resources of health providers go to patient care, rather than in fighting to get insurers to pay correctly" said Anthony Wright, executive director, Health Access California, the statewide health care consumer advocacy coalition. "It's good the DMHC is using its existing authority to require prompt, fair payment of claims, and that the new federal health law will provide more tools for the overall oversight over insurers."

The fines are the result of an initiative announced by Director Ehnes in 2009 in response to complaints by providers about unfair and untimely claims payment practices. Director Ehnes ordered DMHC financial oversight examiners to conduct simultaneous claims audits of the seven major health plans. Previously, claims payment practices were part of a larger financial examination conducted every three years.

In addition to the repayment of claims owed to providers, health plans are making changes in their payment processes, including dedicating additional staff and resources, providing additional management and oversight, and re-vamping entire internal processes to avoid further violations of state law.

Getting the provider paid fairly and on time has been a long-standing priority of Director Ehnes, although not a legislatively-mandated activity of the DMHC. To date, the Provider Complaint Unit, which she established in 2004, has resulted in more than $22 million in additional payments to providers throughout the state and identified systemic claims violations.

The California Department of Managed Health Care is the only stand-alone HMO watchdog agency in the nation, touching the lives of more than 21 million enrollees. The DMHC has assisted more than one million Californians to resolve their health plan problems through its Help Center, educated consumers on health care rights and responsibilities, and works closely with health plans to ensure a solvent and stable managed health care system.

Catherine L. Atkins, JD, is a Staff Attorney and the Deputy Executive Director at CAMFT. Cathy is available to answer members’ questions regarding business, legal, and ethical issues.