The California Department of Insurance (DOI) and the California Department of Managed Health Care (DMHC) last year launched a joint investigation into the health care giant’s unfair payment practices. This joint endeavor is an historic step in the effort to put an end to the practice of unfair claims handling in the health insurance industry. The investigation was prompted by complaints filed by CMA’s Center for Economic Services on behalf of CMA member physicians.
The DOI alone uncovered 133,000 violations of state laws and regulations regarding payments for medical care. Each violation carries a maximum penalty of $10,000 for a possible total of $1.33 billion. Similar violations were found by DMHC, which issued its own fine of $3.5 million, the largest fine ever imposed by the DMHC. DMHC will also assign a claims monitor to oversee the insurer’s compliance with a corrective action plan.
United/PacifiCare’s alleged violations include:
“We are encouraged that California’s two regulatory agencies have taken the important step of banding together to tell United/PacifiCare enough is enough,” says CMA President Richard Frankenstein, M.D. “For-profit health plans have made billions of dollars in California by putting profits ahead of patients. Just because United said they’re sorry and will pay fines, it doesn’t mean patients are protected and won’t continue to suffer. These fines won’t give them back their money or their health.”
Since the United PacifiCare merger more than two years ago, there has been great chaos for doctors and patients. The insurance company was not able to keep track of the patients it insured and the doctors with whom it had contracts, creating a bureaucratic nightmare for patients and doctors. United’s poor administrative practices affected thousands of patients who in some cases went without care or lacked continuity of care.
Meanwhile, United profits nationwide continued to soar and its top officials collected billions of dollars in salary and other benefits.
CMA publicly opposed the United/PacifiCare merger from the beginning, saying it would be a detriment to patient care, yet United officials have used the merger as an excuse for their inefficiencies and errors.
Doctors throughout the state complained to CMA about problems with United, including patients being told erroneously that they would have to switch doctors, or that their doctors were out of network when they actually were not. Patients were told they had different coverage than they signed up and paid for, and were given extremely outdated lists of network doctors. The mistakes caused delays and denials of patient care. CMA passed the many complaints on to regulators and asked them to investigate the insurance company early last year.
The impact of this investigation may stretch beyond the fines. At a press conference in Burbank last week, California Insurance Commissioner Steve Poizner called for audits into all California’s health insurance companies, and vowed to “come down on them like a ton of bricks” if insurers aren’t paying doctors and hospitals and patients on time. Wall Street reacted to the fines as well: United Health stock dropped as much as 3.6% on Tuesday upon news of the fines, and ended down 2.3 percent.
- A participating physician must accept Medicare allowed charges as payment in full for all Medicare patients.
- A nonparticipating physician can choose to accept or not accept assignment on Medicare claims on a claim-by-claim basis. Nonparticipating physician fees are 95 percent of participating physician fees. If you choose not to accept assignment, you can charge the patient 9.25 percent more than the amounts allowed in the participating physician fee schedule.
- Physicians who opt out of Medicare are bound only by their private contracts with their patients. Medicare’s limiting charges do not apply to these contracts, but Medicare does specify that these contracts contain certain terms. When a physician enters into a private contract with a Medicare beneficiary, both the physician and patient agree not to bill Medicare for services provided under the contract. Once you opt out, you cannot opt back in for two years.\
The chart below will give you an idea of how your participation status will change the way you’re paid for treating Medicare patients.
Example: A service for which Medicare fee schedule amount is $100
Factors Affecting 2008 Rates
The payment amount for each service under the Medicare fee schedule is the product of three factors: nationally uniform relative-value units (RVUs) for work and practice expenses; a geographic adjustment factor; and a nationally uniform conversion factor, which is used to convert RVUs into payment amounts. The conversion factor change is not the only change affecting 2008 Medicare payment rates. Payment changes will vary by service, specialty and locality based on the following factors:
- Practice Expense RVU: This year is the second of a four-year transition to revised practice expense relative value units.
- Physician Work RVU: A number of services have revised relative value units for physician work. This change particularly affects anesthesiology, home health, and eye exam services, which increase significantly.
- Budget Neutrality: Federal law requires any changes to Medicare payments to be budget neutral. This will decrease payments for most services by about one percent.
- Geographic Payments: The geographic adjustment factors have been updated, as they are every three years. Most California counties will see geographic payment reductions (Santa Clara -9.1 percent, San Mateo -4.4 percent, San Francisco -4.4 percent, Alameda/Contra Costa/Berkeley -3.9 percent, Los Angeles +2.3 percent, Ventura +3.4 percent, Orange +2.1 percent, Marin/Napa/Solano -3.6 percent, Rest of California -0.6 percent).
The combined impact of these various payment changes on your practice depends on your specialty, location, and service mix. When all of the changes are averaged out across all physicians, there should be a slightly positive increase in rates, but many physicians will see net payment decreases.
Many other insurers link their rates to the Medicare rates in some way. There is no way to anticipate how other payers will adjust their rates in response to the six-month intervention by Congress.
Click here for more information.
Contact: CMA's Reimbursement Help Line, 888/401-5911 or drice@cmanet.org.
3. Congress Working on Another Short Term Medicare Fix
The U.S. Senate Finance committee is working on legislation that would put off the next round of scheduled Medicare payment cuts until 2010. It is unknown at this time if the plan would give physicians a payment increase or if it would freeze the fee schedule at current rates.
At its January meeting, the Medicare Payment Advisory Commission recommended that physicians receive a 1.1 percent increase next year instead of the 5 percent reduction that is projected. The recommendation will officially appear in MedPAC’s March report.
If Congress were to take MedPAC’s advice, the 2009 update would cost more than $10 billion over five years.
Stay tuned for more information.
Contact: Elizabeth McNeil, 415/882-5176 or emcneil@cmanet.org.
4. Senate Kills Health Reform Bill; CMA Remains
Committed to Fixing California’s Broken Health Care System
The Senate Health Committee last week killed the Schwarzenegger/Nuñez health reform plan by a vote of 7 to 1, with 3 abstentions. Although this bill particular may not advance, it is not the end of the discussion. The health care system is still broken, and the talks that have taken place over the past year have stimulated innovative ideas and solutions and have laid the groundwork for meaningful health reform in the near future. CMA and California’s physicians remain committed to health care reform.
“We have been working on this issue for many years, and will continue to do so as long as it takes to make sure all Californians have access to top-quality health care,” says CMA President Richard S. Frankenstein, M.D. “We are hopeful that this effort will pay dividends in the near future, and that all Californians will have the access to top-quality health care that they deserve.”
Contact: Dustin Corcoran, 916/444-5532 or dcorcoran@cmanet.org.
5. Beware of Board Certification Schemes
Many physicians may remember the days before California law prohibited physicians from advertising of “board certification” from unrecognized medical specialties. In 1993, a state law took effect that allowed physicians to advertise board certification only if the certifying board or association is recognized by the American Board of Medical Specialties (ABMS) or deemed to be equivalent by the Medical Board of California (MBC). Before that law took effect, physicians were bombarded regularly with advertisements for quick and easy “board certification” programs. Occasionally such advertisements still show up on the Internet or in physician mailboxes, tempting the unwary.
CMA recently became aware of a certification program offered by the American Board of Diabetes, an organization that is not recognized by ABMS or deemed equivalent by MBC. According to advertising materials, physicians can become “board certified” by paying $300, filling out a two-page application, and paying annual dues of $25.
While physicians are certainly free to pay $300 for a certificate, state law prohibits advertising that certification unless the certifying organization is recognized by ABMS or deemed equivalent by MBC. (The only non-ABMS boards currently deemed equivalent by MBC are the American Board of Cosmetic Surgery, the American Board of Facial Plastic and Reconstructive Surgery, the American Board of Pain Medicine, the American Board of Sleep Medicine, and the American Board of Spine Surgery.)
Physicians are also encouraged to research any such organization before handing over their cash. The American Board of Diabetes’ website, for example, indicates that its “evangelical mission” is “the humanitarian crusade of the congregation of religious medical ministries and the humanitarian crusade against the ongoing murders of poor street children in Latin America.”
Click here for more information.
Contact: Samantha Pellon, 916/551-2872 or spellon@cmanet.org.
6. CMA Convinces Aetna to Pay Assistant Surgeons
for Cardiovascular Surgeries
Despite California law that requires a minimum of three surgeons be present during open heart surgery and certain other cardiovascular surgeries, Aetna until recently reimbursed the primary surgeon, and in some cases the second surgeon, but never the third surgeon, leaving patients to cover those fees. Thanks to 5 years of tireless advocacy by CMA, Aetna has finally agreed to modify their payment policy. Effective February 1, Aetna will pay for all three surgeons.
Several years ago, Medicare, Medi-Cal , and most insurance companies modified their payment policies, at CMA’s urging, to reimburse both assistant surgeons. Aetna was the one insurer that until recently refused to modify its policy.
Contact: Aileen E. Wetzel, 916/551-2037 or awetzel@cmanet.org.
7. Save the Date: Legislative Leadership Day, April 15
CMA’s 34th annual Legislative Leadership Conference is Tuesday, April 15, in Sacramento. This is the most important day of the year for physician advocates!
This is a unique event for California physicians and is free of charge to all CMA members. Attendees will receive a CMA health policy briefing and a short course on “Lobbying 101,” which will train them to become strong physician advocates and prepare them for the legislative meetings later in the day.
Don’t miss the opportunity to meet one-on-one with your elected officials in the State Assembly and Senate to discuss important health policy issues that affect the practice of medicine in California.
Contact: Jennifer Williams, 916/444-5532 or jwilliams2@cmanet.org.
8. Members Get $110 off MGMA Conference Registration
Physicians and their office staff are invited to attend the California Medical Group Management Association’s annual conference, March 6 - 8 in Santa Clara.
Attendees will learn about the revenue cycle, including processes, systems, policies, resources, and the latest tools for improving revenue performance.
Representatives from CMA’s Center for Legal Affairs and Center for Economic Services will be speaking at this event.
CMA’s “Back to Basics” billing and collections seminar will also be offered as a preconference workshop on March 6.
CMA members receive $110 off registration. Early-bird member registration is $275. After the early-bird deadline (February 18), registration is $305.
Visit http://www.camgma.com for details.
Contact: California Medical Group Management Association, 805/650-6724.
9. Highlights from CMA Board of Trustees Available
The CMA Board of Trustees met January 25 in Anaheim. A summary of the board's major actions is now available online.
The board highlights offer a brief summary of major action and informational items discussed by the board. The highlights are not intended to be all-inclusive of items discussed, and these documents are not official CMA policy.
Members can access complete and official board-approved minutes at CMA's members-only website. (Official board meeting minutes are not posted until approved at the following meeting.)
Click here for more information.
Contact: Ginnie Yee, 415/882-5170 or gyee@cmanet.org.
10. Member Benefit of the Week: Free Portfolio Checkup
Given the current volatility in the market and talks of a potential recession, there’s no better time to take advantage of your free portfolio checkup from Mercer Advisors.
Mercer Advisors manages over $3 billion in assets, mostly for doctors. Mercer’s long-term investment strategy is firmly based on academic studies that identify the location of risk and return in capital markets.
Because Mercer Advisors is fee-based rather than commission-based, you can rest assured that its financial experts have your best interests at heart.
Members also get $500 off Mercer’s “Economic Freedom Program,” a comprehensive program that includes financial planning, investment management, and retirement and estate planning.
To schedule your free portfolio checkup, call 888/642-1234.
Click here for more information on your membership benefits.
Contact: CMA's member service center, 800/786-4CMA (4262) or vsatt@cmanet.org.
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