Looking Back at 2019…
In early 2019 customers of Office Ally experienced a dramatic increase in rates. With a relatively short notice of six weeks, Office Ally added a charge of $35 or more for most providers.
Needless to say, this caused a lot of frustration and forced healthcare providers to either adapt to Office Ally’s new policy or change their processes within a short time frame. A tall order for busy medical practices and administrative staff.
Instead of passing the extra “charge” to customers, CarePaths maintained its policy to not charge providers for claims and shifted to another clearinghouse, Availity, for the large number of providers who would have experienced this sudden rate hike.
What Are Claim Rebates?
Office Ally added new charges because many payers stopped paying them claim rebates, but what exactly are these “claim rebates”?
In the 1990s, payers were eager to start receiving electronic claim submissions. Receiving e-claims from providers would allow payers to save money by laying off armies of data entry clerks that would otherwise be needed to continue processing paper claims. To build momentum behind the new e-claim initiative payers started offering claim rebates of $1 per claim to clearinghouses.
Federal regulations encouraging payers to reduce administrative overhead coupled with the rising popularity of e-claims have led payers to “drop” these rebates and push those costs onto providers.
This constitutes a back door pay cut.
Understanding How We Got Here
The current claims environment was not originally designed to be like this. One of the goals of the 1996 HIPAA law was the radical simplification of claims processing. The law’s authors envisioned a national standard that would enable providers to submit claims without a clearinghouse and that claim processing would be as smooth as credit card processing.
It’s now been over two decades, so why isn’t claims processing more like credit card processing? How was the banking industry able to create a world-wide system that accommodates the needs of thousands of different banks, and is quick and predictable for the party receiving credit card payment?
The answer lies in the incentives.
Payer Incentives: Friend or Foe?
Credit card processors earn transaction fees whenever a transaction is successfully completed. It is in their interest to make the process smooth and seamless for clients. Unfortunately, successfully completed claim transactions are an expense for the health insurer.
The claims submission standards were designed by industry insiders who wanted the system to be sufficiently flexible to accommodate their existing claims processing systems. The system the payers came up with has made claims submission easier in some respects, but is still more complex, opaque and arbitrary than it needs to be.
Providers can see evidence of these challenges in two areas: the enrollment process and the rejection of claims for technical reasons, such as payer-specific requirements.
Navigating the Claims Obstacle Course: Enrollment Process
A significant number of payers require an enrollment process before the provider can use a particular clearinghouse. Enrollment can involve multiple different companies operating behind the scenes that handle one or more aspects of the process.
Why is this process so cumbersome and so time consuming? Why do clinicians have to hunt down multiple different vendors to find out the status of their enrollments?
As many providers know, some of these companies cannot be reached by phone and very rarely answer emails.
Navigating the Claims Obstacle Course: Payor-Specific Requirements
Payer-specific claim requirements are another part of the claims obstacle course. These can include special billing code modifiers based on the profession of the provider, the age of the patient, various payer-assigned identifiers, or complex authorization rules.
Perversely, some payers reject claims because they include valid information that they don’t want to see included, when they could just simply ignore the valid data. Nationally, about 5-10% of ambulatory claims a year are rejected for such technical reasons.
Charting the Course for Providers
When CarePaths decided to change clearinghouses, we recognized the impact it had on our customers. Our development team spent considerable resources re-writing code to prevent unnecessary rejections and we even assigned dedicated support staff to help our customers through the transition.
The patience and feedback received from our customers were instrumental in helping CarePaths make progress on this challenge.
Our company is now better prepared to continue helping providers navigate the claims obstacle course and our commitment to keeping claims processing free for our users is stronger than ever.