By Myles Riner
Like most state Medicaid programs, California's Medi-Cal is under increasing pressure to reduce costs. An approach taken by the California Department of Health Care Services (DHCS) is to recoup payment for claims from patients who have dual-insurance coverage (by both Medi-Cal and commercial carriers). DHCS has contracted with an outside vendor to identify patients with dual coverage and to recoup Medi-Cal payments directly from commercial insurance plans. However, a recent pilot project suggests that providers may benefit from getting involved in this claim review process.
CEP America, an emergency physician partnership that staffs 72 emergency departments across the country (including 62 in California), led a pilot project to address dual-eligible claims. The pilot demonstrates a financial benefit to providers and Medi-Cal when providers processed the recoupment claims.
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The Case for the Pilot Project
CEP America learned about Medi-Cal's dual-eligible recoupment program when the DHCS vendor incorrectly billed a patient for services he did not receive, and the patient complained to CEP America. The organization's investigation identified the following concerns with the DHCS program:
- The vendor DHCS contracts with to recoup Medi-Cal payments misidentified patients and the medical services these patients received, resulting in incorrect claims being submitted to insurers. This error was primarily because the vendor was not correlating other patient identifiers and dates of service from Medi-Cal-paid claims files with plan enrollee listings.
- The vendor was allowed to bill private insurance plans using physician provider numbers. This was done without the provider's knowledge.
- When a physician's billing company independently determined that a patient had commercial plan coverage and submitted a claim to the plan with the intent of rebating Medi-Cal, the plan would reject the claim as a duplicate claim if the DHCS's vendor had already made a submission to the plan, using the physician's provider number.
- Private providers were deprived of the opportunity to seek higher reimbursement from commercial insurance.
- The vendor billed only for the amount of the Medi-Cal reimbursement, not the full amount for which the insurer is liable under contract with the provider, or for non-par services.
For those reasons, CEP America approached DHCS about implementing a pilot project to test whether the provider's billing service could more effectively recoup payments from the commercial insurance. The project began in August 2009 when Medi-Cal turned over 3,369 claims for services provided by CEP physicians for processing by CEP's billing service, MedAmerica Billing Services, Inc. (MBSI). At that time, DHCS estimated that it was due $248,097.03 in rebates for prior Medi-Cal payments on these claims.
On CEP America's behalf, MBSI designed a process that started with manually keying in data because claims were delivered in hard copy. All claims had already been checked against Medi-Cal Online Eligibility Request (MOLER) prior to the initial submission to Medi-Cal.
When CEP America received the refund request letters, this was the first indication that patients may have had dual-insurance coverage. MBSI then cross-checked eligibility with commercial insurance carriers' online systems to confirm accuracy and coverage on the date of service. One additional FTE was required to manage the pilot program, and this position has been made permanent to manage ongoing retroactive refund requests.
MBSI then submitted claims to the commercial insurer when appropriate, and provided the vendor with documentation of the results of the claims adjudication process. Recent legislation extended the timely filing limits for submission of these claims to the commercial insurer, and the DHCS has extended the time allowed for the provider to adjudicate these claims to 120 days before refund retractions are made.
Results of Pilot Project
The pilot project was completed in July 2010. Of the claims identified by the DHCS vendor, 66 percent did not warrant recoupment by the Medi-Cal program. Most of these incorrectly identified claims were either not covered by the commercial carrier on the date of service or covered appropriately by Medi-Cal as the secondary payer.
CEP America identified 1,158 claims for which the patient was covered by a commercial plan on the date of service and rebates to the Medi-Cal program were appropriate. As a result, $82,761 was rebated (through retractions) to Medi-Cal (see the exhibit). According to DHCS, this amount significantly exceeded what the vendor had previously been able to collect from a similar number of claims.
CEP America collected $211,315.96 for providers from commercial carriers, for a net gain of $128,555, after rebates to Medi-Cal (i.e., $211,315.96 - $82,761).
Tracking dual-insurance coverage for patients covered by both Medicaid and private insurance resulted in a net gain of $128,555 in revenue for providers in California.
View the exhibit.
Benefits for Providers and DHCS
This pilot project brought the following benefits to both providers and the DHCS:
- Higher rates of recoupment from commercial insurance plans for both providers and DHCS
- Accurate identification and processing of patients and claims
- Preservation of the integrity of the Medi-Cal program and the provider's reputation
These results show that providers can work with state Medicaid agencies as partners to reduce unnecessary Medicaid expenditures. This is a win-win situation, because providers are also able to recover higher reimbursements from commercial insurers than they had from the Medicaid program.
Thanks to the program's success, DHCS will be enabling other physician groups to participate in this program, and has already rolled it out to some hospitals, as well. The result is that other hospitals have experienced similar revenue benefits, which has also improved the Medi-Cal bottom line significantly.
I encourage hospitals to consider screening all patients for commercial insurance coverage at the time of service, even if Medicaid is listed as the primary insurer, to avoid retroactive refund requests. Additionally, all providers should investigate how their state Medicaid program recoups Medicaid payments on claims where the patient has simultaneous commercial coverage to ensure they are not losing out on revenue they could be collecting from commercial insurers.
Currently, the terms of the provider-DHCS agreement include an automatic retraction of refunds from the provider for claims not processed within 120 working days, which CEP America found was necessary as it often takes insurance plans months to respond to these claims. Given the demonstrated financial benefit to providers from participating in this program, I strongly believe there is sufficient incentive for providers to adopt this process without the DHCS requiring automatic retraction of refunds.
Myles Riner, MD, is a partner emeritus, CEP America, Emeryville, Calif. (firstname.lastname@example.org).
Publication Date: Tuesday, March 01, 2011