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Claim Repricing Systems versus Practice Management Systems
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| | By Mark W Rieger, CEO, NHXS Inc.
Physician practice management systems (“PMS”) are designed principally as robust accounts receivable products. More recently, integrated electronic medical records, eligibility and claim ‘scrubber’ functions have been ‘bolted on’ to the AR function to improve the physician’s business operations.
The system architecture used by health plans for claim adjudication and more specifically ‘re-pricing’ is quite different than AR management. Repricing systems were developed by health plans to pay claims. When health plans were paying a percentage of billed charges, the physician’s PMS was capable of handling this simple contractual allowance calculation. As the payor’s introduced more complexity into pricing agreements, the PMS’ quickly fell behind in supporting these business requirements. After RBRVS was introduced in 1983 Payors began investing millions of dollars in proprietary fee schedule development and clinical edit software. The growth of HMOs in the 90’s (and with them the aggressive payment review practices developed by payors to control costs) gave rise to the pervasive use of software designed to systematically deny certain services when billed with other services. The number of ‘edits’ used by health plans today has grown into the millions with nearly 25% of claims submitted by physicians subject to one or more of these edits.
A common edit used by most plans involves two E&M services billed for the same patient on the same day. The AMA position (i.e. CPT Guidelines) is that both services should be considered eligible if the physician appends a -25 modifier to one of the E&M services and the medical record supports “a significant separately identifiable service”. Per CPT 2006 Guidelines, there are 132 E&M codes (99201 – 99499). If you constructed a table with every E&M code billed with every other E&M code, except itself, you have 8,646 unique pairs. As a practical matter, only a third of these pairs would ever be used together for the same patient on the same day. CPT Guidelines would exempt 631 pairs from the modifier -25 rule. Meaning, the use of the -25 modifier will NOT result in payment of both services (i.e. 99217 is not allowed with 99218 even with a -25 modifier).
Nearly all payors including Medicare apply a ‘two E&M services’ edit. The 2006 Correct Coding Initiative (CCI) edits include 1,273 pairs of E&M codes (these include the 631 CPT edits). The CCI edits are essentially a two column table wherein the code in column 2 is not paid when billed with the code in column 1 unless the code in column 2 is appended with a payment enhancing modifier. Modifiers -25 (E&M codes) and modifier -59 (non E&M codes) are the most common type of payment enhancing modifier. Of the 1,273 pairs, CCI would allow 595 of them with a payment enhancing modifier. The balance of pairs not eligible for the payment enhancing modifier include the 631 E&M pairs discussed in the CPT Guidelines.
It’s not uncommon for health plans to state; “We follow Medicare payment guidelines”. This may only be true regarding the policy and not the repricing rule. For instance, Medicare pays the higher priced service when two covered E&M services are billed on the same day for the same patient. Most commercial health plans pay the lower priced service. However, these same plans may cover preventative medicine E&M services whereas Medicare does not.
It takes a significant investment to build and maintain these kinds of rules tables. The E&M codes discussed above represent a fraction of the rules used by most plans. Unless you build the tables with rules unique to each health plan it makes it nearly impossible to find errors in the application of these rules by the various plans. It’s easy to see why PMS vendors have steered clear of making the enormous capital investment necessary to build and maintain these rules engines. Rather, they have taken an approach wherein the easily acquired tables (i.e. CCI) are loaded and then each provider may customize the list.
In a candid moment all commercial payors would admit that the increased complexity in their claim adjudication systems created by maintaining millions of clinical edits contributes to payment errors. In fact, our audits consistently show overpayment and underpayment errors which would be expected in complex systems. Companies like our and others are developing robust rules engines that can keep pace with payors complex repricing systems and efficiently identify the payment errors. The MGMA members consistently report that net collections are 5 – 8% below the contracted rate. Closing this gap by even half represents a significant revenue opportunity for any physician. To do so requires a much higher level of sophistication in the claim audit process that must include the use of payor specific rules engines.
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