05 Sep State Practice 3: Mandate Timely Processing of Claims
Put Some Sense into Processing Claims in a Timely Manner
The practice of an MCO or Medicaid billing a health insurance provider is backwards. It’s really the responsibility of the commercial insurer to make the initial payment, so that insurance claims are not delayed, which is the case when Medicaid or a Medicaid MCO does the initial billing.
Technicalities, such as using the Health Insurance Portability and Accountability (HIPAA) electronic claims transaction version 5010, which was put into use as of Jan. 1, 2012, are used as an excuse by commercial carriers for not initiating the first payment. As a result, a number of states have initiated a policy of only using a paper, instead of electronic, claim. The problem is that several insurance companies are declining to use the paper solution.
It only makes sense that insurance carriers need to be forced to process claims quickly and make prompt payments regardless of whether the claims are electronic or on paper. As long as a reasonable timeframe is used, an MCO or a state Medicaid agency ought to have the right to determine alternative claim processing methods in order to preserve the integrity, and therefore the speed, of the entire process. Ultimately, it means that federal laws are followed, timelines are established on retrospective recoveries by state Medicaid agencies, and Medicaid funds aren’t left in a state of limbo.
Prior to 2005 and the passage of DRA, the federal government required states to hold statutes giving them the same rights as a Medicaid recipient in reimbursing funds from any entity that was supposed to pay Medicaid. The problem was that Medicaid claims often weren’t paid because of technical issues. For instance, if a card issued by the insurance company was not used when the medical procedure or visit was made, the claim might be denied. Other claim requirements stipulated by the carrier and not followed by their customer might result in claim denials.
Add Statutory Language Squelching Denials Based on Technicalities
DRA beefed up section 1902(a)(25)(I) of the Social Security Act by adding language stipulating that states have laws on their books forcing health insurance carriers to agree to stop the denial of claims from the state because of the failure of the client to present appropriate documentation of their insurance coverage when the medical procedure took place, the failure of a claim to be on a certain format, or because of the date of the claim.
It didn’t work. Health insurance companies still deny Medicaid recovery claims using the excuse of missing pre-authorization. Often, denials are issued by the health insurance company with the explanation that the medical service didn’t receive prior approval as stated in the insurance company’s benefit package. These types of denials by insurance companies add up to a huge loss when state Medicaid agencies attempt to recover money.
With this in mind, it would be prudent if states updated their DRA-compliant statutes to unequivocally disallow health insurance companies from denying any Medicaid claim with the excuse that prior authorization wasn’t obtained from the carrier. Some states, such as West Virginia, Missouri, Louisiana, Georgia, Indiana, Delaware, Connecticut and Colorado, already have this type of language in their DRA laws. All states should copy the language used by these states as a method of keeping Medicaid costs down.
So here is the list of DRA-compliant language changes that all states should adopt:
- Describe all varieties of health insurance
- Give MCOs additional power
- Penalize carriers for noncompliance
- Stipulate all-inclusive data
- Establish deadlines for data sharing and processing claims
- Forbid claim denials based on technicalities