HB 1850 Testimony
Good morning. I’m Dr. Mark Piasio, a practicing orthopaedic surgeon from Dubois and also the president of the Pennsylvania Medical Society.
Let me begin by thanking Chairman Micozzie and the rest of this committee for inviting me here today to testify. The Pennsylvania Medical Society strives to address issues that impact physician access. Time spent in coding audits is time spent out of patient care. Thus we are appreciative of today’s opportunity to discuss a health insurance-related matter.
Up front, I want to state that the Pennsylvania Medical Society believes that our health insurers must be financially secure through good business practices. While we oppose audits for no reason, we also oppose insurance fraud. There must be a happy medium so that insurers are protected from fraud and honest physicians are not bullied.
Increasingly, payers are looking to improve revenues by seeking retrospective repayments for alleged overpayments and/or payments made by mistake to providers. A primary method of accomplishing this is through retrospective audits, by which the payer reviews claims made to a physician practice. If the payer determines that an overpayment or mistaken payment occurred, it notifies the physician and demands repayment. In some cases, the payer notification requests complete information related to a claim underlying a suspected overpayment. It is essential that standards exist for retrospective audits both in terms of procedures and substantive rights of physicians with regard to past reimbursement. HB 1850 begins the process of establishing equitable standards.
A primary purpose of House Bill 1850 is to set a time limit of 12 months from the date of payment that a health insurance company can retroactively deny a claim paid to a health care provider. Currently, if addressed at all, retroactive denials are governed by varying language specified in a contract offered to providers by insurers.
The Society supports this legislation in concept, because it would provide protection for physicians and other practitioners, since many provider contracts have open-ended terms with no specific time frames. Furthermore, we have included a similar provision as part of another bill, House Bill 503, our model Managed Care Contracting legislation, currently under review by this Committee. Using a similar rationale as found in House Bill 1850, we have specified in House Bill 503 a time frame of 180 days as the maximum length of time an insurer can retrospectively audit. In some instances, physician practices have had to respond to repayment of claims from insurance companies eight years from the date the claim was paid.
The Society believes this legislation accomplishes the following for physician practices:
Reduces administrative costs by allowing accurate accounting for accounts payable and accounts receivable
Provides an opportunity for practices to devote resources to patient care and not administrative burdens including complex billing and collection schemes required of physician practices
Physician practices are inundated with administrative burdens, include billing and collection costs. It has been estimated by the Medical Group Management Association that physician billing costs alone have risen to about $39.4 billion per year. In order to get paid for a service, a practice must provide standardized information on the billing record, as well as, in many cases, clinical documentation from the medical record. All of these records must be stored indefinitely by the practice.
When a practice receives a retroactive denial notice, it typically must assign staff to extract the appropriate medical and financial records wherever they might be. Most of the time, this information is not at the practice site. It is archived with a contracted storage company, or other firm. In many cases the claim could have been paid two, three, or four years prior to receipt of the denial notice. It is nearly impossible for the physician practice to coalesce this aged medical and billing data.
Aside from the staff time, it is often necessary for the physician to intervene at certain points in the process as well. Should a claim be appealed, the physician is the person with whom the payer meets to justify the payment. Therefore, not only is staff time expended, but physicians are taken away from practicing medicine to deal with administrative matters that have little significance in the provision of patient care.
Staff costs, storage and handling costs, and reproduction costs are all a part of operating a busy physician practice. However, the additional burden placed upon a physician practice when required to handle retroactive denials increases administrative costs. This rigorous process takes away from the already burdened routine of the administrative staff, and unduly causes a disruption to patient care services.
The process requires the practice to hire additional staff to meet the needs of insurers requesting the information and additional costs to defend the audit; none of which is recouped in a successful defense. In this case, a physician is in an unfair, no-win scenario. The physician loses no matter what.
A broader unintended consequence occurs as well. An additional cost will be incurred to track down the patient or other payer to pay off the balance as well as re-auditing hundreds, possibly thousands, of accounts. As any small business can attest, trying to track down a customer two to three years after the fact, and after he believed his bill was paid in full is no pleasant task. With the passage of House Bill 1850, some of these unnecessary burdens would be relieved.
Finally, aside from the administrative burdens and the additional costs that retroactive denials present, the real problem with this issue is that it takes the physician practice away from caring for patients. With Pennsylvania’s stressed health care system, unnecessary administrative burden creates a wedge between doctor and patient, and that’s something the Pennsylvania Medical Society is committed to removing.
As I mentioned previously, the Society is supportive of the bill, but we would like the period of time to permit retroactive audits be limited to no more than 180 days as outlined in House Bill 503, which is ample time to detect patterns of fraud.
Our physician Members have told us for many years that retroactive denials have always assumed the doctor is guilty before proven innocent. The Society believes that limiting the window of opportunity to a fair period of time can provide a favorable resolution for all parties concerned—the insurer, the doctor, and most of all, the patient.
Thank you for the opportunity to speak before you today. I would be glad to answer any questions.
Last Updated: 8/6/2008