PayerView: Examining Payer Performance

One of Richmond Bone and Joint Clinic’s most important payers was slashing its rates, and Juliet Breeze wasn’t sure what to do about it. Breeze, the Texas practice’s lone physician, wondered how other area practices were responding to the cuts, but knew she couldn’t just ask them. “There is such a silence about everything. You can’t share what you are getting paid.”

It was just lucky, then, that while Breeze was shopping for health insurance for her own staff, a sales rep for the payer in question happened to mention that beneficiaries could go online to compare the rates physicians get and so, presumably, choose the least expensive ones.

Being no fool, Breeze immediately asked for a demo user name and password.

“Lo and behold, there is a fee schedule for us and all our competitors,” she recalls. “I [felt] like one of those miners that struck gold. I stayed up all night printing out data. I made this whole book presentation from their own Web site on where we stood compared to our competitors and then I went and asked for a raise.” She got her raise (though a smaller one than she’d hoped for).

Payers are happy to rank your performance on cost and quality. But as for you ranking their performance in their dealings with practices? It’s never been possible to do so such a ranking, except subjectively.

Until PayerView came along.

This is the third time that Physicians Practice has teamed with athenahealth for hard data on payers to help you make better contracting decisions.

With PayerView, we’re putting them on notice that physicians are judging their payment performance.

More importantly, when payers are publicly judged on how they treat physicians, they care more about it.

The broader goal: Identify quantitatively where physician-payer relationships are breaking down, measure trends, and work toward improvements.

In this third year of PayerView, it’s clear that payers are starting to respond to public scrutiny of their performance.

Here are all the details.

Instead of reporting on anecdotal opinions about payers, PayerView is based on actual claims data derived from athenahealth’s athenaNet system database. Athenahealth provides physician billing, practice management, and EMR services via application service provider software. That means it can access billing and payment data.

Other organizations that compare payers rely on opinions and subjective surveys; two examples of which are The University of Michigan’s American Customer Satisfaction Index, and the Davies Public Affairs survey of hospital executives.

Athenahealth’s data only represents a portion of each payer’s provider network, but we required a high volume of claims before reporting on any given payer.

In total, then, the data you’ll see on these pages summarizes claims performance from more than 12,000 providers representing more than 30 million charge lines. Services were billed from 39 states to payers in 45 states.

We took all those numbers and ranked payers based on the following measures - see “What We Measured” for a visual breakdown: (For exact definitions and even more data, please visit www.athenapayerview.com.)

• Days in accounts receivable (A/R). How many days did it take a physician to get paid from the date the charge was entered in athenahealth’s system? Why it matters: The faster you get paid, the more the money is worth. What it’s worth: 25 percent of total score.

• First pass resolve rate. The percentage of claims that were resolved (either paid or passed on to the patients) the first time they were sent in. Why it matters: This measures how much administrative angst it takes to get paid. What it’s worth: 25 percent of the total score.

• Denial rate. The percentage of claims that required back-end work, whether the claim was actually denied or just pending. Why it matters: Whatever the reason for the extra work, it takes you longer to get paid and costs you in administrative time - if anyone on your staff actually bothers to follow up on the payment at all. What it’s worth: 20 percent of the total score.

• Percentage of patient liability. How much of patients’ bills are paid directly by patients? Why it matters: Consumer-directed healthcare is a growing trend. But most physician offices aren’t set up to collect in full at the time of service. And, not every payer is set up to give physicians the information they need to do so. What it’s worth: 7.5 percent of the total score.

• Claim denial transparency. What percentage of denied claims were paid with just one resubmission? Why it matters: This measures how clearly the payer explains its reason when it denies a claim. What it’s worth: 7.5 percent of the total score.

• Percentage of claims requiring medical documentation. This measures the rate at which claims are returned by a payer demanding medical documentation. Why it matters: It’s an expensive process, and demeaning for physicians to have to justify their medical judgment to insurance bureaucrats. What it’s worth: 7.5 percent of the total score.

• Rate of noncompliance with the correct coding initiative (CCI). Any physician will tell you that one of the worst things about payers is that each one has its own unique set of rules and coding expectations. We dinged payers when they refused payment on claims because their rules were different than national coding standards. Why it matters: How can any billing office keep track of hundreds of rules from dozens of plans? What it’s worth: 7.5 percent of the total score.

We didn’t measure how much payers pay. What we’re getting at here is how hard it is to collect what you are owed.

For data on reimbursement levels, download our 2007 Physicians Practice Fee Schedule Survey Results to get a better sense of what payers should pay - and what you should be charging.

Judging national payers

Based on these measures, Aetna was the best payer for providers to work with in 2007, jumping up from second place last year among national payers.

Aetna reduced its denial rate 10 percent since last year’s report, giving it the best denial rate among the national payers. It also has, by far, the fewest days in A/R at 26.86, beating its nearest competitor, Cigna, by nearly six days.

Paul Marchetti, head of Aetna’s national networks and contracting services, credits transparency for the company’s low denial rates.

“We were one of the first ones to put claims rules on the Web site,” Marchetti says. Those public rules “explained our bundling and unbundling logic, how we processed claims, what we would deny for. …Transparency is really the bottom line. Our rules are transparent and you can go out and see the rules prior to submitting a claim.”

The goal is to “eliminate unnecessary costs on both sides. I think the goals are pretty much aligned here.” Physicians understandably complain about the payers’ inscrutable bureaucracies, but theories about payer conspiracies aimed at getting physicians to simply give up chasing payments have always seemed unlikely to us. Remember, it costs payers a lot of money to process denials, too, so they have an interest in streamlining processes.

Aetna works regularly with athenahealth to improve its PayerView metrics, which has positively impacted its approach.

Cigna and Humana ranked second and third, respectively.

Humana improved its first pass resolve rate more so than its competitors. In fact, Humana improved in every measure except patient liability. “It’s the way the industry is going,” comments Mark Smithson, vice president of provider process and network operations for Humana. “We are going to have more patient responsibility and that is just the way it is.” Humana is adding tools to make patient liability easier for physicians to manage, he adds. It’s not so much expecting patients to pay that is the problem, Smithson argues, it’s equipping physicians to deal with it.

“We’re seeing some of the fruits of our efforts coming into play in the latter part of the year. I think we have some real opportunity next year,” he concludes.

Medicare was in the middle of the pack. Its fourth-place showing was respectable largely because its billing rules are public and mostly comply with CCI edits - and because Medicare, being a government payer, has little involvement in the consumer-directed movement. You may have noticed regional differences in Medicare’s performance. These are mainly driven by variations in athenahealth’s specialty mix.

UnitedHealth Group was hurt in our rankings by its more-frequent practice of passing charges onto patients. It has more than 2.3 million individuals enrolled in a consumer-driven health plan, more than double its closest competitor, according to Daryl Richard, vice president of communications for the company.

Richard doesn’t think this should count against United: “This is not a measurement of how accurate or timely we process claims, and because UnitedHealth Group is the market leader in consumer-driven health plans, this measure unfairly impacts our ranking and skews the perception of our claim performance. …We have a number of programs and tools, such as a claim estimator tool, real-time adjudication, and debit card technology for consumers linked directly to their health accounts, which ensure higher deductibles common with consumer-driven plans do not put additional liability on the physicians.”

Richard further notes that some of United’s tools, including real-time adjudication and electronic payment and statements, which speed up payment, weren’t being used by athenahealth clients until late in 2007. Therefore, its performance may look better next year.

Also, PayerView next year will likely reward payers for helping physicians with patient liability.

And the worst performing plans? Well, TRICARE, last on our list this year, disagrees with our data. For example, we assess days in A/R from date of service. TRICARE, using a different standard, reports that it takes care of all the claims it gets in 7.6 days, on average. Any additional processing time is caused by providers’ and clearinghouses’ delays in getting claims to it in the first place.

It also doesn’t really see a problem with its denial rate: “Fourteen percent of TRICARE medical claims for care rendered in the United States during FY 2007 were denied on first pass. This is consistent with industry denial rates,” said TRICARE spokesman Austin Camacho.

Of course, part of what PayerView tries to address is the assumption that a 14 percent denial rate is OK.

Regional insights

For the second year in a row, Blue Cross Blue Shield (BCBS) of Rhode Island had the fewest days in A/R and lowest denial rate in the nation. It helps that this payer operates in the smallest state and is a dominant payer in the market. Like Aetna, BCBS has emphasized transparency, making clear what it needs to process claims quickly. To review all the Blues data see our Blue Cross spreadsheet.

On the other end of the spectrum, Medicaid of New York has the most days in A/R in the nation. This year, it also assumed the worst first pass resolve rate in the nation. The state program has complex referral authorization requirements, insists on proprietary claims forms, and original signature requirements on paper claims - all things that slow the process down.

While Medicaid programs perform poorly in general, there is wide variation state to state, with North and South Carolina at the top of the heap.

Among private payers, however, regional differences were slight. It’s a little better to be a physician in the South than in the West, as Southern payers pay a bit faster and are somewhat less involved with consumer-directed healthcare. But overall, it’s much better to have the right payers than the right ZIP code.

Trends revealed

Overall, payer performance dipped slightly compared to last year. Melissa Lukowski, director of payer outreach for athenahealth, suggests that National Provider Identifier (NPI) issues, which hurt days in A/R, first pass resolve, and denial rates may have been a contributing factor, though multiple dynamics were in play.

The May 23, 2007 deadline for implementing NPI was extended, but providers ended up managing multiple payer-specific timelines and directions. According to Lukowski, some physicians didn’t get the word when payers started using NPI edits for informational purposes. The result? Increased calls, delayed claims, multiple resubmissions, and overall confusion. There were also incidents of payers unintentionally turning on NPI-related edits, incorrectly denying claims, and then asking providers to resubmit.

Regional payers had worse problems than national payers, experiencing a 2.6 percent increase in denial rate and a 0.9 percent decrease in first pass resolve.

If the NPI transition had a slight, negative impact on 2007 performance, you can bet your bottom dollar it will really mess things up this year, when the requirement goes fully into effect.

A small increase in patient liability also hurt overall performance. The increase was just 0.4 percent for the national payers compared with a 19 percent increase in 2006. Lukowski calls it “planned growth.”

Patient liability isn’t so much of an issue for physicians if they are able to figure out what the patient owes at the time of service and collect there and then. And payers are stepping up with online, real-time claims adjudication systems. Both United and Humana, leaders in the consumer-directed movement, offer real-time adjudication to at least some practices.

Real-time adjudication lets a checkout person see within seconds where a patient stands with his deductible and exactly what he owes. A great tool. But even when it’s available not every practice uses it, says Lukowski.

Why not? It might be that the checkout staff isn’t comfortable collecting large amounts. Or it may be that payer solutions aren’t what practices really want.

“The payers tout these ‘investments’ but the problem for payers is that there [are so many] of them. Providers don’t want to deal with eight or 10 different mousetraps,” explains Nathan Kaufman, a consultant for Davies Public Affairs.

Humana’s Smithson points out that most real-time adjudication systems force practices to enter claims data twice, once at a provider site and then again into the practice management system. Humana is trying to integrate with practice management systems to set itself apart, a strategy it will roll out nationwide this year.

Practices are increasingly using electronic remittance advice, electronic funds transfer, more-robust payer Web sites with complete data for eligibility checks, and technologies that speed up payment and decrease denials, ameliorating the impact of NPI. Lukowski suspects these improvements are responsible for fewer days in A/R and fewer denials among regional payers, which are just now adopting tools originally implemented at the national level.

Electronic remittance advice, which essentially allows payers to issue explanations of benefits electronically, has been around for years, but it has been difficult for providers to use it because payers vary so widely. Uniformity has been lacking. Responding in part to PayerView, this is improving. “It really cuts the payment cycle,” argues Smithson. Payment can be five to seven days faster.

Shave another few days using electronic funds transfer, which enables payment to go right to the bank instead of directly to you in the form of a paper check, and we’re really talking about better performance.

Bottom line

So, what does all this data mean for you? Look at where your payers stand, and take notice if they are doing worse by your practice. It might be that some of the problems are with your own processes if it’s taking you much longer to get paid or your denials are through the roof.

Also, keep the data handy at contracting time. Even payers with high reimbursement might not be “good” payers for you if it takes 60 days or painful machinations to get the money from them. A quick note pointing out their lackluster performance relative to others might help.

Pamela Moore is senior editor, practice management, for Physicians Practice. She can be reached at pmoore@physicianspractice.com.

This article originally appeared in the June 2008 issue of Physicians Practice.