Denial Engine Vendor Ingenix Keeps more than Usual and Customary Dollars

In my warnings to providers about denial engines -- those sophisticated analytics tools that payers are increasingly using to reduce, deny, or re-collect claims payments -- I try to emphasize that they can be used ethically.  One of the common features of such tools is that they allow the payer to produce a detailed "defense" for the dollars they are refusing to remit.

The argument I've been trying to focus on is that providers and their vendors need to understand these tools and respond -- not that this is some Good vs. Evil battle over payments that all providers unquestionably deserve.

It's not necessarily that the payers aren't fighting fair, I say.  It's that the providers aren't fighting back.

UnitedHealthcare and its Ingenix division seem to want to give the lie to that even-handed approach.  New York Attorney General Andrew Cuomo has accused them of employing "convoluted and dishonest systems for determining the rate of reimbursement" for use by both UHC and a lot of other insurers, including Aetna, Cigna Corp., Empire Blue Cross & Blue Shield and Humana. This post isn't about that issue. The phenomenon I'm concerned about is probably a lot bigger, since it applies to all claims and thousands of discount and denial codes, not just out-of-network "usual and customary" adjustments.

Scoping Out the Competition
The scope of Cuomo's inquiry involves the specific case of the familiar "usual and customary" (he says "reasonable and customary" which seems like a value judgment) amounts that payers use as estimates for providers they don't have a contract with. They tell their insured (i.e. the patient) that, for instance, they will cover "80% of the reasonable and customary amount," the rest of which is the patient's responsibility.  Cuomo accuses them of cooking the books, resulting in "reasonable and customary" calculations that are far below actual market rates.

And as any good free-market proponent knows, it's the market that decides what is reasonable, not some Washington bureaucrat or Wisconsin bean counter, right?

But denial engines, like Ingenix's iCES Detection Software, look at every claim, not just the typically smaller number of out-of-network claims.

Claim Review
For a long time, payer systems have conducted what's known in the back office as 'bundling and unbundling" -- combining two procedure codes into one, or disqualifying one charge because it is considered an implicit part of another charge. A payer might decide not to pay for a venipuncture as well as a lab test, or might pay for an immunization, but not the office visit that brought the kid to the doctor in the first place.

There are hundreds of such rules or "edits" published in Medicare's Correct Coding Initiative (CCI) guidelines, and more are added all the time.  Medicare also has its own rules for payment, which many commercial payers adopt or adapt, as the case may be.  Payers also add rules according to their contract with the provider (in a provider network, HMO or PPO arrangement), according to the terms of the policy they've sold to the employer or individual insured, or according to, well, whatever they decide makes sense.  Complex? Absolutely. Arbitrary? It sure can seem to be, especially if you are a provider -- or worse, a patient with no background in claims management -- trying to figure out why a particular charge or course of treatment was reduced or denied.

The New Rules
Denial engines go way beyond looking at the CCI edits or Medicare rules. Or even just the claim.  Many will look longitudinally at both the provider's and the vendor's history.  Does the biller have a habit of adding a modifier for increased acuity (to justify an increased rate)?  Did the patient have that procedure done less than 90 days ago somewhere else?

They'll also look beyond the conventional sources of coding standards.  What does the specialty board say about combining this particular implant with that diagnosis and this sort of procedure? Did you read the article in the Annals of Cardiology that said it might not be a good idea?

Yes, some denial engines will even go to published accounts (not consensus positions) to justify their actions.

Avoid the Mistake of Paying for Healthcare
How effective are these tools? Well, according to Ingenix, "payers can achieve immediate savings up to 2―5 percent of facility claims stream without renegotiating contracts." Denial engine vendor TC3 is even more ambitious, saying their service "enables our payer clients to take advantage of multiple state-of-the-art loss control technologies through a single connectivity source to prevent paid claims errors on a pre-payment basis, reducing paid claims by 3-10% annually."

You Gotta Problem Wid Me?
DE vendors can also take the payer's proprietary edits -- which may or may not be based on a contractual agreement with the provider -- and apply these rich analytics to the claim stream.  And they can (and do) apply them to individual providers, not just to their entire mix of billers.

That can actually be good news, if you know what's happening.

To read more about these tools, click on the Denial Engine category link at the foot of this post or in the category listing to the right. To fight back, sign up for our webinar.

Full Disclosure: Claredi, a former HITTG client, was purchased by Ingenix last year. No part of that relationship touched upon the technologies discussed in this article.

Comments

[Curtis]

Are you saying that if physicians and their coders correctly adhere to CCI and are compliant with other rules, then they still run the risk of being denied?

[Martin Jensen]

The problem is that there is no way for a provider to know the millions of "rules" that could apply to a particular claim. Let me allow one of the Denial Engine vendors (er "Editing vendors") to speak to the issue.

"Editing vendors typically have millions of edits in their systems or software that check for upcoding, bundling and unbundling of codes and duplicate claims. Checking for duplicates is based on pattern-matching algorithms.... Another point to consider is how the edits offered by an outsourcing [vendor] can be customized to reflect payor specific reimbursement policies. Some vendors are only able to turn edits on or off. If payment policies are different across lines of coverage or geography, this can force a payor to either pay claims they normally wouldn’t or pend and manually review claims."

Source: Outsourcing Claim Editing: A Practical Solution by David Jackson, Bloodhound Technologies

http://www.imakenews.com/seroper/e_article000750485.cfm?x=b11,0,w

[Leslie Johnson, CPC]

"Some vendors are only able to turn edits on or off. If payment policies are different across lines of coverage or geography, this can force a payor to either pay claims they normally wouldn’t or pend and manually review claims."

Exactly! The problem you have is that those turning the edits "on or off" aren't necessarily coders nor billers. They may not even know any of the CCI rules, but may be learning from providers what may be considered bundled or not bundled.

Sometimes policies are created and/or decided upon merely by the materials a provider might send to defend the use of coding principles because first-level claim processors might not understand the clinical aspects behind many of the procedures performed by physcians. To be honest, some of the reasoning behind certain coding practices are just wrong; the physician or surgeon feels entitled to payment on a procedure that is (or should be) bundled with other procedures. I'd like to say that's the exception, not the rule!

Add to that the myriad of different specialties coming in to the insurance companies at any given time - it's almost impossible for any single person to simply turn on or off all the possible edits for that code or code pair - the people don't know every specialty, they don't know every code and some of them, quite frankly, have never even been taught how to use a CPT or ICD-9 book.

It's reported to me that some carriers are now mandating that their first-level processors become certified coders to be able to catch improper edits and actual improper code pairs that come in when providers wish to appeal.

Hawaii is the first state in the Union to address the discrepancies by legislating that anyone who processes a claim for Medicare must be a certified coder. ( http://www.hawaii.gov/lrb/legis02/passed02.pdf SB2290 SD1 HD1 CD1 (CCR 63-02) RELATING TO INDEPENDENT BILL REVIEWERS.) Some desire more states would do similar legislation.

What's the "ultimate authority" for determining a bundled code pair or set? Coders turn to the only PUBLISHED authority that they can find - and that's the NCCI Edits from CMS, which mandates the bundled codes when billing for Medicare. Many providers still are unaware that there are carriers who don't use the CCI Edits as their authority (for administrative and/or other reasons).

For those insurance companies that don't use CCI Edits, they use contract carve-outs and other published and unpublished means to determine the appropriateness of various codes. Take a look at some of the states' Worker's Comp. rules - they use CPT codes from as early as 1996 and expect providers to comply, some 12 years and 12 versions later. Can you hear the collective groan of the providers who need to deal with that?! Go find a CPT book 12 years later!

The hurtful thing in all of this is that the very tools many have trusted and relied upon to fight the insurance companies are the very same tools used against the providers.

This is not a subject that's going to go away; in fact, I believe it's going to get worse as these are just a few of the MANY major bones of contention between providers and payers. There are more, but we can start here since it's something we're all watching (collectively) at the moment.

L J

[Bill]

Just to add to some of the comments above: I want to make the point that Providers also have claims editing systems created by Ingenix that are for both sides of the fence. You have Providers that will use the product(s) honestly, but you also have those Providers that don't. If you look at an article that was published by CMS on Modifier 25 and Modifier 59 that should Providers abusing these modifiers (ex. Mod. 25 (35% error rate) and Mod 59 (40% error rate)) and this was just for Medicare. What do you think it is like for the Providers billin private/commercial payers. My point is they will use the editing system to increase $$$$$$ and not blink an eye about it.

Much in the case of Revenue code 270, 271, 272 for surgical supplies and equipment that Providers will recieve duplicate payment for the equipment and supplies over and over again. The payment of these Revenue codes are included into the payment for the surgical room/per minute operating room payment. I have seen billed charges from hospital for "Fecal management collection" billed up to 15 times on a hospital bill for over 95$. This is included in the "Routine" room and board payment and should not be paid separately.