Insurers in Florida will be prohibited from automatically downcoding claims, if, as expected, Gov. Jeb Bush signs a bill passed by the Legislature.
The bill, which passed May 4, is believed to be the first in the country to specifically bar the practice of automatic downcoding claims to cut reimbursement. Insurers in Florida and around the country have come under attack for paying for a less involved office visit or procedure than the one the physician billed.
The law also would prohibit physicians from systematically upcoding--claiming they provided a higher level of service than they did--and strengthen existing prompt pay laws.
The final bill was a compromise of sorts; the Florida Medical Association introduced a bill early in the session to prohibit automatic downcoding and put more teeth in the prompt pay law requiring insurers to pay claims within the required 35 days of receipt. And while the bill was winding its way through the Legislature, lawmakers included provisions to punish physicians who upcode claims.
Because the bill put restrictions on providers and payers, both sides are claiming victory.
"I think it's important to note they did put balance in the bill," says Richard Dorff, president of the Florida Association of HMOs. The bill holds physicians "to a higher standard of greater accountability."
The General Accounting Office estimates 10% of the $1 trillion annual cost of healthcare nationally is lost to fraud and abuse, or about $900 million, Dorff says. Physicians have billed for services they didn't provide and supplies they didn't use and have misrepresented diagnoses, Dorff says.
While the FMA doesn't see upcoding as much of a problem, "obviously we didn't feel we could argue against it," says John Knight, general counsel for the FMA.
In recent years, the FMA has launched a campaign against insurers that it contends are automatically downcoding claims, costing physicians millions of dollars.
Florida agencies last year warned HMOs and other insurers to stop automatically downcoding claims.
The FMA filed several complaints with the state Department of Insurance. However, department representatives told FMA officials that there was no authority to do anything about downcoding, Knight says.
So the doctors took their fight to the Legislature.
The bill says systematic downcoding or the intent not to pay for services constitutes an unfair claims settlement practice, he says. "It grants the department clear authority" to enforce the law and penalize those who violate it, Knight says.
The bill provides for an outside panel to review downcoding disputes between physicians and insurers. The party that loses the review will have to pay the cost of the review.
Systematic downcoding has been "fairly prevalent for the last three or four years," he says. "I believe it's gotten a little bit better recently. United, to our knowledge, has ceased using or cut back using computer software that automatically downcodes . . . We've entered into an agreement with Humana that we hope . . . will also help to reduce the downcoding."
The bill also strengthens Florida's prompt payment law, first passed in 1998. As originally drafted, the bill didn't specify what constituted a clean claim, Knight says, and physicians didn't know when the insurer received the claims.
"HMOs were claiming that they'd never received the claims. So doctors had to resubmit the claims two and three times," Knight says. "What the law now says is . . . the HMO has to inform the physicians of both the mailing address and the electronic address and a telephone number physicians can call with any questions for submissions of claims. The HMOs are required to keep that information current and up-to-date."
Physicians who submit claims by return mail may use the date stamped on the card as the "received on" date, and the clock starts ticking, he says. HMOs that accept electronic claims must provide some type of acknowledgement of receipt, he says.
If the bill becomes law, insurance companies will be prohibited from retroactive denial of claims unless the HMO determines within one year of service that the patient wasn't eligible when the care was provided, Knight says. Physicians have complained that insurers have come back up to 24 months after care was provided, claiming it wasn't a covered service and demanding repayment, Knight says.