Texas healthcare providers have asked state lawmakers to close loopholes in payment policies to ensure they are reimbursed promptly.
The Knox County Hospital District, which filed a complaint with the Texas Department of Insurance for an alleged $12 million in outstanding claims from Aetna (now CVS Health) dating back to mid-2018, submitted a proposal to TDI to amend the state's Prompt Pay Act. The hospital district, much of which are rural hospitals, asked for administrative changes related to an insurance company's retaliation against doctors who have filed a complaint against the payer, communication between providers and insurers, and managing audits.
"Aetna is clearly in violation of the Texas Prompt Payment statute," Kelly Dawson, attorney for the Knox County Hospital District, said in prepared remarks, adding that TDI needs to hold Aetna accountable. "If they don't, we will have to spend more time and money in the courts just to get paid for services provided."
CVS Health, which acquired Aetna in 2018, did not reply to a request for comment.
In the 2021 legislative session, the hospital district hopes that policymakers will amend the current law to prohibit insurers from retaliating by terminating a doctor's participation in the preferred benefit plan, refusing to renew the provider's contract, or penalizing or deceiving them during the contract negotiations.
The KCHD also wants insurers to provide electronic notice if a preferred provider's clean claim was electronically submitted and insurers to provide electronic submissions for information related to an audit. Insurers should not be able to recover a payment on an audited claim until the final audit is completed and insurers should allow "a reasonable mechanism" for an appeal that includes a review panel, the district proposed, among other stipulations.
"After two decades of creating and exploiting a myriad of loopholes in the law, the Prompt Payment statues of been rendered toothless," the proposal reads. "Too often, the Texas Department of Insurance is dismissing as 'contract disputes,' clear violations of the Prompt Payment Statues. Many of the state's rural hospitals are now being forced into legal action they cannot afford to try and collect on bill that are more than two years old."
Rural and community hospitals, excluding critical-access hospitals, had 21 days cash on hand as of April 2020, according to the Chartis Center for Rural Health. Not-for-profit hospitals had 210 days median cash on hand in 2018 by comparison, according to Moody's Investor Service. Meanwhile, bills spend an average of 49 days in accounts receivable, according to the Healthcare Financial Management Association's analysis of national hospital data.
About a quarter of rural hospitals are at risk of closing, with Texas being home to the most rural hospitals in the country and hence has the highest share of financially unstable facilities, research shows. Nearly 50% of rural hospitals nationwide operate in the red.
Billing disputes between hospitals and insurers particularly jeopardize smaller hospitals, which have less negotiating leverage. These are commonplace in U.S. healthcare, in part because of chargemasters. Hospitals often inflate the list price of procedures in those documents to gain negotiating leverage with payers, even though those prices have little bearing on cost or quality, policy experts said. Commercial payers deny claims too often, hospitals say, setting up a combative relationship that drives up administrative costs.
But some providers and payers are testing out new programs aiming to reshape the dynamic. One of which is a pilot program between CommonSpirit Health and Ooda Health.
Executives compared it to a credit-card statement, where every provider encounter is listed on a single bill. Ooda then presents a consolidated invoice to the patient and handles reimbursement, claiming that it can better respond to patients with its access to payer and provider data.
"There is a groundswell happening," Steve Scharmann, CommonSpirit Health's system vice president of revenue cycle, told Modern Healthcare last year. "I would say it has been lip service for many years, and to a certain degree it still is. But I see more payers and providers coming to the table to try to do this better."