Health Plan Administrative Performance 2012

Massachusetts Hospital Association

The leading voice for hospitals.

Dear Healthcare Stakeholder: In 2006, Massachusetts became the first state in the country to expand access to healthcare and to require all residents to have health insurance. Six years later, in 2012, more than 98 percent of residents are covered. Now, government officials, policy makers, and other key healthcare interests — hospitals, insurers, doctors and consumer advocates — are focusing on the best ways to control rising healthcare costs while maintaining access to quality care for all citizens of the commonwealth. One aspect of the cost problem that doesn’t get a lot of attention is administrative costs. These are defined as the costs associated with processing claims, medical management, enrollment, billing, provider service, contracting, filing and responding to appeals, regulatory reporting, maintaining medical records, marketing and advertising, and dealing with a highly fragmented, multiplepayer system. Massachusetts health insurers maintain that administrative costs average less than 10% of the premium dollar. In fact, in 2012, Massachusetts health insurance companies will pay $45 million in rebates to health insurance customers and employers after failing last year to meet medical loss ratio requirements. In INDICATE WHICH PAYERS YOU CONTRACT WITH (CHOOSE ALL THAT APPLY) 2011, Massachusetts health insurers were required to spend at least 88% of the premium dollar on medical care and not more than 12% on administrative expenses. That figure rose to 90% in 2012. It is also interesting to note that in 2011 health insurers combined administrative costs amounted to more than $2.5 billion for the 14 largest commercial and Medicaid managed care plans in Massachusetts. More importantly, that number does not take into account the costly investments in labor, training systems, and daily operations that physicians, hospitals, and other providers must make in order to interact with the different policies and requirements of multiple health plans.

Although Massachusetts is fortunate to have highly rated health plans covering the vast majority of our citizens, we are not immune to the problems associated with administrative complexity. In an effort to begin to address some of these administrative complexities, the Massachusetts Hospital Association (MHA) is a founding member of the Mass Collaborative, along with the Massachusetts Medical Society, the Massachusetts Association of Health Plans, and Blue Cross Blue Shield of Massachusetts (BCBSMA). Several health plans and provider groups are also part of the collaborative. The Collaborative’s goal is to simplify healthcare administration. Since 2010, the collaborative has successfully introduced a uniform claims denial process, a standardized authorization form, and is continuing work on simplifying the credentialing and eligibility processes and improving payer/provider communications. Despite the success of the collaborative, problems remain. MHA wanted to give our hospital and health system members an opportunity to evaluate how the health insurers approach administrative practices with an eye towards identifying issues as well as best practices. The survey was administered in January 2012 and MHA received responses from 30 health systems, representing 35 hospitals, or 61% of MHA’s membership. Responses include both teaching and community hospitals from all over the state. When reviewing the survey results, it is important to note that not all hospitals contract with all payers, resulting in a varying number of responses for each payer. While all of the respondents contract with BCBSMA, Tufts Health Plan, Harvard Pilgrim Healthcare (HPHC), United Healthcare, and Cigna, only 33% have a contract with Health New England (HNE), while 47% contract with Celticare. In 2008, MHA administered a similar survey in which 27 acute and two non-acute care facilities provided feedback on health plan performance. In comparing the 2008 to the 2012 survey results, certain measures have shown significant improvement while others demonstrate higher levels of dissatisfaction. In both surveys, levels of satisfaction vary depending on the carrier. Following are highlights of some of the changes during the fouryear period. Recognition and utilization of national coding standards: For most plans, there appears to have been some improvement since 2008. HPHC and Aetna rated highly in both surveys. For the other plans, while improvement is still needed, there is a greater level of satisfaction than in 2008. The exceptions are Blue Cross, Network Health, and Neighborhood Health Plan, which all had higher levels of dissatisfaction than in 2008.

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Tiering and Transparency: In 2008, tiered products were relatively new to the Massachusetts market. Hospitals were asked to rate each payer’s performance on transparency around cost and quality measures used for determining the tiers. Hospitals were largely dissatisfied, because they did not get sufficient opportunities to review and provide meaningful comments on the data. The 2012 survey reveals that this is still an issue, with none of the payers providing a consistently high level of transparency. PLEASE INDICATE YOUR TOP FIVE PAYERS BASED ON PERCENTAGE OF GROSS REVENUE

Eligibility transactions: All plans showed significant improvement in providing timely, accurate responses to eligibility inquiries. While some dissatisfaction remains, HPHC, Tufts, Cigna, Aetna, Unicare, and HNE had satisfaction rates in excess of 85%, something that no plan demonstrated in 2008. Contracting: In 2008, hospitals were asked to rate payer negotiating style and contract processes. With the exception of Cigna, Aetna, and United Healthcare, the Massachusetts payers were described positively in their negotiating style and contracting processes. In 2012, we asked hospitals whether they were satisfied that the payer conducts good faith negotiations during the contracting process. While HPHC, Tufts, and Fallon received high marks, and the national plans showed some improvement as well, respondents were very dissatisfied with Blue Cross and NHP and expressed higher levels of dissatisfaction with the other local payers. The purpose of this report is to provide constructive feedback to the health plans, as MHA continues its goal of working collaboratively with them. We hope that you will keep this goal in mind as together we strive to streamline and improve administrative processes and to make healthcare more cost effective and efficient for payers, providers, and patients. If you have any questions or comments, please contact MHA’s Senior Director of Managed Care Karen Granoff at [email protected]. Sincerely, Lynn Nicholas, FACHE MHA President & CEO

Has the payer’s overall performance changed during the past year? There was a lot of variation in this answer depending on the payer. The majority of respondents did not think that Blue Cross, Harvard Pilgrim, Tufts, Aetna or Unicare had a change in performance over the past year. However hospitals did feel that Fallon, Network Health, Neighborhood Health Plan, United Healthcare and Cigna all had a degradation in overall performance during that same time period. The responses to the rest of the questions on the survey will shed some light on why hospitals responded this way.

HAS THE PAYER’S OVERALL PERFORMANCE CHANGED DURING THE PAST YEAR?

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What is your overall current level of satisfaction for each of the payers? The top rated plan is Harvard Pilgrim, with others showing varying levels of satisfaction. Comments from hospitals contributing to the ratings included: •B  CBSMA tends to be very rigid even when resolving issues that it created. It needs to evaluate its system changes to ensure that it will do what is intended and described by its policies. If its system cannot handle the change, it should wait until the system can do it, not just implement it and create a manual work-around team. • Dissatisfaction based on claims processing errors and slow reprocessing. • Fallon continues to be one year behind on processing appeals. • Fallon’s new billing system isn’t working properly and Fallon is behind on claims processing NHP has retracted payment for Medicare claims past the Medicare filing limit and left the provider “holding the bag.” • Problems with United and Aetna: they will authorize a visit, and then at the time of payment say the member is not eligible.

WHAT IS YOUR OVERALL CURRENT LEVEL OF SATISFACTION FOR EACH PAYER LISTED BELOW?

Communications Hospitals were asked to rate their levels of satisfaction with timeliness, accuracy and consistency of payers’ response to specific questions as well as overall payer communication policies. Responses to both these questions indicated that Harvard Pilgrim had high rates of satisfaction. The national plans appear to do a fairly good job of communicating general policies, but Cigna and United Healthcare both had higher rates of dissatisfaction in responding to specific issues. Most of the local plans received good marks on overall payer communications but there were higher levels of dissatisfaction regarding timeliness, accuracy and consistency of responses to individual questions. General concerns included delays in sending out notices, timeliness and clarity of information, lack of communication from provider reps, changes made with little advance notice, difficulties accessing information on payer websites, and sheer volume of information. COMMUNICATION: HOW SATISFIED ARE YOU WITH THE TIMELINESS, ACCURACY, AND CONSISTENCY OF EACH PAYER’S RESPONSE TO YOUR QUESTIONS?

HOW SATISFIED ARE YOU WITH THE WAY THE PAYER COMMUNICATES NEW POLICIES OR POLICY CHANGES TO PROVIDERS?

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Provider Credentialing and Re-credentialing Tufts and Harvard Pilgrim both stand out in these areas, closely followed by most of the other local plans. The exceptions are Blue Cross and Neighborhood Health Plan, which both have higher levels of dissatisfaction with the initial credentialing process. Hospitals are particularly frustrated regarding the Blue Cross credentialing process for mid-level practitioners and non-board-certified physicians. For the re-credentialing process, there was a much higher level of satisfaction among all respondents.

HOW SATISFIED ARE YOU WITH THE PROVIDER CREDENTIALING PROCESS FOR INITIAL APPLICATIONS? CONSIDER TIMELINESS, COMMUNICATION, DOCUMENTATION REQUIREMENTS, ETC.

HOW SATISFIED ARE YOU WITH THE PROVIDER RE-CREDENTIALING PROCESS?

Provider Enrollment Provider enrollment follows health plan credentialing and refers to the process of getting a physician, nurse practitioner, or other clinician set up in the payer’s system so that referrals, authorizations, and claims can be submitted. Although there is clearly room for improvement among all plans, Blue Cross is an outlier among the local plans with almost half of the respondents dissatisfied with the enrollment processes. Health New England received no dissatisfied ratings on this metric.

HOW SATISFIED ARE YOU WITH THE PROVIDER ENROLLMENT PROCESS? CONSIDER TIMELINESS OF ENROLLMENT, NOTIFICATION, ANY ISSUES THAT ARISE, ETC.

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Payer Conducts 2-way good faith negotiations during contracting process Payers will often claim that they are partnering with hospitals and clinicians to provide services to members/patients. The purpose of this question was to assess how hospitals perceive the payers’ interactions with them during the contracting process. Hospitals were asked to consider the pace of negotiations, the authority and knowledge of the payer’s negotiation team, the payer’s understanding of hospital/physician issues, etc. Harvard Pilgrim, Tufts, and Fallon were highly rated, with more than 75% of respondents somewhat or very satisfied. Conversely, 73% of respondents were dissatisfied with BCBSMA and 59% dissatisfied with Neighborhood Health Plan on this measure. The remaining plans fell somewhere in between these two extremes, clearly with room for improvement.

HOW SATISFIED ARE YOU THAT THE PAYER CONDUCTS 2-WAY GOOD FAITH NEGOTIATIONS DURING THE CONTRACTING PROCESS?

Adherence to negotiated contractual terms when adjudicating claims and introducing new payment polices and processes 87% of respondents reported that they were somewhat or very satisfied with Harvard Pilgrim on this measure, which was by far the highest score. Conversely, Network Health, Blue Cross, Aetna and Cigna received high levels of dissatisfaction. The remainder of the plans essentially fell in between these two extremes. Frequent payment policy changes, insufficient lead time to implement these changes, problems with payment accuracy in the Tufts/Cigna and HPHC/UHC products, disagreements around policy interpretation were all cited as factors contributing to dissatisfaction.

HOW SATISFIED ARE YOU THAT THE PAYER UNDERSTANDS AND ADHERES TO THE NEGOTIATED CONTRACTUAL TERMS WHEN ADJUDICATING CLAIMS AND INTRODUCING NEW PAYMENT POLICIES AND PROCESSES?

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Accuracy and response time on eligibility transactions Checking patient eligibility is an important first step in the continuum that ultimately leads to payment or denial of a claim. In addition to providing information on whether the member is covered by a particular plan, an eligibility check can also reveal coverage and patient liability information. It is critical that the response the provider receives from the payer be accurate and timely. Harvard Pigrim, Tufts, Cigna, Aetna, Unicare and Health New England have satisfaction rates in excess of 85%.

HOW SATISFIED ARE YOU WITH EACH PAYER’S ACCURACY AND RESPONSE TIME ON ELIGIBILITY TRANSACTIONS (E.G. THE ELIGIBILITY INFORMATION YOU RECEIVE IS QUICK AND ACCURATE SO THAT THE DENIAL AND RE SUBMISSION RATE IS NOT SIGNIFICANTLY AFFECTED)?

Payer’s performance related to transparency around cost and quality measures used for tiering As more payers introduce tiered networks or re-tier their existing networks, it is critical for providers to understand the data that was used in making those determinations. There is room for improvement for all of the payers on this measure, as none were perceived to have a consistently high level of transparency. Almost half of the respondents reported that BCBSMA was not transparent; one third stated that Unicare was not transparent; and more than one quarter felt that Harvard Pilgrim and Tufts were not transparent.

RATE EACH PAYER’S PERFORMANCE RELATED TO TRANSPARENCY AROUND THE COST AND QUALITY MEASURES USED FOR TIERING.

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Rate each payer’s process for member education around tiered and limited networks Tiered networks differ from a payer’s full network products because of varying co-payment arrangements depending on cost/quality of provider. Limited networks simply exclude certain providers and classify them as out of the network. These arrangements require consumers to be well informed both before they even purchase the product as well as at the point of service. Many of these products are relatively new to the market. Even so, it is evident from the responses that all of the payers should be working towards improving member education around these products. Comments included frustration around complex plan design, members unaware of the tier distinctions, and patient registration departments having to walk patients through their benefits at the time of service.

RATE EACH PAYER’S PROCESS FOR EDUCATION ITS MEMBERS ON THE LIMITS OF SELECTING TIERED NETWORKS (E.G. DO PATIENTS UNDERSTAND THE DIFFERENT COST SHARING ARRANGEMENTS, WHO IS IN/OUT OF THE NETWORK, ETC.)?

Website functionality Providers use health plan websites on a daily basis to look up information on products, benefits, authorization and referral requirements, medical policies, procedures, and eligibility. It is critical that the website be user friendly and that information be easy to locate. With the exception of Fallon, in which 40% of respondents rated the website functionality as poor, ratings were in the fair to very good categories. Harvard Pilgrim and Tufts led in the very good category. HNE did not receive any poor ratings. Hospitals commented that certain websites were difficult to navigate and information hard to locate if you didn’t know exactly what you were looking for; and that too much unrelated information returned during searches. Hospitals would also like to see more self-service functions for those plans that currently don’t allow much self-service transactions.

RATE EACH PAYER’S WEBSITE FOR FUNCTIONALITY, ACCURACY OF SEARCH ENGINE, ACCESSIBILITY OF UP TO DATE INFORMATION, ETC.

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Average time to receive payment as measured from billed date to remittance post Blue Cross performed very well on this measure, with 71% indicating they receive payment in under 30 days. Most of the plans were within the benchmark standard of under 45 days. There is some concern regarding Fallon’s resuts, which indicated a third of respondents had a cycle that exceeded 45 days.

FOR THE MOST RECENT FISCAL YEAR, INDICATE THE AVERAGE TIME (IN NUMBER OF DAYS) THAT IT TAKES TO RECEIVE PAYMENT AS MEASURED FROM THE BILLED DATE TO REMITTANCE POST

Recognition and utilization of national coding standards Chapter 305 requires that all payers comply with standardized coding and billing procedures by July 2012. Despite ongoing work with the Division of Insurance-led Uniform Coding and Billing Advisory committee, there is still significant room for improvement among virtually all of the payers. Harvard Pilgrim has the highest number of satisfied customers, followed by the national plans. Blue Cross, Tufts, Network Health and Neighborhood Health Plan all have higher rates of dissatisfaction. Compliance with national coding standards will significantly reduce the number of inappropriate denials and improve the quality and accuracy of metrics used for pay-for-performance and clinical quality benchmarks.

HOW SATISFIED ARE YOU THAT THE PAYER ROUTINELY RECOGNIZES AND UTILIZES NATIONAL CODING STANDARDS AND GUIDELINES?

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The administrative appeal process for denied claims is fair, timely, and includes appropriate documentation about the decision from the payer There is strong dissatisfaction among hospitals around the process used to review and respond to denied claims. Among the payers with the highest levels of dissatisfaction are Fallon, Blue Cross, Tufts, United Healthcare and Cigna. The administrative simplification collaborative implemented a new denied-claims process that standardized the form and the definitions; as of the date the survey was administered, it was still too soon to evaluate the effectiveness of the new form and its impact on overall satisfaction.

THE ADMINISTRATIVE APPEAL PROCESS FOR DENIED CLAIMS IS FAIR AND THE PAYER RESPONDS IN A TIMELY FASHION AND WITH COMPREHENSIVE INFORMATION AND DOCUMENTATION ABOUT THE DECISION TO UPHOLD OR OVERTURN THE APPEAL

Overall satisfaction with the end-to-end claims adjudication process Although there are varying levels of dissatisfaction with individual pieces of the claims adjudication process, most hospitals were fairly satisfied with the end-to-end process from most payers. The payers that garnered the most dissatisfaction were Fallon, United Healthcare, and Cigna. Comments included problems with Bluecard (the Blue Cross national program) and lack of an escalation process at Cigna and UHC.

OVERALL, HOW SATISFIED ARE YOU WITH THE END TO END CLAIMS ADJUDICATION PROCESS?

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Utilization management process is timely, user friendly and results in clinically appropriate decision Respondents expressed a high level of dissatisfaction on this measure, particularly regarding Tufts Health Plan, Blue Cross, Fallon, and Network Health. Plans that had higher levels of satisfaction included Harvard Pilgrim, Neighborhood Health Plan, Aetna, and United Healthcare. Comments included frustration around health plans using Interqual criteria as an absolute measure for decision making rather than as a clinical guideline; difficulty in finding a “live” person to speak with; timeliness of process, and disagreement with level-of-care determinations. THE PAYER’S UTILIZATION MANAGEMENT PROCESS IS TIMELY, USER FRIENDLY, AND THE DECISIONS ARE CLINICALLY APPROPRIATE (CONSIDER EASE OF TALKING WITH A LIVE PERSON, COMPLEXITY OF PROCESS, APPROPRIATE USE OF INTERQUAL OR OTHER CRITERIA, FAIRNESS OF CLINICAL APP

Rate the payer’s prior authorization program for high-cost radiology services Over the past few years, virtually all of the payers have implemented prior authorization programs for MRI, CT, PET scans and similar “high-tech” radiology services. Hospitals find many of these processes to be burdensome and result in transferring the responsibility to them for ensuring the service is authorized and medically necessary even though they are not the ordering clinician. Problems that hospitals cited included poor coordination of clinical policies and conflicting responses between the carrier and the radiology carve-out company, as well as the amount of staff time required to obtain/verify authorizations.

RATE THE PAYER’S PRIOR AUTHORIZATION PROGRAM FOR HIGH COST RADIOLOGY SERVICES IN TERMS OF EASE OF USE, DENIAL RATE, CONSISTENCY BETWEEN RADIOLOGY MANAGEMENT COMPANY AND PAYER MEDICAL POLICIES, ETC.

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Rate the payers pre-certification and pre-authorization processes for med/surg and behavioral health services As with prior authorization for radiology services, there is ample room for improvement. Comments included health plan inflexibility, length of time to get a response from the payer, and amount of staff time required to obtain the authorization. There is also a lot of frustration regarding the increasing number of services for which payers require preauthorization.

RATE THE PAYER’S PRE-CERTIFICATION OR PRE-AUTHORIZATION PROCESS FOR MED/SURG AND BEHAVIORAL HEALTH SERVICES (CONSIDER EASE OF USE, DOCUMENTATION REQUIRED, ABILITY TO REACH A LIVE PERSON IF NECESSARY, CONSISTENCY AND TIMELINESS OF DECISIONS, ETC.)

How would you grade each plan for administrative services overall, including claims adjudication, payment policies, transparency, responsiveness, utilization management, credentialing and provider enrollment? Harvard Pilgrim was the leader with 80% of respondents giving an A or B grade and no failing grade. The other plans, both local and national, had mixed responses, with many receiving poor grades from more than half of the hospitals responding to the survey. The results reflect the high level of frustration among hospital staff who have to regularly deal with the administrative complexity resulting from health plan policies and procedures.

OVERALL, WHAT GRADE WOULD YOU GIVE EACH PLAN FOR ADMINISTRATIVE SERVICES, INCLUDING CLAIMS, ADJUDICATION, PAYMENT POLICIES, TRANSPARENCY, RESPONSIVENESS, UTILIZATION MANAGEMENT, CREDENTIALING, AND PROVIDER ENROLLMENT?

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Massachusetts Hospital Association

The leading voice for hospitals. 5 New England Executive Park Burlington, MA 01803-5096 www.mhalink.org

September 2012