Derrick B. Stark, CPA, Brandi Collins, and Angela Hayden
Blue Cross Blue Shield (“BCBS”) plans across the country are instituting a fundamental change in the rules for submitting claims for durable medical equipment (“DME”). As a result, providers are likely to see longer payment cycles, higher collection costs, reduced payments and/or more uncollectible balances. Patient risk assessments before delivery are imperative; the billing department will not be able to mitigate the damage afterwards.
Traditionally, providers have submitted claims to the BCBS plan in the state in which the provider is contracted (“Home State Plan”), regardless of the state plan in which the patient is actually covered. The provider’s Home State Plan would handle the exchange between states. Under new rules, DME providers are required to submit claims to the BCBS plan in the state in which the equipment is purchased or delivered, regardless of the provider’s contract status with that plan.
For example, assume the DME provider is located in New Jersey and Horizon Blue Cross Blue Shield of New Jersey is the Home State Plan. Further assume the provider delivers equipment across the state line to a patient living in Virginia and covered by Virginia’s BCBS plan. The provider does not have a contract with the Virginia plan. Under the old rules, the provider would submit the claim to the Home State Plan, who would then file with the Virginia plan for approval, and claims would process with in-network benefits because the Home State Plan served as the gateway. Under the new rules, however, the provider must submit the claim directly to the Virginia plan and it will be subject to out-of-network coverage benefits.
At MiraVista, we are seeing the first signs of the new rules in some, but not all, states. A few have sent notifications to providers, while others are already denying claims as OA109 “claim not covered by this provider.” Our research team has contacted customer service representatives in several states and discovered there is little continuity in their understanding. Payor websites and Internet searches provide surprisingly little guidance. While clear directives are not currently available, we suspect, based on our experience, the following scenarios:
- Claims will be improperly denied by the Home State Plan because the patient is covered under another state’s plan and there is no evidence the transaction took place in the home state
- Claims will process out-of-network
We suspect the far more devastating impact to cash flow is the latter where claims are unexpectedly processed out-of-network.
Improperly Denied Claims
Our initial discussion with some of the provider representatives at various states indicate that the goal is to determine the location of the transaction, and ultimately the appropriate insurance plan, by the place of service field on the claim form. While providers most often use a value of 12 to report a private residence as the place of service, the appropriate value for in-store deliveries has not been decided or communicated. Until place of service guidance is available, we are not sure how the payor will appreciate when the sale takes place at the provider’s location. Delivery tickets denote this information but are not typically transmitted with claims. As such, we expect these claims will almost always deny and require appeal within the applicable time limits. Appeals require a significant effort to compile and usually must be submitted in a paper format. While the cost of collection and average collection times will increase, these claims should be payable.
The far more serious scenario is when equipment is subject to the out-of-network coverage limitations. Services provided out of network:
- are often subject to significantly reduced fee schedules
- are subjected to higher deducible amounts
- often require the provider to pursue collection of amounts paid directly to the patient for services rendered
- may have different authorization or documentation requirements
Furthermore, out-of-network providers generally have limited access to resources granted by the Home State Plan such as online tools for claim status, patient information via customer service representatives, and the ability to submit claims electronically without separate enrollment.
Assessing and Limiting Risk
Providers with substantial exposure might include:
- Locations close to state lines
- Locations in states serving a highly mobile client base (e.g. Northeastern states, Florida)
- Providers that routinely mail or ship goods to other states
- Providers with high concentrations of sales to BCBS patients
- Providers that are already seeing increased denials related to these rules
Our initial inquiry and research suggest there are many unanswered questions regarding the tactical implementation of these new rules, and that uncertainty will adversely affect cash flows. For now, we are advising our clients to:
- Analyze their billing software database and historical sales to identify cases where the patient’s address is in a state where the provider is not currently contracted with that state’s BCBS plan(s)
- Begin the contracting process for those states where the provider has a significant patient base but is not currently contracted with the BCBS plan(s)
- Create an easy-to-reference cheat sheet for intake personnel to flag BCBS patients with addresses in non-contracted states
- Evaluate options for high risk patients including non-assigned claims, collecting money up front, and declining to service the patient
Understanding the risks these new rules pose is critical. In the best case scenario, delayed payments are likely. Significant equipment sales that will not reasonably covert to cash flows in a timely fashion, if ever, can disrupt the entire business. Vendors still want to be paid according to terms. Payroll is still due every other Friday. Take proactive measures to mitigate these risks and avoid the looming cash flow squeeze.
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