Medicaid Recoupment Programs Bypass Providers


The following is a very long blog directed at those responsible for reimbursement issues for your ED group or site.  Though a bit complicated, is pretty interesting, both from a revenue standpoint for Emergency Physicians, not only in California, but throughout the nation, and from the standpoint of maintenance of our reputation with patients.  The basic gist of this issue is that state Medicaid programs have been employing private agencies to recoup payments made to providers through the Medicaid fee-for-service programs in instances where the enrollee MAY have also been covered by a commercial carrier on the date of service.  This process, which in California bypassed the providers entirely, allowed the commercial carriers to escape with millions in unearned profits, and denied providers the opportunity to receive the revenues they were rightfully due.  If this is happening in your state (it probably is), you may find that you have an opportunity to reassert your right to participate in this process, and reclaim these revenues.  I believe that as other health departments in other States become aware of the inadvertent consequences on providers from this program, they may, as the DHCS has in California, willingly consider revisions to the recoupment program.

My ED group first became aware of this Medicaid (Medi-Cal) recoupment program in California somewhat by accident, aided by careful attention to claims management.  More than a year ago, CEP America (CEPA) received a number of notices from Blue Cross requesting additional information to make an eligibility and benefits determination on claims that (we subsequently discovered) were sent to Blue Cross by Health Management Systems (HMS) on behalf of the Department of Health Care Services (DHCS), using CEPA’s group name and our providers’ identification numbers, to try to recoup payments made to CEPA by the MediCal program.  HMS had been contracted by the DHCS to manage this recoupment process (as it has in other States).

What appears to have happened here is that HMS was using Medi-Cal claims data, provided by the DHCS, to try to identify patients who may possibly have simultaneous coverage under the Medi-Cal program and under an indemnity plan like Blue Cross on the date of the provider’s service.  HMS compared the Medi-Cal claims to plan enrollment data provided by several plans, including Blue Cross, obtained under a data sharing agreement with these plans.  HMS then sent claims to these plans in the hope that the patients might have also been covered by the plans, using the CEPA’s provider name and identification number on the CMS 1500 claim form, but using a different PO Box payment address so that any payment is sent to the HMS and the DHCS, and not to CEP America. These claims were supposed to have been processed in a unique manner by these plans, but due to an inadvertent mix-up, BC processed some of these claims as if they came from CEPA.  Since many of these enrollees turned out not to have dual coverage on the date of service; BC inadvertently sent notices to CEPA requesting additional information on the claim hoping to resolve the eligibility question.  HMS indicated that CEPA should never have received these notices, but nonetheless, these notices alerted CEPA to the fact that BC was being billed under CEPA’s provider name and number by HMS.

Furthermore, in a couple of cases, HMS identified patients who appeared to have BC coverage, sent the claim to BC, and it turned out the patient had the same name as the actual BC enrollee, but a different birth date.  One such claim listed both the CEPA provider’s charge of $306 and the payment by Medi-Cal to CEPA of $68.35.  BC then sent their enrollee an EOB indicating that the patient had not yet met their deductible level for the year, and thus the patient owed $186.91 (based on the BC allowable payment).  Had this enrollee met their deductible for the year, BC could easily have sent this $186.91 to the DHCS/HMS PO Box directly.  However, when the patient received the EOB, they contacted BC to say that they had not been treated in the ER on 8/11/2007, and furthermore had not been pregnant at the time (as alluded to in the EOB).  BC then sent CEPA a patient grievance notice asking CEPA to respond to the patient’s grievance.  This is but one of several examples which demonstrated that:

1) The cross-referencing of Medi-Cal claims and commercial plan eligibility logs relied on incomplete data, and misidentified some patients
2) Some of the claims sent to the plans were misleading and inaccurate, and could easily result in incorrect payments by the plan or the patient to DHCS, and damage to the provider (and we were never able to determine how many such claims were previously miss-paid by the plan or the patient)
3) The recoupment process (at least for this program) inappropriately bypassed the provider, thus denying the provider the opportunity to obtain reimbursement at the higher commercial indemnity rate
4) The process made it difficult if not impossible for the provider to subsequently recover proper payment from the health plan if the provider were later to discover that the enrollee had commercial coverage, as the provider’s claim to the plan would be rejected as a duplicate to the claim from HMS.

HMS indicated that it had the right to try to recover these payments directly from the health plan using the provider’s name and ID number, based on existing subrogation rights statutes.  Furthermore, even when the claims screening process actually identified a patient who did have indemnity coverage at the time of CEPA’s service, the claim sent by HMS to the insurance plan might result in payment at the contracted commercial rate referenced under CEPA’s provider number, rather than a payment that rebates DHCS the exact amount of the payment made by DHCS to CEP.

Once we had identified these issues, we asked the DHCS to consider allowing CEPA to participate directly in the claims submission / recovery process, using the list identified by the HMS cross-reference process.  The DHCS was quite willing to consider establishing a pilot program to test this concept, in light of the problems we had identified, and recruited HMS’s participation in the pilot.  Although it took HMS a full year to set up the pilot program, they eventually submitted 3369 CEPA claims paid by Medi-Cal where the enrollees were thought to have simultaneous commercial plan coverage.  HMS requested a total of $248,098 in Medi-Cal payment refunds to the DHCS on these claims.

Of these 3369 claims, 1897 claims have thus far been successfully closed.  These 1897 claims represented $138,626 in potential refunds to DHCS.  We determined that of this amount, only $34,327 was actually due to DHCS in refunds (which will be retracted by the department directly).

No refund was due for 1432 claims representing $104,299 in potential recoupments: 762 claims representing $58,000 related to lack of coverage eligibility under the carrier on the date of service; 361 claims representing $21,000 had originally been billed to and paid appropriately by MediCal as the secondary payer (these claims should probably not have been submitted to HMS in the first place); and 309 claims representing $25,000 were not eligible for recoupment for other various other reasons, which were documented and sent to HMS).

CEPA collected $91,357 from primary carriers from the remaining 465 claims that were actually found to have primary commercial coverage on the date of service.  Thus, CEPA retained $104,299 in appropriate Medi-Cal payments (some of which might otherwise have been inappropriately recouped) and received an additional $57,030 after collecting from the plans and making rebates to the Medi-Cal program.

At this time, we still have 1472 unresolved claims due to the following issues:

1) Carrier denied payment due to untimely filing even though supporting documentation was submitted with the original billing to justify late filing.
2) Carrier indicated (on follow-up calls for claims status) that the claims could not be found, thus requiring resubmission on paper, which allows the carrier to take an additional 45 workings day to respond to the claim.
3) Carrier has failed to respond to the claim within 45 days, requiring additional follow-up calls – status pending.

We anticipate that when all 1472 pending claims have been successfully (and accurately) adjudicated, CEPA may collect an additional $80,000 in revenues, and provide an additional $30,000 in rebates to the Medi-Cal FFS program, for a total net additional revenue of over $120,000 from the 3369 claims identified by HMS.  The cost of managing these claims will probably be around $20,000.  Based on even this incomplete result, the DHCS now appears to be ready to remodel the recoupment program with HMS to enable all providers in California to participate in the process.  Given that CEPA represents about 15% of the California ED physician market, this could mean an additional $1-2 M a year for ED physicians in our state. This is not a huge amount, but it appears to be worth the effort, and perhaps more importantly, eliminates the mistakes that can undermine provider relations with our patients, while allowing the Medicaid program to recoup payments appropriately.

It is likely that the same recoupment process, which has been in place in California for several years, is also in effect in many other states, and may deserve to be remodeled to incorporate, rather than exclude, providers.   I think you will see that HMS is in many states doing what they have been doing for the CA Medicaid program, and by the way, HMS also does this or similar recoupment processes for several other government and private clients.  In fact, in CA they provide recoupment services for Medicaid HMOs, though in this program providers get to participate.  However,  the provider has only 45 working days to adjudicate the claim with the alternate payer before the Medicaid Managed Care payment is retracted.  In CA, HMS  ‘demands’ recoupments without bothering to do the work of checking with the alternate payer’s on-line coverage eligibility database for coverage on the specified date of service, resulting in demands for recoupment for many patients that did not have simultaneous coverage on the date of service.

I would suggest that ACEP members send out inquiries to their Medicaid departments asking if HMS, or any other organization, has been contracted to manage recoupment for Medicaid patients in the state that were thought to possibly have simultaneous commercial or Medicare coverage, and whether this contractor was responsible for submitting claims to these alternate carriers, using the provider’s name and id numbers on these claims.  If the answer is yes, I would suggest stating concerns about the inadvertent impacts such a program might be having, based on the fact that the contractor is likely misidentifying (with their cross-check process) far more instances of simultaneous coverage than actually occur (see the issues listed above), and insisting that providers should have the opportunity to send these claims themselves, and provide rebates to Medicaid when appropriate.

Assuming that the Department in question is willing to revise the program to include provider participation, I would suggest insisting that 1) the provider have at least 120 working days to adjudicate the claim with the new primary before any recoupment or retraction is made, 2) HMS be required to do online eligibility determinations with the potential new primary carrier for the date of service in question before sending the information and recoupment request to the provider, 3) that HMS be required to use the patient’s name and at least one and preferably two additional patient identifiers (date of birth, Medicaid enrollee number) to ensure proper patient identification, and 4), that any retractions done by the Medicaid program should properly identify on the retraction notice (warrant) the specific claim to which the retraction applies.  Ideally, no retractions should be due unless the commercial carrier has paid first.   EMTALA obligated providers can not afford to be bypassed in the recoupment process.

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  1. #1 by valorie - March 25th, 2010 at 12:50

    is there a statue of limitation in Texas for recoupment requests. We are getting them for 2 or 3 years ago.

  2. #2 by D Smith - July 2nd, 2015 at 19:00

    The statute of limitations for Medicaid reclaimation is 3 years.

    I am currently working for such a firm, calling insurance companies to recoup payments. I can’t say anything too specific, but today I found myself calling an insurance company on behalf of a firm of physicians, to reclaim money due Medicaid. The CSR for the insurance company asked me to explain that. I couldn’t explain. I asked my supervisor, who, mind, wouldn’t have necessarily been answering on behalf of the company I worked for, and got a version of stop thinking and do your work.

    I’d really appreciate a clear explanation of what is going on, and so far I can’t find one online.

    I’m also specifically interested in any reason to think HMS in particular, is engaged in something shady, as distinct from sometimes billing the wrong party by accident or getting something confused.

    Thanks!

  3. #3 by D Smith - July 2nd, 2015 at 19:03

    Oh, one other thing.

    When HMS collects medicaid reclaimation payments, the payments do go specifically to HMS and not the insurance company or whoever is doing the reclamation. HMS is specifically contracted by the insurance company or other providers to collect the money on their behalf. Now, don’t ask me specifically how that works, because that is what I am trying to find out. It makes sense when the contractee on whose behalf I am calling is a state medicaid agency… But from what people have been telling me on the phone, the identity of the place where the payment is to go is very explicit, though usually I’m talking to people more confused than I am.

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