Fall 2023

The Complexity of Payer Policy Changes
By Kacie Geretz, RHIA, CPMA, CPC, CCA
For The Record
Vol. 35 No. 4 P. 26

How to Proactively Manage Them, Improve Compliance, and Prevent Denials

Rising health care costs, advancements in medical technology and treatments, and new legislation and regulation are driving payers to frequently update their policies concerning reimbursement rates, coverage criteria, billing and coding policies, and prior authorization requirements. Payers, however, are not required to adhere to a single set of guidelines when updating their policies. As a result, each payer has a unique set of processes and policies to support coverage decisions and explain reimbursement for health care services provided to patients. What’s more, payers don’t publish these policy changes using any standard formats, forums, or timelines.1 For health care providers, it’s therefore incredibly challenging to stay up to date with the growing number of policy changes, adding to the high level of administrative complexity already faced by hospitals, health systems, and physician offices daily.2

Methods providers have traditionally used to keep up with payer policy changes are lacking, and those that exist largely rely on manual systems and retroactive processes. Often inefficient, time-consuming, and unreliable, the existing approach leaves providers unable to effectively and proactively manage and implement new payer policy changes, especially those related to billing and coding guidelines or coverage criteria. This puts provider organizations at risk of compliance issues, denials, and lost revenue down the line.

To meaningfully improve the effectiveness of payer policy management and proactively reduce the risk of denials and underpayments, providers are turning to technology that enables automation and provides them with the flexibility to proactively implement payer policy changes when and where needed in the revenue cycle.

An Ever-Evolving Health Care Landscape
The rising cost of health care has been a long-standing challenge for payers. Inflation, increased pharmaceutical prices, and health care labor shortages have increased the cost of health care and are expected to continue to do so in 2024.3 As a result, payers must consistently assess their policies to strike a balance between coverage and affordability for their members. This could involve adjusting copayments, deductibles, and reimbursement rates, all with the aim of effectively managing costs while ensuring adequate coverage.

Advancements in medical technology and treatments (eg, medications and procedures) also result in changes to payer policies. Payers must evaluate the cost-effectiveness and clinical efficacy of new treatments to determine how to cover and reimburse these innovations appropriately. This typically results in policy changes to reimbursement rates and coverage as well as to medical necessity guidelines that directly affect coding and billing.

Furthermore, changes to government regulations and health care laws can have a significant impact on payer policies. New laws or updates to existing regulations may require payers to adapt their policies to remain compliant. Additionally, changes in government programs, such as Medicaid and Medicare, can influence payer policies for beneficiaries under these programs.

With the cost of health care continually increasing, the growing and rapid adoption of new medical technology and treatments, and regular changes to government policies and health care laws, payers are left with little choice but to frequently update their policies. While this creates a burden for payers, it also results in some serious challenges for health care providers whose revenue directly depends on remaining compliant with the policies of different payers.

Keeping Up With Payer Policy Changes
The frequency of payer policy changes has been increasing as health care becomes more complex. In a recent article, J. Scott Milne, senior director of product management at Experian Health, commented that “[Experian] is seeing an uptick in the volume and velocity of payer policy changes, updates, requirements, and terminations.”4 While the sheer volume of payer policy changes that providers must stay up to date with is a challenge in and of itself, there are other obstacles that make it especially complicated for providers to effectively manage and implement payer policy changes.

Inconsistent Rules
The biggest hurdle providers face when it comes to payer policy changes is inconsistency. There are more than 1,000 different health care payers in the United States, and each has a unique set of policies for approving and paying claims.5 These inconsistent rules also vary based on specialty and region.

Additionally, regulatory updates often trigger payers to make a change to their policies. Each payer, however, may have a different way of interpreting a new regulation and adjusting their policy based on it.

Providers are thus in the position of having to keep up with numerous payers’ policies and each of the changes implemented to them. Further complicating matters for providers, while today most claims are submitted electronically, many payers require additional documents to support claims, increasing the administrative burden of the claims process.

Complex, Lengthy Changes
Adding to these challenges, payer guidelines are often long, intricate documents filled with technical jargon and complex terminology. These documents may cover a wide range of medical services, procedures, and diagnoses. Therefore, it can be difficult for providers to focus on the updates that are relevant to them (eg, those based on a specialty area or facility type).

Limited Communication
The only way for providers to find out about payer policy changes is to proactively visit each payer’s website and look for information about policy updates or to sign up for each payer’s e-newsletter—a time-consuming, manual task. Additionally, e-newsletters could easily get lost in a busy inbox or spam folders, making it easy for providers to miss policy change announcements from different payers.

Payer Policy Management Best Practices

Automate Payer Policy Alerts
Nowadays, there are software solutions that scan all known sources where policy updates might be posted, like payer websites, e-newsletters, and third-party websites. These tools then consolidate that information and deliver a report to providers on a frequent basis (certain tools send out reports as often as every day). For providers, this frees time and resources that otherwise would have been spent combing through payer websites and crowded inboxes.

Many of these solutions that automate payer policy alerts take it a step beyond just notifications, providing summaries of the changes, links to the affected policies, and breakdowns of the changes by specialty. Summaries can help mitigate confusion, and breaking down the changes by specialty ensures that providers don’t waste time sifting through policy adjustments that don’t apply to them.

Lastly, and perhaps even most importantly, automating payer policy alerts ensures that no payer policy changes fall through the cracks. When providers miss even a minor payer policy change, it can result in noncompliant preauthorization, incorrect medical coding, or issues at other stages of the revenue cycle that lead to denials and lost revenue down the line.

Automate Edits Within Billing and Clearinghouse Claim Creation Workflows
In most health care organizations, once a payer policy update is identified and understood, the billing department may need to either manually update or request an update to the chargemaster or add to/edit a billing edit. In some cases, this process happens retrospectively and therefore doesn’t ensure that all payer policy changes are taken into account at the time they are put into effect.

Just as some solutions automate the detection of payer policy alerts, there are solutions that leverage the information in the updates themselves to automatically identify claims where reimbursement will be negatively affected before they’re sent to payers. To automate this process with the utmost accuracy, such solutions use a massive knowledge base of the latest payer guidelines to create actionable edits for billing and/or coding teams to resolve before the claim is sent to the payer.

Taking advantage of this type of automation enables providers to proactively avoid denials, underpayments, and compliance risks by efficiently hardcoding all payer policy changes into the revenue cycle’s workflow. Doing so also ensures that the reimbursement is optimized for the health care services and care provided.

Automate Coding
Most providers approach medical coding as payer-agnostic, meaning that coders focus on aligning with internal guidelines and guidelines provided by nonpayer organizations such as the American Medical Association (AMA). In this workflow, as mentioned previously, the billing department handles all payer-specific updates, code changes, and modifiers, or, if necessary, goes back to the coding team and requests that it updates its coding based on the payer policy change.

Ideally, payer policy changes would be implemented during the coding stage to avoid unnecessary back and forth between the billing department and coding staff. However, this would likely add a significant administrative burden to coding staff, who are already stretched thin for resources.

That’s where automated coding technology comes in. Today, there are certain automated coding solutions that can make it much easier to implement payer policy changes during the coding stage of the revenue cycle without adding additional administrative burden to medical coders themselves. These solutions, which leverage artificial intelligence to assign medical codes to patient charts with no human intervention, use a rules-based approach to implement standard coding guidelines from CMS and AMA, as well as providers’ internal coding guidelines. This ensures that the codes assigned by these solutions are always compliant.

Just as these solutions are configured to align with CMS and AMA guidelines, they can also be configured to include the latest payer policy changes related to coding or documentation. By leveraging automated coding technology that’s capable of such configuration, providers can ensure that their medical coding is compliant, mitigate the need for retrospective edits, and reduce the risk of coding or modifier-related lost revenue.

How to Get Started
It’s unlikely that payers will change the processes they employ to update their policies anytime soon. If anything, given how rapidly the health care landscape continues to evolve, these processes and policies will likely become more and more complex in the coming years.

To simplify such complexity, it’s in providers’ best interest to invest in processes and technology that proactively improve the efficiency of payer policy management. But where should providers start? It’s ideal to implement such processes and technology early in the revenue cycle to proactively reduce compliance issues down the line. That said, this approach may not work for all providers. Providers can also start by identifying which stage of the revenue cycle drives the most denials and underpayments. For example, do your payer compliance issues stem from front-end processes like insurance eligibility, or are they caused by noncompliant coding or documentation later in the revenue cycle? Answering questions like these will help providers select the solution that will drive the biggest improvements to their claims denial rates, underpayment rates, and payer policy management processes. What’s important is getting started now.

— Kacie Geretz, RHIA, CPMA, CPC, CCA, is the revenue cycle management solutions manager at Nym (www.nym.health), a health care technology company that leverages artificial intelligence and clinical language understanding to fully automate the medical coding process. As a key member of Nym’s commercial team, Geretz focuses on aligning Nym’s product roadmap to the needs of the company’s customers and ensures that Nym’s medical coding engine is always compliant with the latest regulatory updates. Prior to working at Nym, she managed mid to backend processes such as revenue integrity, chargemaster, managed care contracting and credentialing, and denials analytics within health systems and medical centers.

 

References
1. Norris A. Rev cycle leaders call out two major players in their fight with payers. HealthLeaders Media website. www.healthleadersmedia.com/revenue-cycle/rev-cycle-leaders-call-out-two-major-players-their-fight-payers. Published February 24, 2023. Accessed August 30, 2023.

2. Cass A. Biggest challenges facing revenue cycle leaders. Becker’s Hospital Review website. www.beckershospitalreview.com/finance/biggest-challenges-facing-revenue-cycle-leaders.html. Published June 8, 2022. Accessed August 30, 2023.

3. Lagasse J. Payers could see 7% spike in healthcare costs in 2024. Healthcare Finance News website. www.healthcarefinancenews.com/news/payers-could-see-7-spike-healthcare-costs-2024. Published July 5, 2023. Accessed August 30, 2023.

4. How to keep up with changing payer requirements. Experian Health website. www.experian.com/blogs/healthcare/2022/05/how-to-keep-up-with-changing-payer-requirements/. Published May 25, 2022. Accessed August 30, 2023.

5. National Association of Insurance Commissioners. U.S. health insurance industry analysis report. https://content.naic.org/sites/default/files/inline-files/health-2022-mid-year-industry-report.pdf. Published 2023. Accessed August 30, 2023.