Claim denials by HMOs rise over 50% to $74 million

15% of hospitalizations had claims denied in part, hospitals find

33 of 47 hospitals studied

Md. health care

August 24, 1999|By M. William Salganik | M. William Salganik,SUN STAFF

HMOs denied $74 million in hospital claims last year, up more than 50 percent from $47 million the year before, according to a study by the Maryland Hospital Association.

In 1996, only $17 million in claims were denied, according to the hospital association.

While the hospitals have challenged the legality of claims denials in the past, Linda Bolton, the association's vice president for managed care and health systems integration, said yesterday that the group hopes to "work with HMOs on better strategies" for avoiding claims disputes.

Similarly, Dr. David Yalowitz, chief medical officer for United HealthCare of the Mid-Atlantic, the HMO with the highest claim denial rate in the study, said his health plan is seeking to work with hospitals from the time the patient is admitted, to make sure care is appropriate and there are not disputes later about payment.

"We view a denial as a failure in our system," he said.

However, Jeffery W. Valentine, director of corporate communications for CareFirst BlueCross BlueShield, the state's largest insurer, said his company's method of claims review had been upheld by state insurance regulators.

"We have to be diligent in our review to make sure our members are not paying for services that are not needed," he said.

The denials involve claims an HMO refused to pay in full or in part. The HMOs say some of the denied care was not medically needed, or that the hospitals had not followed proper procedures in documenting the care.

For example, an HMO might pay for only four days of a five-day hospital stay, arguing that that was enough time to treat the patient. Or, it might refuse to pay for tests it said were not needed for that patient.

At least part of the claim was denied in 15 percent of hospitalizations in the state, according to the MHA figures.

When a claim is denied, the hospital absorbs the cost. It cannot, under Maryland laws and regulations, bill the patient for the balance.

Last year, the hospital association filed a complaint with the state's insurance commissioner about claims denied by the state's two largest insurers, CareFirst BlueCross BlueShield and Mid Atlantic Medical Services Inc. (MAMSI). Insurance Commissioner Steven B. Larsen had independent physicians review a sample of cases, while his staff reviewed about 100 cases cited by the hospital association. He ruled this month that there was no evidence to support the association's claim that CareFirst was systematically and arbitrarily denying claims.

However, he did find that some claims had been denied improperly. He fined CareFirst $79,000 and MAMSI $10,000.

Bolton said the number of days of hospitalization for which claims were denied dropped somewhat, to 43,943 from 42,256. With more scrutiny by insurance regulators on "denied days," she said, the HMOs seem to be focusing more on claims for diagnostic tests and other "ancillary procedures."

She said the study was based on survey responses from 33 of the state's 47 hospitals. In 1997, she added, there were 35 responses, so the data should be roughly comparable from year to year. Also, she said, the survey targeted the HMOs with which hospitals said they were doing the most business.

Yalowitz, United's chief medical officer, said the HMO recognized that "we had issues with claims payment [delays]," and moved that function last year from its regional headquarters in Woodlawn to a claims center in North Carolina. That should result in speedier payment, he said.

Also, he continued, the HMO is working to discuss cases while the patient is in the hospital. United might recommend, for example, a patient be shifted to home care or a skilled nursing facility, avoiding disputes later about the length of a hospital stay.

Valentine said claims denials are not the problem. He said, "My question is: Why isn't the hospital association looking at why Maryland hospital costs are 8 percent above the national average?"

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