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An Act to prevent inappropriate denials for medically necessary services

Joint Committee on Financial Services

The Massachusetts Health & Hospital Association (MHA), on behalf of our member hospitals, health systems, physician organizations and allied healthcare providers, appreciates the opportunity to submit comments in strong support of HB1072, “An Act to prevent inappropriate denials for medically necessary services.”

Insurance companies should not be able to deny claims for medically necessary covered services based solely on a healthcare provider’s technical error, failure to overcome an unreasonable administrative hurdle, or for an insurer’s retroactive decision to deny previously approved services. HB1072 will ensure that hospitals are reimbursed appropriately for the good-faith delivery of medically necessary services that are covered under the patient’s insurance contract. HB1072 will also give providers needed protection from arbitrary, unfair, and retroactive decisions rendered by insurance companies, often for services that even the insurer agrees are medically necessary. It will also provide incentives for insurers to work closely with employer groups to ensure that the groups are notified promptly when an employer is terminated from a group health insurance plan.

Insurance carriers have established increasingly complex and bureaucratic sets of rules and processes for notification and prior authorization of healthcare services. The Health Policy Commission (HPC) and others have identified prior authorization as one of the primary reasons for physician burnout and administrative complexity. While MHA understands the importance to insurers of notification and/or prior authorization, the process has to be fair to providers. Requirements are different for every insurance company and sometimes differ within the insurer’s products. To complicate matters, insurers often delegate decision-making authority to outside companies for authorization of high-tech radiology, behavioral health, and pharmaceuticals. As a result, providers are dealing with literally hundreds of different companies and sets of rules. Since insurers don’t always operate 24 hours per day/7 days a week, hospitals and doctors may have to wait to receive authorization for urgent services while at the same time providing medically necessary care to their patients.

The following exemplify authorization policies of just two large Massachusetts health insurers, illustrating the complexity of these processes; other carriers have similar complicated policies. Also note that healthcare providers contract with multiple insurers that each day are adding to the list of services that require prior authorizations, which increases complexity and administrative burdens on providers.

Harvard Pilgrim Healthcare
Under Harvard Pilgrim policies, there are literally hundreds of services that require prior authorization: from ambulance transport, to behavioral healthcare, durable medical equipment, and major surgical procedures. Many of these prior authorizations must be obtained through carve-out companies. Sample language follows:

• “Unless otherwise specified, information in this policy does not apply to members with the Choice or Choice Plus products offered through Passport Connect. Prior authorization processes for behavioral health, prescription drugs and advanced imaging are managed through outsourcing.
• Servicing providers are responsible for obtaining prior authorization (when required) from Harvard Pilgrim. When possible, authorization should be requested at least one week prior to the date of service/admission to allow Harvard Pilgrim time to determine eligibility, level of benefits and medical necessity.
• Failure to comply with Harvard Pilgrim’s authorization requirements will result in an administrative denial of the claim payment and the provider is held liable for any denied claim.”

Here is the link to this language:

Tufts Health Plan
“Inpatient Notification”

An inpatient notification is notification to Tufts Health Plan via web or fax that a member is being admitted for inpatient care regardless of whether Tufts Health Plan is the primary or secondary insurer. Inpatient notification is completed by the facility where the member is scheduled to be admitted or may be completed by the specialist provider.

Prior Authorization
Tufts Health Plan requires prior authorization for certain services, drugs, devices and equipment as a condition of payment. “While you may not be the provider responsible for obtaining prior authorization, as a condition of payment you will need to make sure that prior authorization has been obtained.”

The following require prior authorization through an approved vendor on behalf of Tufts Health Plan: cardiac care, joint surgery, outpatient high-tech imaging, spinal conditions management, sleep studies, and PAP therapy

There are different authorization requirements depending on the service and whether the patient is using the CIGNA PPO or PHCS products.

This link to the authorization requirements shows the complexity for just one health plan :

These are just a small sample of the complex requirements providers face. It is easy to see how a strict deadline in an authorization, pre-registration, or clinical documentation process could be missed, a miscommunication could occur, and a claim denied based on a technicality or on an unreasonable policy. And even when insurers authorize a service as medically necessary, services may be denied retroactively upon audit by the insurer, or if a patient is retroactively dis-enrolled from an insurance plan due to employer termination. In all of these cases, the provider has rendered services in good faith to the patient, but will not get paid for those services.

The administrative costs resulting from these processes are considerable for both providers and insurers. The Council for Affordable Quality Health Care (CAQH) has estimated that in 2015, prior authorizations cost a provider $7.50 per transaction and an insurer $3.68 per transaction for a total of $11.18 (2016 CAQH Index). More recently, a JAMA article showed that costs of billing- and insurance-related activities ranged from $20 for a primary care visit to $215 for an inpatient surgical procedure (JAMA, 2018:319(7) 691-697). Provider organizations must employ nurse case managers and administrative staff to comply with the many different requirements to obtain authorization, submit claims, and file appeals on the back end when services are denied. Likewise, insurers must employ staff to accept and review requests for services and to respond to appeals from providers. These administrative requirements add considerably to the cost of healthcare delivery and, as a result, are now undergoing HPC scrutiny.

HB1072 would eliminate some of the costs related to administration and appeals, and level the playing field by requiring insurers to pay for medically necessary services provided in good faith – services that the insurer would have covered anyway. HB1072 would prevent health insurers from “Monday morning quarterbacking” – that is, reversing decisions often months later on cases that had received prior authorization and after the medical/surgical/behavioral health services had been provided to the patient. Lastly, HB1072 will incentivize insurers to work more closely with employers to reduce retroactive terminations where the provider is left with significant uncollectible bad debt.

Thank you for the opportunity to offer testimony on this matter. If you have any questions regarding this testimony, or require further information, please contact Michael Sroczynski, MHA's Senior Vice President of Government Advocacy at (781) 262-6055 or