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AB 72 Victory: IDRP Lessons for Anesthesiologists

For the first time ever, an anesthesiologist/anesthesia group has successfully appealed an AB 72 claim payment dispute under the independent dispute resolution process (IDRP) established by the  Department of Managed Health Care (DMHC). Of the 22 final determination letters (FDL’s) issued by Maximus, the independent organization engaged by the DMHC to conduct IDRP’s under AB 72, this is the first decision we are aware of in which Maximus ruled in favor of the anesthesiologist(s) and directed the payor to make an additional payment to the anesthesiologist(s) for out-of-network services.  

What was different this time?

The anesthesiologist submitting the successful appeal included evidence of his contracted rates with payors for services at the same surgery center involved in the appealed claim. The names of the payors were redacted to comply with confidentiality requirements. To substantiate the rates paid by contracted payors in the narrative that accompanied the submission to the IDRP, the anesthesiologist also submitted copies of remittances from those payors with dates of service in the same time frame to the date of service being appealed. In the copy of each remittance, the payor’s name and patient information had been redacted to comply with confidentiality requirements as explained by the anesthesiologist in his narrative.  

Importantly, the anesthesiologist’s suggested reimbursement was not for his usual and customary billed charges but for his “average contracted rate” among the payors for which he had submitted evidence.  In ruling for the anesthesiologist, Maximus made the following comment: “The only evidence and basis for an appropriate reimbursement amount in the submitted information and documentation is one based upon the Provider’s documentation of the average contracted rate,” referring to the average among the contracted payors mentioned above.

The quoted language from the final decision letter bears an additional comment. It suggests that Maximus not only rejected all of the evidence submitted by the payor in the IDRP submission, but also all of the evidence submitted by the anesthesiologist with the exception of the average contracted rate evidence. The anesthesiologist had taken great pains to submit evidence of his (i) his training, qualifications, and length of time in practice; (ii) the nature of the services provided; (iii) the fees usually charged by the provider; (iv) prevailing provider rates in the area; (iv) other relevant aspects of the economics of the provider’s practice, and (vi) any unusual circumstances. These are the six factors listed in the DMHC Guidelines as relevant to the determining the Provider’s suggested appropriate reimbursement amount for the claim at issue. It is unfortunate that, despite the DMHC Guidelines, Maximus determined that none of these factors “provide evidence of the appropriate conversion factor in this case.”

In all the other FDL’s for anesthesia services we have reviewed, Maximus determined that the initial payment from the payor under AB 72 was the appropriate reimbursement. It appears that Maximus applies the rules of “baseball arbitration” to its determination. That is, it chooses which rate proposed by the parties is the more reasonable, rather than making an independent determination of what is appropriate. 

What lessons can be learned from this first AB 72 IDRP success?

Given Maximus’ propensity for applying baseball arbitration, it makes sense to suggest appropriate reimbursement that is consistent with your contracted rates rather than your usual and customary rates. You should also submit appropriately redacted remittance evidence from your contracted payors for dates of service near the time of the services under appeal. If you have remittances for the same type of procedure at the same facility, this is ideal. Otherwise, remittances for other procedures at other facilities will suffice. The most recent FDL suggests this is the only information and documentation Maximus will consider in making its determination. Even so, we advise that you continue to submit evidence and documentation consistent with the factors cited in DMHC Guidelines that Maximus rejected. That is, you should follow the Guidelines even if Maximus does not. 

In order to make your IDRP submissions easier and more effective,  a narrative template accompanies this article. Of course, most of your final narrative will include information specific to you, the case on appeal, and your contracted rates. The template should help ensure you do not omit anything that should be included.

There is more at stake than your specific case and under payment when you submit an appeal to IDRP. A successful appeal gives you leverage in your negotiations with the non-contracted payor. If you and others demonstrate resolve in appealing under payments, the non-contracted payors will see that refusing to contract at reasonable rates is not a money saving strategy. Any time and every time you have a successful appeal you should consider offering to enter into a contract with the payor at the rate Maximus determined reasonable. If you assert you intend to appeal any future under payments, the payor should be willing to negotiate. If not, you should let CSA know.  

We encourage you to make your appeal submissions as streamlined as possible. Health and Safety Code section 1371.30(b)(4) allows a “physician group . . . to act on behalf of a non-contracting individual health professional to initiate and participate in the independent dispute resolution process.” I believe the best arrangement would be to have representatives (and more than one) from your revenue cycle management company or billing service interface with the IDRP site on your behalf. The web base submission system set up by the DMHC  negates some of the efficiencies intended by the Legislature, but the CSA will be working with the DHMC to remedy these deficiencies.

The vigorous and successful use of the IDRP system could not help but have the effect of encouraging the payors to offer reasonable rates. Please continue to keep the CSA apprised of your efforts, both successful and unsuccessful. Your efforts will help CSA in its dealings with the DMHC and the Legislature in addressing and correcting problems with AB 72 and how it is enforced.

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