Health Plans’ Use of Policies and Guidelines to Reduce Coverage and Reimbursement
A technique we have seen payers use more commonly in recent months than in the past is to unilaterally implement policies or “clinical guidelines” that arguably change the coverage of key healthcare services for their members. These policies or guidelines are, in most cases, not issued pursuant to amendments to contracts, but rather as purported utilization review or member benefit changes to which hospitals have not expressly agreed. These internal policy changes may have material effects on the reimbursement hospitals actually receive under their contracts.
Anthem, Inc. and its subsidiaries are at the forefront of imposing these policies and have recently implemented several “site of service” policies in the states in which they operate. United has followed suit in announcing that it will implement an imaging site of service policy that closely tracks Anthem’s policy. In addition, both Anthem and United are applying policies that deny or downcode claims for emergency services if, based on a post-hoc review of the patient’s medical record and final diagnosis, the insurance company determines that the patient was not in fact experiencing a medical emergency at the time of the emergency room visit (the “ED Policy”) or, in the case of United, if the insurer determines that the level of service billed was too high. Humana has implemented a policy to perform a retrospective review of facility ED billing levels and to adjust billings downward where the level billed does not match Humana’s results achieved through a proprietary set of computer algorithms.
Hospitals are beginning to challenge these policies, particularly the Imaging Policy and the ED Policy, by filing actions seeking remedies for breach of contract and injunctive relief in court and in arbitrations across the country. Other providers are seeking contract solutions to address the policies' impact. The following are some examples of how payers have implemented this strategy:
Anthem’s Imaging Policy
The Imaging Policy sets forth Anthem’s “determination of the medical necessity of hospital outpatient level of care” for certain radiologic imaging procedures that it refers to as “advanced,” including MRIs, CT scans, and PET scans. The Imaging Policy provides that Anthem considers an advanced radiologic imaging procedure to be “medically necessary” and “appropriate” for the hospital outpatient imaging department only when certain criteria are present. When Anthem determines that it is “not medically necessary” to perform an imaging service in the hospital’s outpatient imaging department, under the policy, Anthem will redirect the imaging service to a freestanding imaging center, which can be lower in cost. In other words, in the states in which Anthem has implemented this policy, Anthem is determining whether an outpatient MRI, CT scan, or PET scan is “medically necessary” based on where the service is performed.
Depending on the specifics of their managed care contracts with Anthem, providers may be able to bring breach of contract actions arising from the Imaging Policy. Providers may also have arguments that the Imaging Policy interferes with physician medical judgment by limiting physicians’ ability to refer patients to what the physician deems to be the most clinically appropriate setting for the imaging service. In some communities, there are tangible differences in the quality and sophistication of the imaging equipment, and the expertise and availability of radiologists who interpret the imaging studies, between the hospital outpatient imaging department and the local freestanding imaging centers. Moreover, the Imaging Policy raises issues relating to access to care by potentially requiring patients to drive more than thirty (30) miles to receive an imaging study at a freestanding imaging facility.
Some medical societies, physician advocacy groups, state hospital associations, and others have expressed criticism over Anthem’s Imaging Policy. For example, the American Medical Association stated their “serious reservations regarding the policy’s potential impact on timely access to care and health outcomes,” noting that “[c]ritical imaging services may be delayed while arrangements are made for care at an alternative, approved site of service.” The American College of Radiology noted that “[s]ite-of-service decisions based solely on imaging costs also negatively impact patients by ignoring pre-existing relationships between referring physicians and radiologists. These relationships between ordering and rendering physicians are largely based on quality of care and the skills of the radiologist who perform [sic] and interprets the imaging study.”
United’s Imaging Policy
United introduced its own Imaging Policy in 2018. Although the Imaging Policy was scheduled to become effective on January 1, 2019, United delayed the policy implementation until April 1, 2019 (further than its original delay to February 1 and subsequent delay to March 1). According to United, the delays “help ensure [United] provide[s] a more positive member and provider experience throughout the prior authorization process . . . .” United’s proposed Imaging Policy requires prior authorization for certain advanced imaging procedures, such as MRIs and CTs, if they are performed in the outpatient hospital setting, and the prior authorization process will include a “site of care review.” The site of care review is not performed if the procedure will be performed in an office setting or in a free-standing diagnostic radiology center. The policy clarifies that prior authorization will not be required if the imaging is performed in the ED, an observation unit, an urgent care center, or during an inpatient stay. United has clarified that the site of care reviews apply to all states other than Alaska, Connecticut, Iowa, Kentucky, Maine, Utah, Vermont, or Wisconsin.
Anthem’s Emergency Department Policy
Anthem’s ED Policy, which looks at the medical necessity of services provided to patients in hospital Emergency Departments, has been the subject of numerous articles and media reports. According to a notification that Anthem sent to its members in Missouri prior to implementing the ED Policy, “you’ll be responsible for ER costs when it’s NOT an emergency.” The notification to members lists the following types of conditions which Anthem considers to be emergency conditions: “chest pain, stroke, poisoning, serious breathing problems, unconsciousness, severe burns or cuts, uncontrolled bleeding, or seizures.” The American Medical Association has spoken out strongly against the Anthem ED Policy, stating that: “Anthem is asking that patients act as highly trained diagnosticians, skills our members spent many years of their lives acquiring. Moreover, Anthem’s policy requires that they diagnose their acute symptoms at a critical and emotional moment, when time could be of the essence. The impact of this policy is that very ill and vulnerable patients will not seek emergency medical care while, bluntly, their conditions worsen or they die.”
Providers challenging the ED Policy will argue that the policy breaches the managed care agreement by improperly amending the agreement’s definition of “Emergency,” which typically incorporates the “prudent layperson” standard for determining whether an emergency exists. The “prudent layperson” standard in turn is focused on the patient’s symptoms at the time he decides to seek emergency care. The Affordable Care Act defines “Emergency medical condition” as:
A medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) so that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in a condition described in clause (i), (ii), or (iii) of section 1867(e)(1)(A) of the Social Security Act (42 U.S.C. 1395dd(e)(1)(A)). (In that provision of the Social Security Act, clause (i) refers to placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy; clause (ii) refers to serious impairment to bodily functions; and clause (iii) refers to serious dysfunction of any bodily organ or part.) (Emphasis added.)
Further, because the “prudent layperson” is codified in state and federal law, providers may argue, depending on the relevant contract, that the ED Policy breaches contract provisions requiring the insurer to follow all state and federal laws.
Anthem so far has rolled out the ED Policy in Kentucky, Georgia, Missouri, Indiana, Ohio, and New Hampshire. Due to the outpouring of criticism against the policy, Anthem partially pulled back the policy effective January 1, 2018. A version of the policy that specifically applies to providers of out-of-network emergency services has been rolled out in Texas by Health Care Service Corporation, an entity that operates Blue Cross plans in Illinois, Montana, New Mexico, Oklahoma and Texas. In Texas, notice of the policy’s rollout faced immediate objection. The Texas Department of Insurance sent a letter in May 2018 to Anthem asking for Anthem to clarify its ED Policy. A subsequent meeting resulted in Anthem agreeing to delay the ED Policy’s implementation for 60 days past its initial rollout date of June 4, 2018. On November 30, 2018, Code 3, which operates freestanding emergency room facilities in Texas, obtained a Temporary Restraining Order enjoining Blue Cross Blue Shield of Texas from applying its ED Policy to ED claims submitted by Code 3.
Downcoding E&M and NICU Codes
Like Anthem, United has implemented a policy focused on reducing what it pays for ED services. The United policy focuses on coding rather than coverage, however. On March 1, 2018, United Healthcare rolled out its ED Facility Evaluation and Management (E/M Coding) Reimbursement Policy that focuses on emergency department codes 99284 and 99285. Pursuant to this policy, United Healthcare is adjusting ED E/M codes “to address inconsistencies in coding accuracy.” United Healthcare is using the “Optum Emergency Department Claim Analyzer” tool, which, according to the insurer, “determines appropriate E/M coding levels based on data such as the patient’s presenting problem, diagnostic services performed during the visit and associated patient co-morbidities.” The Optum Claim Analyzer supposedly “systematically evaluates each ED visit level code in the context of other claim data (i.e., diagnosis codes, procedure codes, patient age, and patient gender) to ensure that it reasonably relates to the intensity of hospital resource utilization as required per CMS (Centers for Medicare & Medicaid Services) guidelines.” The new policy applies to both UHC’s commercial plans and its Medicare Advantage plans, as well as claims submitted to UHC from non-participating facilities. CMS has recognized that there are no national guidelines for emergency E&M codes, and that hospitals can report emergency visits according to their own internal hospital guidelines as long as (a) those guidelines reasonably relate the intensity of the hospital resources to the levels of effort represented by the codes, (b) they are based on hospital, not physician, resources, (c) the guidelines are clear, (d) they meet HIPAA requirements, (e) they only require documentation that is clinically necessary for patient care, and (f) they do not facilitate upcoding or gaming.
Humana published in April 2018 a new claims payment policy for E&M reimbursement (codes 99281-99285) in the emergency department setting. Humana’s policy outlines the criteria its plans use to determine the appropriate E&M code that facilities “should” report for ED care. In its policy, Humana noted that its plans compare facility charges for E&M services in EDs to its policy guidelines, and, if the criteria associated with the facility’s billed code are not satisfied, Humana allows reimbursement at the highest ED E&M code level permitted in its policy guidelines.
Similarly, health plans are also using utilization management tools to downcode Neonatal Intensive Care Unit (“NICU”) codes on hospital bills. Whether the hospital’s claims meet the health plan’s criteria may, in many cases, depend on the utilization review standards used by the hospital and the health plan. For example, Milliman and InterQual review criteria do not always align.
Hospitals are now seeing the effects of these new policies and are seeing their codes being downgraded by one to three levels and their payments being reduced by material amounts. King & Spalding is representing a number of providers regarding these matters.
Denials For Readmissions
Health plans are increasingly using internal policies regarding readmissions to deny reimbursement to hospitals where the patient returns for treatment to the hospital for the same or closely related conditions. These readmission policies apply also to other facilities that operate under the same provider agreement as the hospital, operate under the same tax identification number as the hospital, or under common ownership as the hospital.
What constitutes a related readmission is often vague and subject to differing interpretations. For example, Anthem’s readmission policy states that it will use clinical coding criteria to determine if the subsequent admission is for:
We believe that in many cases, these new readmission policies are inconsistent with, and superseded by, the terms of the hospitals’ agreements with the health plans, as many of those agreements are based on the assumption that the hospital will be reimbursed for each separate admission regardless of the cause of the readmission.
Anthem Pre-Certification Penalties
This policy provides that Anthem will impose penalties of up to 30% of the claim if the provider fails to notify Anthem of admissions within the timeframes specified in the Provider Manual. On its website, Anthem specifies that pre-certification should be provided in the following circumstances: (i) at least 24 hours before an elective admission or outpatient procedure; (ii) within 72 hours of an urgent or emergency admission; or (iii) within seven days of urgent or emergency care or an unanticipated in-office procedure.
We believe that this policy may also be inconsistent with, and superseded by, the terms of the provider agreements. We also believe that this may be unenforceable under state laws prohibiting penalties and forfeitures.
Downgrading Levels of Care for Short Stays and Observation Claims
A number of health plans (including Anthem, United, Aetna and Blue Shield of California) are denying and/or underpaying hospital claims that involve 1-2 day inpatient stays and observation services on the grounds that the inpatient or observation services are not medically necessary. In many cases, the health plans are using after-the-fact reviews of the patient’s ultimate condition to second-guess the admitting physician’s judgment that the patient’s symptoms posed a serious enough concern to justify admission as an inpatient or for observation. Hospitals, of course, are required to follow the treating physician’s orders and are required to provide the necessary services. Health plan clinical reviewers who deny these services as not medically necessary do not, in many cases, have the necessary expertise in the relevant medical specialty. King & Spalding is currently representing a number of providers regarding this issue.
 See Tara Bannow, Hospitals cry foul and sue Anthem over new policies, Modern Healthcare (April 21, 2018), available at http://www.modernhealthcare.com/article/20180421/NEWS/180429976.
 Letter from James L. Madara, MD (Executive Vice President and CEO of the American Medical Association) to Craig Samitt, MD (Executive Vice President and Chief Clinical Officer of Anthem, Inc.), (Sept. 27, 2017).
 American College of Radiology, Anthem Restrictive Imaging Policy Raises Concerns (Sept. 15, 2017), available at https://www.acrdsi.org/sitecore/content/ACR/Advocacy-and-Economics/Advocacy-News/Advocacy-News-Issues/In-the-September-15-2017-Issue/Anthem-Restrictive-Imaging-Policy.
 UnitedHealthcare, Site of Care for Outpatient MR/CT Services FAQ, available at https://www.uhcprovider.com/content/dam/provider/docs/public/prior-auth/radiology/Site-Care-Outpatient-MRCT-Svcs-FAQ-Commercial.pdf. See also UnitedHealthcare, February 2019 Medical Policy Update Bulletin, available at https://www.uhcprovider.com/content/dam/provider/docs/public/resources/news/2019/mpub/medical-policy-update-bulletin-february-2019.pdf.
 UnitedHealthcare, Outpatient Radiology Notification/Prior Authorization Protocol (2019 Administrative Guide, p.41), available at https://www.uhcprovider.com/en/admin-guides/administrative-guides-manuals-2019.html. See also MRI and CT Scan-Site of Care (April 1, 2019); available at
 See, e.g., Sarah Kliff, An ER visit, a $12,000 bill—and a health insurer that wouldn’t pay, Vox (Jan. 29, 2018), available at https://www.vox.com/policy-and-politics/2018/1/29/16906558/anthem-emergency-room-coverage-denials-inappropriate; Reed Abelson, Margot Sanger-Katz, and Julie Creswell, As an Insurer Resists Paying for ‘Avoidable’ E.R. Visits, Patients and Doctors Push Back, N.Y. Times (May 19, 2018), available at https://www.nytimes.com/2018/05/19/upshot/anthem-insurer-resists-paying-emergency-room-visits-if-avoidable.html; Samantha Raphelson, Anthem Policy Discouraging ‘Avoidable’ Emergency Room Visits Faces Criticism, NPR (May 23, 2018), https://www.npr.org/2018/05/23/ 613649094/anthem-policy-discouraging-avoidable-emergency-room-visits-faces-criticism; Ariel Hart, Anthem’s emergency room coverage denials draw scrutiny, Atlanta Journal-Constitution (February 1, 2019), available at https://www.ajc.com/news/state--regional-govt--politics/anthem-emergency-room-coverage-denials-draw-scrutiny/sWT8ts3TYv6vNjrEN99kdO/.
 Anthem, Save the ER for emergencies – Or you’ll be responsible for the cost (May 11, 2017), available at http://mediad.publicbroadcasting.net/p/kwmu/files/mo_er_member_letter_2017.pdf.
 See Maggie Fox, Major Insurance Company’s Payment Decision Angers ER Doctors, NBC News (June 3, 2017), available at https://www.nbcnews.com/health/health-news/major-insurance-company-s-payment-decision-angers-er-doctors-n767766.
 Andis Robeznieks, Physicians protest harmful Anthem emergency care coverage policy, AMA Wire (Aug. 7, 2017), https://wire.ama-assn.org/practice-management/physicians-protest-harmful-anthem-emergency-care-coverage-policy.
 29 CFR § 2590.715-2719A.
 For example, it is codified in Georgia law at O.C.G.A. § 33-20A-3(2), in California law at Health & Safety Code § 1317.1(b), and in federal law in the Affordable Care Act patient protection regulation, 29 C.F.R. § 2590.715-2719A(b)(4)(i).
 Samantha Raphelson, Anthem Policy Discouraging ‘Avoidable’ Emergency Room Visits Faces Criticism, NPR (May 23, 2018), https://www.npr.org/2018/05/23/613649094/anthem-policy-discouraging-avoidable-emergency-room-visits-faces-criticism.
 Amid its pull back, Anthem released new “exceptions” to its ED Policy. For example, the ED Policy will not apply when the member is traveling out of state, is younger than 15, or is directed by a healthcare provider to visit the ED. See, e.g., Shelby Livingston, Anthem makes changes to controversial ED program, Modern Healthcare (Feb. 15, 2018), available at https://www.modernhealthcare.com/article/20180215/NEWS/180219946.
 See, e.g., Thomas Beaton, BCBS of TX Delays Non-Emergency ED Claims Review Policy, Health Payer Intelligence (June 12, 2018), https://healthpayerintelligence.com/news/bcbs-of-tx-delays-non-emergency-ed-claims-review-policy.
 Jenny Deam, Blue Cross Blue Shield will delay its controversial ER denial program, Houston Chronicle (June 1, 2018), available at https://www.chron.com/news/article/Blue-Cross-Blue-Shield-will-delay-its-12958670.php.
 Code 3 Emergency Partners, LLC v. Blue Cross and Blue Shield of Texas, No. 18-0345 (District Ct. of Aransas Cty., Texas, 36th Judicial District, Nov. 30, 2018). The case was later removed to federal court. Code 3 Emergency Partners, LLC v. Blue Cross and Blue Shield of Texas, No. 2:18-cv-00441 (S.D. Tex. 2018).
 Network Bulletin, UnitedHealthcare (December 2017), available at https://www.unitedhealthcareonline.com/ccmcontent/ProviderII/UHC/en-US/Assets/ProviderStaticFiles/ ProviderStaticFilesPdf/News/December-Interactive-Network-Bulletin-2017.pdf.
 Humana, Claims Payment Policies, Emergency Department E/M Reimbursement (New) (April 4, 2018), available at https://www.humana.com/provider/support/claims/payment-policies.