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Out-of-Network Reimbursement Changes

Story Content Provided by Horizon BCBSNNJ on 2/16/14

Applies to: Insured mid-size and large groups and self-insured (Administrative Services Only) business

Horizon Blue Cross Blue Shield of New Jersey would like to clarify that both FAIR Health and the Centers for Medicare & Medicaid Services (CMS) fee schedules are available for out-of-network (OON) reimbursement to all groups with 51 or more employees upon their renewal effective on or after January 1, 2014. These group customers may evaluate which OON reimbursement is right for them and make retroactive changes if they have already made a selection for their renewal date beginning January 1, 2014 or after. Please see Brief Notes Vol. 23 No. 969 for further information.

The fee schedules allow Horizon BCBSNJ to develop a reimbursement structure that is transparent, reliable and cost effective.

Our new structure will be available to all 51+ fully insured groups and affects all large group insured market segments. There are different options for self-insured groups (Administrative Services Only).

All Insured 51+ Groups
CMS Option

The CMS professional fee schedule is based on a Resource Based Relative Value Scale (RBRVS) where the reimbursement for services is determined by the resource costs. The relative value unit (RVU) for each code is multiplied by the annual conversion factor (a dollar amount set by Congress) to yield the national average fee. Reimbursements are also adjusted for geographical differences in resource costs.

CMS calculates allowance for facilities and ancillary providers using the various prospective payment systems that apply to each provider type (e.g, Diagnostic Related Groups [DRG] for inpatient acute care services; Outpatient Prospective Payment System for hospital outpatient services). The CMS fee schedule options for professional, ancillary and institutional providers are:
• 110 percent. • 150 percent. • 180 percent. • 250 percent.

The CMS fee schedule is used nationally by health insurers as a basis to calculate their in-network and out-of-network rates. It provides pricing for professional, ambulatory surgical centers, inpatient (IP) and outpatient (OP) as well as other provider types. Medicare payments to physicians are a function of three key factors: the RBRVS, the geographic practice cost indexes (GPCIs) and the monetary conversion factor. As a result, the CMS fee schedule is independent and reliable, consistently avoiding the data manipulation and inflation often seen in charge-based profiles that are developed using providers' actual charges.

Members will notice a difference in the amount being reimbursed for certain out-of-network services. The example below illustrates how a member's financial responsibility may change under the new reimbursement structure when seeking services out of network.

View CMS Chart.

FAIR Health Option
In addition to the new CMS fee schedule options, all large insured group customers also have the option to select a FAIR Health fee schedule. FAIR Health uses actual, nondiscounted, provider reimbursement structure charges for private sector health care services. The FAIR Heath percentiles available are:
• 70th percentile. • 80th percentile. • 90th percentile.

FAIR Health, Inc. is a national, independent not-for-profit corporation established in October 2009 as part of the settlement of an investigation by the New York State Attorney General into the health insurance industry's methods for determining out-of-network reimbursement. The Attorney General alleged that it was a conflict of interest for health insurers to determine "usual, customary and reasonable" (UCR) charges for out-of-network services based on data compiled and controlled by the industry. To determine UCR, the insurers had relied on a database compiled and operated by Ingenix Inc., a wholly owned subsidiary of the United Health Group. Additional allegations charged that the data was flawed, and that the database was a "black box" to providers, patients and other stakeholders. FAIR Health was formed to take over and improve the charge-based profile, developed by Ingenix, and to bring transparency, objectivity and reliability to its construction and to the data products derived from it.

The FAIR Health fee schedule is based on actual, nondiscounted provider charges submitted by various health plans across the nation. Since the fees are developed using actual charges, it can include charges that are excessive, which can increase the overall cost of health care. Generally, selection of FAIR Health translates into higher reimbursement rates to providers and increased cost for group customers. The FAIR Health fee schedule provides reimbursement for professional, IP and OP provider types.

See FAIR Health Chart.

Self-insured ASO Customers
The options described are for fully-insured group customers only. Self-insured group customers will generally have the same options, though FAIR Health pricing is generally unavailable for self-insured customers, except for Public Sector.

Horizon BCBSNJ is focused on providing quality of care while helping to control rising health care costs so premiums and renewal rates are manageable. High
out-of-network reimbursement leads to increased medical costs.

This change:

  • Helps keep health care costs affordable through lower premiums.
  • Encourages members to receive care from in-network providers who offer high quality at lower costs and thus minimize out-of-pocket costs.
  • Provides transparency to both members and providers as the new OON reimbursement is publicly available which allows for upfront calculation of health plans benefit and member's liability.
  • Encourages providers to contract with Horizon BCBSNJ which allows members a broader access to our contracted providers.

If you have any questions, please contact your Horizon BCBSNJ sales executive or account manager.