Looking to Lose Money? Provider Directory Inaccuracies Can Cost you Thousands

Three tactics to avoid outdated, inaccurate provider data

Jodi JohnsonFebruary 21, 2017

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Provider data management has long been a pressing concern for health payers, but throughout the last few years, state and federal regulatory agencies, as well as accrediting bodies, have ratcheted up both the focus and pressure on health plans to ensure provider data accuracy and provider network access.

The cost of ensuring provider data accuracy is incredibly steep: an analysis prepared by Booz & Company for CAQH back in 2011 estimated that payers spend $2.1 to $2.3 billion annually on provider database maintenance.

More than two BILLION dollars spent each year, just by payers alone. One would think that an investment like that would be more than enough to ensure the integrity of that data. But one would be wrong.

In spite of such staggering financial commitments from the industry, provider data has remained largely inaccurate and unreliable, and a source of consistent complaints from members trying to locate in-network providers via online and print directories from their health plans.  Many members found that directory providers weren’t accepting new patients, or worse yet, obtained treatment from a listed doctor only to find that their “in-network” doctor was actually out-of-network, and resulted in exorbitant charges.

Member Complaints Drive Legislative Action

In response to spiraling member complaints and dissatisfaction, the Centers for Medicare & Medicaid Services (CMS), as well as a host of state regulatory agencies have taken action in recent years to regulate health plan provider data. More than half of U.S. states have enacted legislation aimed at ensuring the accessibility, accuracy and integrity of provider directories for health plans ranging from Qualified Health Plans (QHPs) to Preferred Provider Organizations (PPOs), Health Maintenance Organizations (HMOs) and Managed Care Organizations (MCOs). Many of these regulations impose severe financial penalties on plans that fail to comply with standards for accuracy or access—and two such actions have recently received widespread media attention.

Last month, CMS sent warning letters to 21 payers, following their first in-depth audit of provider directory data for Medicare Advantage plans. This initial review examined provider data for nearly 6,000 primary care physicians, cardiologists, ophthalmologists and oncologists, and found that 46.9% of audited providers had at least one error, with an average error rate of 38% among the 54 plans audited. Payers were given 30 days to fix the identified errors, which in large part, concerned directories misidentifying providers’ practice locations.

Payers with the most egregious error rates were required to submit business plans for correction, and all of the cautioned plans were informed that failure to remediate errors could result in heavy fines and/or sanctions up to suspension of marketing and enrollment.

On the state regulatory front, California officials just this month expressed outrage with payers after a review of health insurers’ annual reports revealed variance of up to 45 percent between the initial provider lists submitted by plans during the year and the required year-end tally list. Of the 40 insurers reviewed, 36 had significantly inaccurate data. In the case of one insurer, the cardiologists in one county were counted more than 160 times, overstating the number of network specialists by 82 percent.

While this was not a review for purposes of assessing plans’ provider directory accuracy, fines are sure to come, and it may spur additional action under a recent state law that requires insurers and medical providers to provide accurate and regularly updated provider lists, and pay for any out-of-network penalties charged due to data inaccuracies.

California has levied fines against payers for directory inaccuracies in the past, with the Department of Managed Health Care charging two major plans from $250,000 to $350,000 for issues with their ACA exchange plan directory listings. When this latest issue came to light, the Department’s Director, Shelley Rouillard, told California Healthline, “I told the [health plan] CEOs it looks to me like nobody cared. We will be holding their feet to the fire on this. I am frustrated…because the data we got was unacceptable. It was a mess.”

Placing the Blame for Bad Provider Data

The expectation is that more and more states will impose fines and penalties on health plans who fail to provide members and potential enrollees with accurate provider directory information. But the irony is that while payers must clean up the mess, in many ways they do not bear responsibility for causing it. Payers must rely heavily on providers to let them know when there’s a change in phone number or location, or when individual doctors in group practices retire or leave the practice. Rampant consolidation among providers in recent years hasn’t made this task any easier.

Many agencies give plans a pass when it comes to hospitals, simply requiring evidence that the payer has repeatedly asked for updated information. But when it comes to the many primary care doctors and specialists in networks, plans must ensure their online directories are updated as frequently as weekly. If providers are not cooperative, information is quickly out-of-date and problems can arise.

The recourse available to payers to deal with non-responsive or non-compliant providers is often to eliminate them from either their directory listings or from their networks altogether. But providers who aren’t accepting new patients probably aren’t focused on the benefits of network channeling from directory inclusion, and terminating contracts can be a major problem for certain specialists in certain geographic areas where access is also critical—I believe the metaphor for this position is commonly referred to as the space between a rock and a hard place. Payers may have the ability to eliminate providers from the network if they aren’t providing updates—but can they afford to?

Bottom line, regardless of member perceptions or the understandable frustrations of state officials, payers desperately want to keep their information up to date. They wouldn’t be investing more than $2 billion per year if they didn’t. Is it possible that certain payers see some benefit in overstating the breadth and scope of their network? Without question. The individual market has never been more competitive, and attracting members is critical to success. But most payers will tell you that directory errors and the resulting member dissatisfaction when they find providers aren’t accepting new patients are far more harmful than the net benefit of the “illusion” of a larger network.

Before the ink is dry on print directories, they are out of date in some way. Updating provider information for member access online is a full-time proposition, one that requires just as strong a commitment from participating providers as it does from a payer. So what can payers do, in a world where they didn’t necessarily make the mess, but still must foot the bill for the clean-up?

No Easy Answers, But Some Practical Suggestions

The reality is that individual states, as well as CMS, will only become more aggressive about imposing fines and sanctions for bad provider data. These agencies do care about protecting members, and that may well be the primary force behind these growing regulations. But the cynical part of me also whispers that financial penalties also provide a handy source of state revenue in a future where they will likely be increasingly responsible for managing healthcare dollars and Medicaid spending. So what can payers do?

The healthcare industry wish-list has long included a desire for an external “single source of truth” for provider data. But until that dream becomes a reality, there are some simple, practical steps that payers can take in their own provider data management efforts. After all, there are issues beyond payers’ control when it comes to provider data issues. But the CMS audit also noted that in some cases, providers had been retired or deceased for years, yet they were still included in directory listings. For issues like this, payers have no one but themselves to blame.

To avoid outdated, inaccurate data, payers should:

  • First and foremost, ensure the integrity of any incoming data. Every payer has multiple sources of provider data that may feed their provider database(s). For each of these sources, you need to monitor your data to ensure its quality and eliminate any missing, duplicate, or erroneous data before it becomes a part of your provider database.
  • Leverage all sources of data. Providers may not be providing updates as regularly as they should, but they’re still submitting claims for payment (or aren’t they? Could that be a sign as well?). Are you putting the data from your HCFA 1500s and UB04s to work for you? Reconciling this data against your other provider information can identify exceptions for further investigation and proactively identify errors before they’re found by members or regulators.
  • Reconcile data between multiple sources of truth. Just as you have multiple sources of provider data, you may have multiple sources of truth for that data. Flag any inconsistencies between these sources and proactively investigate and resolve any data issues. An exception management workflow is a wise investment when weighed against the potential costs of fines or sanctions.

The CMS audit is ongoing, and may expand beyond Medicare Advantage plans. CMS noncompliance can mean fines up to $100 per day per individual for Qualified Health Plans, and up to $25,000 per day per Medicare Advantage enrollee. As states continue to expand their regulations around provider data accuracy and the associated fines, the financial risks for payers will only grow. Any steps you can take to mitigate that risk and increase accuracy would be money well spent.

To learn more actions you can take to ensure accurate provider data, check out this data sheet.

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