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Increase in claim denials concerns local mental health provider

Published on -6/9/2014, 11:55 AM

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By John Green

The Hutchinson News

A rise in insurance denials for mental health care plans -- amid reports managed care providers have lost money during the first year of their KanCare contracts -- has the director of Horizons Mental Health Center concerned.

He fears, Horizon's CEO Michael Garrett told the Reno County Commission recently, that the companies providing insurance coverage for patients through KanCare will start denying even more claims as they near the end of their contracted budgets.

Garrett isn't alone in his concern.

Kyle Kessler, executive director of the Association of Community Mental Health Centers, said there has been a definite increase in denials for mental health services in recent months, though he wasn't sure in recent weeks if it was continuing or had peaked.

"We're watching it very closely," Kessler said. "There are quite a few centers that have outstanding receivables or accounts receivable waiting for payment. We're working with the state and managed care organizations to get those accounts reconciled."

Figures from the Kansas Department of Aging and Disability Services show an increase in denial rates for two of the three providers during the first quarter of this year, compared to the average for last year.

All three providers, however, are doing significantly better on approval rates for behavioral health claims than was occurring prior to implementation of KanCare, according to KDADS spokeswoman Angela de Rocha.

And for "clean claims" -- those processed without a need for additional information -- the payment turnaround time has been cut.

The process

When a patient comes into Horizons, Garrett said, a set of preauthorized services provides initial coverage. Staff then assesses the individual and develops an outpatient treatment plan. Horizons must submit a plan within 30 days to the managed care provider for approval.

"We submit a plan and goals and progress toward those goals," Garrett said. "We submit what we believe services should be in order to accomplish those goals. We go through this process continually."

The managed care company that insures the individual then authorizes the care, modifies it or denies the claim. If denied, Horizons can appeal. Each plan must also be re-evaluated every 90 days.

The process of filing plans and managing claims has created "a considerable amount of administrative time," Garrett said, enough to add a full-time person to do just that.

"We've noticed a lot more are being modified from what we recommend," Garrett said. "They're recommending a different level of service. Our concern is, as we approach the end of the contract period that may increase in order to control expenses."

Under their contracts with the state, which expires in December 2015, the three companies providing coverage through the state's privatized Medicaid program are paid a flat fee.

"When they reach their cap, they need to watch expenses," Garrett said.

According to reports from the National Association of Insurance Commissioners, all three saw net losses in their first year, collectively losing more than $110 million.

State figures

Amerigroup is the agency with the most claim denials. It averaged a 10.59 percent denial rate for all of 2013, and that inched up to 10.99 percent through the first three month of this year, according to the figures from de Rocha.

United Healthcare had the biggest jump in denials so far this year, from an average 7.51 percent in 2013 to 9.33 percent in the first quarter.

Sunflower Health plan, in contrast, cut its denial rate nearly in half, from 6.96 percent in 2013 to an average 3.77 percent so far this year.

Data on the percentage of clients at Horizons under each plan was unavailable. Figures on how many plans were modified was also unavailable.

Overall, de Rocha stated in an email, the average denial rate for all behavioral health claims pre-KanCare was 12.4 percent, higher than any of the averages now.

"The state continues to actively work through payment issues with the CMHCs and MCOs," de Rocha stated in an email. "The feedback from KanCare providers has become significantly more positive over the past year."

The financial impact

Gross patient revenue for Horizons for the first three quarters of its fiscal year totaled $7.629 million. That was up almost $100,000 from the same period a year ago.

Contractual deductions -- or write-offs -- for the period, however, shot up up $156,285 to more than $500,100. That 45 percent hike in contractual write-offs resulted in an overall drop of nearly $45,000 in net patient revenue.

"We're doing the same amount of service -- actually a little bit more, but we're having to write off more," Garrett said.

Despite the issues, "we have a solvent budget for fiscal 2015," Garrett said.

A week after he spoke to the County Commission, Garrett said he learned Amerigroup -- which had the most backlogged payments to Horizons -- had "done a lot of cleanup and fixed a lot of their information technology problems."

In the past two months, Garrett said, Horizons has received $135,000 from Amerigroup, some for claims dating back to January and February of last year, as well as more recent ones.

"They're much more current now," he said. "I checked with our Medicaid biller and he said in the last couple of months they've done a lot of clean up, fixed a lot of technology problems. I had him run a report how much in claims we have with Amerigroup that are older than 120 days, and its only $12,000. So they've made pretty good improvement in the last two months."

"My concern, though, is more of what will happen," Garrett said, referring to a recent news article about the MCO losses. "Those kinds of articles, saying they're already losing money, raise concerns 'are they going to get tighter?'"

"I don't know if it will or won't."

Kessler, whose agency has worked as an intermediary between health centers, the KanCare managed care organizations and the state to resolve disputes,said conversations involving the parties have been occurring "probably a couple of times a week" over disputed claims.

Still, he remains "cautiously optimistic" that things will yet improve, Kessler said.

(c)2014 The Hutchinson News

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