Payer Intelligence, Part 4: Understanding Payer Thinking: Beyond Medical Policy

By Rayellen Kishbach, Director of Business Development for Policy Reporter

In Parts 1, 2 & 3 of the Payer Intelligence series, we looked at how Medicare and Commercial payers publish medical policy to communicate coverage or non-coverage of a procedure, product, service or test. In this article, we explore a number of other documents that payers may publish that can support a thorough understanding of payer thinking.

Administrative Documents
So, what if you’ve reviewed the payer medical policies and can’t find guidance? This may be especially common for new therapeutics and diagnostic services. Often the first publication a payer will issue is an administrative document that mentions the service. This lets you know the payer is aware of the technology, even if they haven’t yet addressed it on a medical policy, and even if there is not yet a procedure code.

Administrative Documents to watch for include:

  • Service Coverage Administrative documents – such as a New Technology, Non-covered, or Experimental & Investigational lists often explain that the payer has not yet established medical necessity criteria to cover the service.
  • Similarly, when codes are updated, it is helpful to review the payer’s Omnibus Codes, New Codes, and Temporary Codes lists to get insight into their treatment of a new or revised code.
  • For some services (like radiology and surgery), site/place of service guidance can be incredibly helpful to review as well.

Prior Authorization
For many tests, drugs and services, payers require providers to get approval from the health plan before the service order is filled or the procedure is begun. Once a service is covered on medical policy, providers may begin to see some slow down or complexity in the claims and payment process because new prior authorization steps come into effect or change.

Payers publish a number of different prior authorization (PA) document types, including:

  • PA lists are typically a long list of services, often listed by HCPCS/CPT® code, which require prior authorization. These can be very long documents that combine info across all clinical areas, or the payer may choose to produce multiple separate lists by clinical specialty.
  • PA criteria are documents which might mirror or provide more detail than the medical policy regarding what needs to be documented in order to meet medical necessity guidelines. So the policy might say “Covered for moderate to severe sleep apnea” and the PA criteria will explain exactly which points of data from the medical record count as documentation of moderate-to-severe. In the case of drugs, PA criteria documents can also include preferred drug lists, and other guidelines that provide transparency in qualifying the patient for a given drug.
  • Step edits may be in place, where a lower cost drug in a given therapeutic class must be prescribed first prior to allowing reimbursement of more expensive (or less cost-effective) drug.

Payment Policy
Once a drug, device, or diagnostic test is covered by a payer (and prior authorization requirements may be established) there may still be “friction” in the claims processing system that slows patient access to care, such as payment edits, site of service rules, and other special billing rules that must be followed. Many payers do provide transparency into these via payment policy documents.

Fee Schedule
For procedures, services, and drugs that are billed by HCPCS or CPT® code, government payers publish a number of different fee schedules that disclose prospectively what the reimbursement rate for each procedure is. The Center for Medicare and Medicaid Services (CMS) publishes multiple fee schedules based on the provider type – physician, outpatient, clinical lab, Durable Medical Equipment (DME), etc., and rates are then adjusted by locality/state. Most Medicaid programs also publish similarly structured fee schedules. Presence of a code on a fee schedule does NOT imply coverage – it simply provides insight into the payment IF the patient meets medical necessity criteria. But some of the Medicaid programs will provide notes like Not Covered in their fee schedule, which essentially acts like the “not covered” code list that the commercial payers publish.

In the next part of this series, we will examine a few key places in the revenue cycle where it is important to review payer logic to keep the entire process flowing smoothly.

This “Payer Intelligence” series provides a set of quick tutorials on payer publications that support accurate coding and efficient revenue cycle operations.

About the Author
Rayellen Kishbach is a Director of Business Development for Policy Reporter, a TrialCard Company with over two decades of experience building and selling healthcare knowledge products. Policy Reporter provides an innovative healthcare software solution that tracks payer policies in real time wth customized alerts to subscribers. The company’s patented software-driven solutions include a suite of billing and reimbursement tools for providers and laboratories, market intelligence tools for payers, and a suite of patient access solutions for life science companies.

WE ARE HIRING. Policy Reporter is regularly recruiting and hiring for positions that can be a great fit for professional coders, auditors, and revenue cycle experts. From data quality to health document analyst to reporting and 1099 research contract positions, you might be a good fit if you have certification such as CPMA, CHDA, or CDIP and are good at synthesizing complex information and communicating clearly. Diagnostics and Laboratory prior authorization, billing and claims experience is a plus! Contact [email protected] for next steps in working with Policy Reporter.

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