FEHBP vs. Medicare

Sunday, February 29, 2004

AMHERST, Ohio - One provision of the Medicare Prescription Drug Act directs CMS to determine the mean payment under the Federal Employees Health Benefit Plan (FEHBP) for 17 classes of Medicare-covered DME. This means payment is then used to “make such adjustments as may be appropriate to the Medicare fee schedule.”

According to one Republican staffer close to the Conference Committee, “…it was added to address the industry’s constant harangue that comparison of Medicare fee schedules to VA payments is invalid. This provision would create new data points reflective of private sector payments.” The industry’s reaction to the provision was predictable: This is another way to reduce Medicare payments for DME based on invalid comparisons.

To explore that perception, I talked to officials from 4 of the largest FEHBP carriers and 4 providers.

Kathy Lewis of the Blue Cross/Blue Shield Association, which provides coverage to 52% of the lives covered under FEHBP noted the following key difference between Medicare and BC/BS:

“85% of our FEHBP beneficiaries are covered under preferred provider organizations (PPO) and there are very few hoops they must go through to access the DME benefit. We suggest prior approval for big ticket items such as beds and motorized wheelchairs but otherwise rely on a simple prescription from the physician.”

Similar information was provided by the other three carriers interviewed.

As one provider put it: “If you develop a good working relationship with the case managers and take time to answer questions up front, payment is pretty much guaranteed.”

Providers interviewed all agreed that the availability of a knowledgeable, involved case manager is a big plus. Because they know more about the patient than a claims reviewer at a DMERC, they are more likely to cover products that are appropriate and are not limited by restrictive payment policies and coverage guidelines. The use of case managers before a claim is filed reduces the likelihood that claims will be denied or payment will be delayed.

Interviews with providers dealing with FEHBP revealed agreement that FEHBP carriers are easier to deal with than Medicare but acknowledged some drawbacks. First, all carriers interviewed report insignificant fraud problems because of zero tolerance policies and careful screening of providers before adding them to their “preferred list.”

This process is costly and time consuming for the provider. If a provider does not apply to the carrier as soon as they begin operating in an area, they may have to play “catch-up” to gain enough referrals to justify the cost of application and the fixed fee schedules.

The biggest negative that providers experience with FEHBP carriers is that the prompt payment rules only apply to clean claims and anything that includes a miscellaneous code is automatically considered “not clean.”

Further, like Medicare, any time the plan requests additional information, the clock is reset for prompt payment purposes. And, FEHBP plans use the rigid and time-consuming Medicare policies and procedures for prior authorization.

“Getting PA for the base item is relatively easy,” said Peggy Reno of Miller’s in Akron, Ohio. “However, there are problems when you need PA for an item listed under miscellaneous codes because they have UCR fees that are often lower than cost.”

In summary it, appears that participating providers dealing with FEHBP plans enjoy a number of advantages that reduce the cost of doing business as compared to Medicare. The trade off is that the plans often pay less than Medicare for the same item. The providers interviewed were in agreement that they could accept lower Medicare fee schedules if Medicare incorporated the efficiencies of payment used by FEHBP participating carriers.

How do you like these apples?
- FEHBP has significantly reduced the cost of gathering and maintaining documentation compared to Medicare.

- FEHBP prompt payment provisions average 30 days. Moreover, providers can earn “special status” with accreditation and scoring high on ongoing consumer satisfaction surveys. If providers agree to periodic “desk audits,” payments are made as quickly as 3 to 5 business days.

- FEHBP plans value accreditation and reward providers who emphasize measurable improvements in customer satisfaction, resulting in shorter periods between delivery and payment which reduces the cost of borrowing money.

- All FEHBP plans interviewed rely on providers to decide the least-costly and most-appropriate item for each patient. There is little “second guessing” and the vagueness and arbitrary interpretations of payment policies and coverage guidelines so often associated with Medicare do not exist with FEHBP.