Are insurers calculating usual, customary and reasonable correctly? In fact, do UCR reductions seem to result in unreasonable reimbursement? Do carriers balk at explaining the “reason” behind their supposedly reasonable adjustments?
State and federal disclosure laws can be used to appeal for clarification on how the usual, customary and reasonable rates were calculated. It is also important to describe any unique factors and/or resources used to establish your organization’s charges. Appeal Solutions has developed a Three Point Appeal approach for UCR appeals:
(1) Charge Information: Fee schedules typically lump providers together regardless of provider experience, expertise or procedure-specific challenges. For in-network providers, contract negotiation provides a forum for negotiating higher fees based on the value of the practice. No such negotiation takes place prior to most out-of-network payments. Therefore, your appeal should briefly describe the provider’s training, qualifications, and length of time in practice and bring to the carrier’s attention any charge data you have for providers with equitable credentials.
Most policies and plan documents define Usual, Customary and Reasonable (UCR) in terms of the prevailing charge from providers in the same geographic area. However, some legal decisions on UCR calculations have recognized the potential importance of provider expertise. The California Department of Managed Health Care identified six factors as pertinent to reasonable and customary rate calculation: (i) the provider’s training, qualifications, and length of time in practice; (ii) the nature of the services provided; (iii) the fees usually charged by the provider; (iv) prevailing provider rates charged in the general geographic area in which the services were rendered; (v) other aspects of the economics of the medical provider’s practice that are relevant; and (vi) any unusual circumstances in the case. Since carriers do not necessarily collect detailed information on the factors named above, the appeal is the appropriate time to provide additional details.
(2) Disclosure Request: “Denied as above the usual, customary and reasonable charge” does not go far in explaining reductions which often exceed thousands of dollars. UCR appeals should request the specific written limitation, exclusion or internal guideline which applies to the denial, including the definition of UCR as it reads in the policy or plan booklet. Further, your letter should request disclosure of the methodology used to calculate the payment and the source and age of the data and used to determine prevailing charges. Even if the source is identified, it is important to find out the age of the data, at what percentile the claim was adjusted to and if data was skewed by inclusion of claims not priced at normally prevailing rates.
(3) Compliance Review: Each appeal should identify any potential compliance issue regarding the carrier’s legal and/or contractual claim processing obligations. This requires being well educated on both state and federal claim processing requirements and potentially applicable disclosure standards. Some of the legal protections applicable to UCR calculations include federal and state disclosure laws related to benefit calculation disclosure, managed care access laws and state out-of-network payment requirements.
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