New Blue Card Policies Cause Labs to Go Unpaid

Out-of-state labs were once in-network, but are now considered to be out-of-network

CEO SUMMARY: Widespread frustration continues within the independent clinical laboratory community about the new Blue Card rules that took effect in October 2012. That was when the Blue Cross Blue Shield Association revised its Blue Card program so that labs must bill the local plan in the service area where the specimen was obtained/collected. Further, most local Blue Cross plans are sending reimbursement checks directly to patients, leaving it to labs to find these patients and collect payment from them.

FOR 16 MONTHS, many independent clinical labs have struggled to understand and get paid under the revised Blue Cross Blue ShieldAssociation instituted in October 2012, for its Blue Card program.

Labs report that they have attempted one or more of the following actions to address this situation: 1) enroll or attempt to enroll with the out-of-state local plans as a participating provider; 2) add additional staff to their billing and collections departments in an attempt to adjudicate claims; 3) add additional staff to collect from patients issued reimbursement checks directly from the local plans; and, 4) analyze data to determine whether it’s better to be in-network with out-of-state Blues plans or remain out of network.

Many independent labs have lost specimen volume and/or testing revenue as a consequence of the new Blue Card policy. “I know of specific labs that have lost approximately 30% of total annual revenue,” stated Charles C. Dunham IV, an attorney with Bond Schoeneck & King in Albany, New York.

Effective October 2012, the Blue Cross Blue Shield Association (BCBSA) implemented the major change to its Blue Card program it had announced earlier. In cases where a patient specimen was obtained/collected out-of-state, independent clinical labs would no longer be able to submit claims for lab services to the local plan in the service area where the test was performed, but rather would submit to the local plan where the specimen was obtained/collected.

As such, any lab testing services done at an out-of-state lab would be considered out-of-network for those Blue Card services and would be reimbursed at out-of- network rates, unless the lab was enrolled as an in-network lab with that specific local plan. (See TDR, July 16, 2012.)

Problems for Labs

This rule change has caused significant problems for labs throughout the United States. Essentially, it changed the provider enrollment status of any lab that provides lab testing services to a patient enrolled under a Blue Card plan where the specimen that is obtained or collected outside of the state in which the lab is performing the testing service.

This significant change to the Blue Card rules has created problems for many lab organizations and for patient enrollees using their Blue Card benefit. Since the new Blue Card policy took effect, Dunham said that labs are facing at least three primary issues when seeking payment for the Blue Card claims.

“The first issue is provider enrollment, which means that labs may want to consider strategic contracting,” said Dunham. “If your lab is out-of-network, then you may want to make two key determinations. First, how much lab testing would your lab get if it became an in-network lab for that Local Plan? Second, what are the in-network rates and how do they compare to the out-of-network rates? Labs that want to be in-network must accept the contracts and the fee schedules offered by the local plan.

“It is essential that your lab team understand the price and terms being offered to you as an in-network provider by each and every local plan your lab is considering,” he stated. “Analyze what you would be paid on the in-network fee schedule versus what you would get paid as an out-of-network lab. Also, consider what percentage of claims are being denied to your lab as a non-participating provider.

Understand Price and Terms

“Upon completing this analysis, I’ve seen some labs decide that it is just not worth becoming an in-network provider,” Dunham added. “Sometimes a lab will do better financially by just staying out-of-network.

“The second issue is claims processing/adjudication and the need to be persistent,” he said. “This means working every claim diligently. Doing so requires ongoing conversations between the lab’s billing staff and the various local plans while resubmitting or manually submitting claims when the plans ask for additional information. In my experience, labs that have been persistent in this regard have processed more claims through the local plans than labs that have not been persistent.”

Collecting from Patients

Dunham said that the third issue involves collecting directly from patients. “What has surfaced as a problem is that most local plans are paying patients directly for out-of-network services,” stated Dunham. “This makes it even tougher for labs to get paid for these claims.

“Interestingly, the national policy of the BCBS Association is that payment for out-of-network services should be made directly to the patient because the contract is with the patient.” explained Dunham. “Then, the patient is supposed to return the payment to the provider. But patients don’t always pay the labs or understand what to do with the payment. Therefore, labs must track down these patients.

“One way that a lab can get the local plan to pay it directly and not send the payment to the patients is to use what’s called an assignment of benefits form,” he advised. “However, few states require plans to honor this assignment and pay providers directly if the providers have patients assign benefit payments to them.

Assignment of Benefits

“For this to work, a lab needs to get each individual patient to sign an assignment of benefits form, usually at the time of service,” continued Dunham. “This is often difficult because the lab typically never sees the patient.

“In most states, health plans are not required to pay the lab, even with an executed assignment of benefits form, and each local plan can decide if it will pay the out-of-network provider or the patient,” he said. “When plans pay the patients, the patients are then supposed to pay the lab.

“Labs should try to collect from all patients early and often if they hope to be successful in collecting these amounts,” noted Dunham. “Getting information on patients is difficult because—as an out-of- network provider—the lab that performed the test may not always be granted access by a local plan to view this patient’s EOB and payment information online.

“In-network providers can go online to view almost all the information they need to check a claim’s status, the adjudication amount, and how to reach the patient by phone and mail,” he commented. “Unfortunately, if the labs don’t have access to the patients’ information online, they have to call the local plans and get someone there to track down each and every claim.

Collection Done Manually

“Too often, this form of collection was— and is—done manually, meaning the plan won’t transmit either an electronic explanation of benefits or an electronic payment,” observed Dunham. “That is why labs have needed to hire additional staff: Someone at the lab has to do this leg work to ensure that these lab test claims are paid.”

Another tactic that labs can try may be easier. “It is always worth simply making application to become an in-network provider with a local plan,” said Dunham. “Just going through the application process with a local plan is a positive development because—even if the plan rejects your lab—there could be a benefit to submitting an enrollment application when it comes to claims adjudication.

“At a minimum, the local plans will get to know your lab and that may make it easier to get an internal billing identification number,” he continued. “It’s not the same as being in-network, but it may help facilitate the claims process and help with obtaining payment status information.”

Local Blue Cross Plans Respond with Reasons Why They Deny Requests of Labs to Join Networks

WHAT HAVE SOME BLUE CROSS LOCAL PLANS stated to labs when explaining the reason for denying the enrollment application?

“When labs submit an enrollment application to local plans to be considered in-network, they are likely to hear these reasons from the various local plans,” observed Charles Dunham IV, an attorney with Bond Schoeneck & King.

“First, some local plans will say they have exclusive contracts with Quest Diagnostics Incorporated or with Laboratory Corporation of America,” he stated. “They will assert that these exclusive contracts do not allow other labs to enroll as in-network providers.

“The second reason is the brick and mortar issue,” Dunham said. “When a lab does not have a physical presence in the state, the local plans are not interested in contracting with out-of-state labs unless there is some lab testing being done within the state. However, most independent labs don’t have facilities in multiple states—and didn’t have them when providing lab testing to Blues beneficiaries before the new Blue Card policy was implemented.

“The third reason is based on the desire of the local plans to reduce overhead costs related to processing claims from multiple labs,” stated Dunham. “These local plans apparently believe smaller networks are easier from an administrative standpoint.

“It could be argued that having smaller networks helps keep their premiums down and low premiums are important to customers,” concluded Dunaham. “If their costs rise, they may need to increase premiums or reduce benefits to enrollees, neither of which they want to do.”

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