Americans expect a lot from their health care system, which they pay for with world-leading costs and complexity. COVID-19 challenges that system, and not just with hot spots threatening to overwhelm hospital capacity. Funding for providers and oversight by payers have been pushed beyond their ordinary contentious but stable practices.
New Jersey hospitals are seeking help from state government in the form of legislation to tip the balance temporarily in their favor.
The New Jersey Hospital Association this month said 30 acute care facilities had a little more than 1,000 claims related to patients positive for coronavirus denied by insurance companies from March through June. In more than half the denials, the insurers questioned the medical necessity of the treatment. In another 20%, the required prior authorization for the treatment was missing.
A bill that this month cleared the Assembly Financial Institutions and Insurance Committee would temporarily stop audits of all claims by the state Department of Human Services that oversees Medicaid, by the Department of Banking and Insurance, and by health insurers. The suspension of claims oversight — except for cases of fraud or other egregious abuse — would continue as long as New Jersey continues under Gov. Phil Murphy’s declared public health emergency (now in its fifth month with no end in sight).
The association said the audit process uses staff when hospitals are still burdened by the pandemic and some have instituted furloughs in response to losses (much due to the state ban, since ended, on nonessential procedures and care).
The health insurance industry insists there isn’t an unusual trend in denials of hospital claims for reimbursement. The stress on N.J. hospitals and staffing has dissipated, with just over 700 COVID patients now, down from 8,000 in April.
The New Jersey Association of Health Plans said that while the federal Centers for Medicare and Medicaid Services and the state Department of Human Services had suspended claim audits in March to unburden providers, those orders were reversed in mid-May and prior authorization requirements were reinstated.
The association said the five insurance companies that oversee most of the plans for New Jersey’s 1.7 million Medicaid recipients are also looking out for the interests of taxpayers. The state spends $4 billion annually on Medicaid and someone has to make sure the claims are legitimate and the money properly spent.
Both industries and their associations — hospitals and health insurers — have central, critical roles in the provision and cost of U.S. health care. When New Jersey was in the midst of the nation’s second hottest COVID-19 epidemic, emergency relief from claims oversight made sense. The need is much less clear now.
The Legislature might consider this compromise — allow normal claims processing and vetting to continue and set up a state office to temporarily handle expedited appeals of denied claims. Let the public see the numbers and reasons why denials were reversed or upheld, so people can see if their interest in satisfactory care at fair costs is being met.
Next to getting other people to help pay their health costs, getting good value for their money spent on care and health insurance is the top priority for most people.