House Bill 2455 is Important - and Would Benefit Providers Greatly by including 2 Definitions

A Discussion Paper

Providers would benefit additionally if House Bill 2455 (HB 2455) included definitions of “Medically Necessary and Reasonable Care” and “Minimum Necessary Information”.

Why Is HB 2544 Important?

House Bill 2455 (HB 2455) is important because it addresses critical issues related to the auditing practices of health insurers and coordinated care organizations, particularly in the context of behavioral health services. Here are the key reasons why HB 2455 is significant:

1. Protection of Behavioral Health Providers

• Fair Audit Practices: HB 2455 establishes clear guidelines for how audits of behavioral health providers' claims should be conducted. This helps protect providers from unfair, arbitrary, or excessively burdensome audit practices that can disrupt their operations and financial stability.

• Prevention of Unjust Recoupments: The bill includes provisions that prevent insurers from recouping payments based on requirements that were not disclosed to providers in advance. This ensures that providers are not penalized for non-compliance with undisclosed or retroactively applied documentation standards.

2. Ensuring Transparency and Accountability

• Clear Documentation Requirements: HB 2455 mandates that insurers provide clear, accessible documentation requirements to providers before audits are conducted. This transparency helps providers understand exactly what is expected of them and reduces the risk of miscommunication or misunderstanding.

• Good Faith Audits: The bill requires that audits be conducted in good faith, with respect for the provider's professional judgment. This promotes a fair and balanced approach to auditing, where the focus is on ensuring compliance and improving care quality rather than penalizing providers.

3. Reducing Administrative Burden

• Time Frame and Scope Limitations: HB 2455 sets specific time frames and scope limitations on audits, preventing insurers from conducting audits on claims that are too old or extending the audit process indefinitely. This helps reduce the administrative burden on providers, allowing them to focus more on patient care rather than on prolonged or excessive audit processes.

• Protection from Retaliation: The bill includes provisions that protect providers from retaliation by insurers, particularly in cases where providers exercise their discretion in determining the minimum necessary information for audits. This fosters a more supportive and less adversarial relationship between providers and insurers.

4. Supporting Patient Privacy and Care Quality

• Minimum Necessary Information (proposed by MRI): HB 2455 empowers providers to determine what constitutes the minimum necessary information that should be disclosed during audits. This helps protect patient privacy by ensuring that only relevant information is shared, reducing the risk of unnecessary or intrusive data disclosures.

• Focus on Medically Necessary Care (proposed by MRI): By defining "medically necessary and reasonable care," HB 2455 ensures that audits focus on evaluating the appropriateness and quality of care provided, rather than on minor clerical errors or documentation issues. This helps maintain a focus on patient outcomes and the delivery of high-quality, evidence-based care.

5. Promoting Equity and Fairness in Healthcare

• Standardization Across the Board: HB 2455 helps standardize the audit process, ensuring that all behavioral health providers are subject to the same fair and transparent standards, regardless of their size or resources. This promotes equity within the healthcare system, preventing larger or more resource-rich organizations from having an unfair advantage.

• Alignment with Broader Healthcare Goals: The bill supports the transition towards value-based care models by ensuring that audits are conducted in a manner consistent with these goals. This alignment helps reinforce efforts to improve care quality, patient outcomes, and cost efficiency across the healthcare system.

6. Legislative Oversight and Continuous Improvement

• Collaboration and Education: HB 2455 mandates collaboration between the Oregon Health Authority, healthcare providers, and other stakeholders to develop recommendations for improving audit processes. It also requires the creation of educational resources to help providers better understand and comply with audit requirements.

• Ongoing Evaluation: By requiring reports and updates on the progress of implementing these changes, HB 2455 ensures that the legislative framework for auditing remains responsive to the needs of providers and patients, and can be adjusted as necessary to address emerging challenges.

Conclusion

HB 2455 is crucial because it seeks to balance the need for oversight and accountability in healthcare with the protection of providers' rights and the focus on delivering high-quality patient care. By setting clear standards for audits, enhancing transparency, and promoting fairness, the bill plays a vital role in supporting the sustainability and effectiveness of Oregon's behavioral health services.

Why Does HB 2455 need the Current Medicare and Medicaid Definition of “Medically Necessary and Reasonable”?

The distinction between "medically necessary and appropriate" versus "medically necessary and reasonable" plays a significant role in how healthcare services are covered and reimbursed by insurance companies. Here's how providers have been affected historically by these definitions:

"Medically Necessary and Appropriate" (dropped by Medicare and Medicaid)

• Definition: This standard requires that the medical services provided be suitable for the diagnosis and treatment of a patient’s condition according to accepted standards of medical practice.

• Impact on Providers:

  • Narrower Interpretation: Insurers may interpret "appropriate" more narrowly, meaning that only certain types of treatments or interventions are covered. Providers might find themselves delivering care that they deem clinically appropriate, but which may not be reimbursed because the insurer doesn’t consider it "appropriate" based on their criteria.

  • Higher Denial Rates: Providers have historically faced higher rates of claims denials under this standard. Even if a treatment is effective, if the insurer deems it not "appropriate" according to their guidelines, they may refuse payment.

  • Patient Care Limitations: This can limit the care providers offer to patients, as they might be constrained by what is considered "appropriate" by the insurer, rather than what they believe is in the best interest of the patient.

"Medically Necessary and Reasonable" (used by Medicare and Medicaid)

• Definition: This standard implies that the services provided are necessary for the treatment of the condition and that the cost and scope of the services are reasonable in relation to the expected health benefit.

• Impact on Providers:

  • Cost-Effectiveness Focus: The term "reasonable" brings cost-effectiveness into the equation. Providers have historically been pressured to deliver care that not only addresses the patient's condition but also aligns with cost considerations deemed "reasonable" by insurers.

  • Greater Flexibility: While the "reasonable" standard can also be restrictive, it may provide providers with a bit more leeway compared to "appropriate," as it emphasizes the necessity and cost-effectiveness rather than strictly adhering to a predetermined treatment approach.

  • Cost Containment: Insurers favor this standard because it allows them to control costs by covering treatments that are not only medically necessary but also cost-effective. Providers might be required to justify not only the necessity of the treatment but also its cost, which can lead to disputes and additional administrative burden.

Why do Payers Prefer "Medically Necessary and Appropriate" Rather than "Medically Necessary and Reasonable" in Contracts and Policies?

• Cost Control: The use of "appropriate" is a way for insurers to control healthcare costs by ensuring that treatments are not only necessary but also economically justified. This language allows insurers to evaluate whether the cost of treatment is proportional to the expected benefits, potentially denying more expensive or unconventional treatments that don’t meet their cost-benefit criteria.

• Flexibility for Insurers: The word “appropriate” as a standard gives insurers more flexibility to deny claims, arguing that while a treatment may be medically necessary, it is not "appropriate" in terms of cost or expected outcome. This can result in lower reimbursement rates and more financial risk shifted onto providers and patients.

• Legal and Contractual Grounds: The "appropriate" standard is often embedded in contracts and legal agreements, giving insurers a strong position in disputes over coverage decisions.

In essence, providers have been historically disadvantaged by the Medically Necessary and Appropriate standard because they allow insurers to exert significant control over what treatments are covered, often prioritizing cost savings over clinical judgment. This has led to an environment where providers must navigate complex insurance criteria that may not always align with their medical expertise or the best interests of their patients.

Proposed Amendments to HB 2455

Definitions

"Medically Necessary and Reasonable Care": Services are considered medically necessary if they are provided for the treatment of a behavioral, mental health, or substance use disorder diagnosis. These services must be safe, effective, and appropriate for the patient based on generally accepted medical guidelines, empirical evidence, or standards recognized by relevant scientific or professional associations. The services should be consistent with the diagnosis identified in the behavioral and mental health assessment and provided according to an individualized service plan. The care must not be for the convenience of the patient, the patient's family, or the provider, nor for recreational purposes, research, data collection, legal requirements, or for maximizing provider reimbursement. Services are deemed medically reasonable if they are justifiable and appropriate based on accepted medical standards, clinical evidence, and the specific circumstances of the patient's condition.

"Minimum Necessary Information": Healthcare providers shall have the discretion to define what constitutes "Minimum Necessary Information" when using, disclosing, or requesting protected health information (PHI) for purposes of payment, healthcare operations, or other permitted uses under applicable law. Providers shall base their determination of the minimum necessary information on the specific requirements of the patient's care, diagnosis, and treatment, and the necessity to fulfill the intended purpose of the disclosure or use. The PHI requested by a Healthplan or other entity should be the least amount necessary to achieve a clinically and legally reasonable objective. Healthplans exercising a request for PHI under this section must document the rationale including the specific factors considered and an explanation of why the information requested, used, or requested is deemed the minimum necessary. Providers will determine if such information is private, confidential and or sensitive. The provider may decide in consultation with another qualified provider that such disclosure of private, confidential and or sensitive is not appropriate if the consequence will more likely than not cause harm to the patient in the present time or distant future. The consultation, decision and reasons will be documented in the patient’s medical record.

Why are the Proposed Amendments to HB 2455 Important?

The proposed enhancements to House Bill 2455 (HB 2455) involving the definitions of "Medically Necessary and Reasonable Care" and "Minimum Necessary Information" are crucial for several reasons. These enhancements provide clarity, protect provider discretion, and safeguard patient privacy, all of which are central to the fair and effective regulation of healthcare services. Here’s why these enhancements are important:

1. Clear and Consistent Standards for Medical Necessity

Definition of "Medically Necessary and Reasonable Care":

• Clarity in Audits: By explicitly defining what constitutes "medically necessary and reasonable care," these enhancements help ensure that audits are conducted based on clear, standardized criteria. This reduces the risk of subjective interpretations that could lead to unjust financial penalties or recoupments for providers. Auditors would need to adhere to these well-defined standards, ensuring fairness and consistency in their evaluations.

• Alignment with Evidence-Based Practices: The definition ties the concept of medical necessity to generally accepted medical guidelines and empirical evidence. This alignment ensures that care provided by behavioral health professionals is evaluated against recognized standards, promoting high-quality, evidence-based care while protecting providers from arbitrary audits.

• Protection Against Unjust Denials: By establishing clear criteria, this definition helps protect providers from health plans that might otherwise deny claims on questionable grounds. Providers can appeal denials by referencing the standardized definition, making it harder for insurers to unjustly withhold payments.

2. Empowerment of Provider Discretion and Patient Privacy

Definition of "Minimum Necessary Information":

• Provider Discretion in Information Disclosure: The enhancement grants providers the authority to determine what constitutes "minimum necessary information" for audits and other requests. This is important because it empowers providers to protect sensitive patient information, ensuring that only the most relevant data is shared with insurers or auditors. It prevents overreach by health plans that might otherwise demand excessive or irrelevant information, which could compromise patient privacy.

• Safeguarding Patient Privacy: The enhancement allows providers to assess whether the requested information is private, confidential, or sensitive. It further allows providers to withhold such information if its disclosure could harm the patient, either immediately or in the future. This safeguard is particularly important in behavioral health, where patient confidentiality is often critical to effective treatment and trust in the therapeutic relationship.

• Documentation and Justification: Requiring providers and health plans to document the rationale behind their decisions regarding the disclosure of information ensures transparency and accountability. This documentation can serve as evidence in case of disputes, providing a clear record of why certain information was or was not disclosed.

3. Legal and Ethical Protections for Providers and Patients

Avoiding Harmful Disclosures:

• Ethical Responsibility: The enhancement acknowledges the ethical responsibility of providers to protect their patients from harm. By allowing providers to consult with peers and document their decisions to withhold sensitive information, the bill supports ethical decision-making in the context of patient care. This is particularly relevant in situations where disclosure could have negative consequences for the patient’s well-being.

• Legal Safeguards: By defining these terms within the bill, providers are given a legal basis to defend their decisions if challenged by insurers or auditors. This legal protection is vital in maintaining the integrity of provider-patient relationships and ensuring that care decisions are made based on clinical, rather than administrative, priorities.

4. Reducing Administrative Burdens and Conflicts

• Streamlining Audit Processes: Clear definitions of medical necessity and minimum necessary information help streamline audit processes by reducing disputes over what information is required. This minimizes the administrative burden on providers, allowing them to focus more on patient care rather than on extensive documentation and justifications during audits.

• Preventing Overreach by Health Plans: By setting limits on what health plans can request during audits, these enhancements help prevent overreach, ensuring that audits are conducted within reasonable boundaries. This reduces the likelihood of conflicts between providers and insurers, fostering a more cooperative and less adversarial relationship.

5. Consistency with Broader Healthcare Goals

• Alignment with Value-Based Care: These enhancements align with the principles of value-based care, where the focus is on delivering high-quality, patient-centered care. By ensuring that audits and information requests are tied to clinically relevant and necessary criteria, the bill supports the broader goal of improving healthcare outcomes while protecting provider and patient interests.

Conclusion

The proposed enhancements to HB 2455 are important because they provide clear, standardized definitions that protect providers from arbitrary and unfair audits, empower them to safeguard patient privacy, and ensure that healthcare practices are aligned with ethical and evidence-based standards. These changes support a more transparent, fair, and effective healthcare system that respects the professional judgment of providers and the privacy needs of patients.

DISCLAIMER and PURPOSE: This discussion document is intended for training, education, and or research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.

For more information see: https://www.mentorresearch.org/disclaimer-and-purpose