LMH accuses KanCare contractors of systematically denying legitimate claims

Taryn Schraad, left, and Linda Sherman of Lawrence Memorial Hospital tell a Kansas Legislative Committee that the private contractors managing the state's KanCare system are routinely denying claims as part of an effort to reduce the state's Medicaid costs.

? Lawrence Memorial Hospital officials told a legislative panel that the three insurance companies managing the state’s Medicaid system routinely deny legitimate claims in order to hold down costs, a claim that all three contractors said was untrue.

Those charges, which other hospitals have made in the past, came Tuesday at a meeting of the Legislature’s joint committee that oversees KanCare, the name given to the state’s privatized Medicaid system.

Taryn Schraad, who handles audits and insurance claims appeals at LMH, told the panel the hospital frequently receives denial notices, often with no explanation provided.

“I believe there is a pattern of behavior to just deny claims and see if the provider will spend the time and the energy and the money to pursue them through the appeal process,” Schraad told reporters after the hearing.

Linda Sherman, director of patient accounts at LMH, said she understands that all insurance companies deny some claims.

Taryn Schraad, left, and Linda Sherman of Lawrence Memorial Hospital tell a Kansas Legislative Committee that the private contractors managing the state's KanCare system are routinely denying claims as part of an effort to reduce the state's Medicaid costs.

“The problem comes when they don’t meet deadlines, and they don’t provide denial reasons,” she said. “When they approve a stay for observation and then turn around and, in that observation claim that they have approved, say no, you didn’t get authorization for this. We’re going to make you appeal this through three levels.”

In their testimony, Schraad and Sherman cited an example of a claim that was denied by Amerigroup on Dec. 30, 2014. LMH filed an appeal on Feb. 5, 2015, well within the allowable 60 days for making an appeal.

Procedurally, Amerigroup was supposed to respond to that appeal within 60 days, but LMH did not hear a response until Nov. 18, denying the claim again, giving the hospital only three days to respond to that second denial.

Schraad said that only about 35 percent of the claim denials that LMH appeals are eventually overturned and paid. By comparison, she said, LMH has about a 90 percent success rate in overturning denials by Medicare, the federal health insurance program for the elderly.

Susan Thomas, director of compliance at the hospital, said the problem has gotten steadily worse throughout the three years that KanCare has been in place.

“It seems like when we moved from the traditional Medicaid program that was administered by the state, and now we’ve gone to for-profit managed care companies, the game has changed,” she said.

“They’re in the business to make money, and we appreciate that. We are too,” Thomas said. “But definitely, the requirement to process a claim, to get authorization for patient status, it’s changed dramatically in addition to now having three companies to work with rather than working through a state agency.”

Furthermore, LMH officials said, there is no clear pattern to the denials among the three different contractors. One type of claim that is denied by any one of the companies is often routinely approved by the other two, they said.

“We’re just not getting paid consistently or timely with those plans,” Schraad said.

Since KanCare began in 2013, Schraad said she has had to double the number of employees in her department who deal with claims and appeals just to keep up with the volume of work.

But officials from all three of the companies that manage the system, United Healthcare, Sunflower Health Plan and Amerigroup, insisted they do not send out denial notices without some kind of explanation.

Tim Spilker, CEO of United Healthcare Community Plan, said overall his company denies only about 7 percent of all claims, while Laura Hopkins, CEO of Amerigroup Kansas Plan, said her company’s denial rate was about 11 or 12 percent.

All three companies also pointed to data showing that since they started providing managed care plans to Medicaid patients, emergency room visits have declined while visits to regular primary care physicians has increased, one of the original goals of turning the system over to private contractors.

Rep. Jim Ward, D-Wichita, who serves on the joint panel, said he has heard similar reports from the two major hospitals in his community, Via Christi Hospital and Wesley Medical Center.

Sen. Laura Kelly, D-Topeka, said she has heard similar complaints since the beginning of KanCare in 2013. In response, she said, the contractors have worked with individual providers and developed “patchwork fixes” to resolve their particular issues, but she said there needs to be a “global” solution to prevent problems from arising elsewhere.

But Sen. Mary Pilcher-Cook, R-Shawnee, who chairs the joint panel, said she disagreed. She said that in the past, problems have tended to be caused by the hospitals themselves and the way they submit claims, not through actions of the private contractors.

“What really needs to happen is for everyone to work together and not point fingers and say that the system is not working, but instead find solutions,” she said. “And if we do come up with a pattern and can establish that there’s a better system, then we will go forward with that.”

The committee ended by encouraging LMH to return at the next meeting with examples of claim denials that it thinks were unreasonable or unexplained.