By: TAFEC

Last month, we talked about how the Texas Department of Insurance (TDI) added a provision in the new PPO network adequacy rule that mandates commercial health insurance plans to base out-of-network provider reimbursements on a usual and customary method when an in-network provider is not available in the region or if it is for out-of-network emergency care.  This is one of the first instances in which the state government has mandated a usual and customary rate.

In a future attempt to help consumers understand health care pricing, TDI now has an online reimbursement rate guide for patients, which includes selected billing codes, is now available online. 

When public policy and industry discussions focus on what commercial insurance reimbursement rates are appropriate for providers, the spotlight often falls on the new FAIR Health, Inc.  The entity replaced the industry's health care reimbursement rate database.

While some health care groups may prefer to have the government mandate health plans to use usual and customary standards for determining out-of-network rates, other health care groups fear that any mandate that sets reimbursement rates could be dangerous.

The idea of usual and customary rates and mandatory provider pricing disclosure will be debated again in the 2015 Texas Legislature.

The following is a recent Q&A that TAFEC conducted with FAIR Health, Inc.'s CEO, Robin Gelburd.

TAFEC: What was the impetus behind FAIR Health?

Robin Gelburd: FAIR Health was founded in 2009 out of a legal settlement reached between the New York State Attorney General and the nation’s major health insurers. This settlement was the culmination of an investigation into the industry’s practices for establishing so-called “usual, customary and reasonable” (UCR) charges when determining reimbursement amounts for out-of-network services.  All parties agreed that patients, providers and insurers would be best served if UCR benchmark data were established by an independent, not-for-profit entity that had no other vested interest in the health care industry. That entity is now FAIR Health.

FAIR Health is proud to have successfully fulfilled all aspects of the mandate that was established in the New York settlement: we have created a massive, national health care claims repository that receives data contributions from 60 payers on an ongoing basis; our benchmark charge data are being licensed to insurers, providers and other industry stakeholders as an unbiased source of information on prices for medical and dental procedures in 491 geographic markets nationally; we oversee a free website (fairhealthconsumer.org) that allows patients to easily research the cost of health care in their area; and we offer claims data to support health services research on patterns in care utilization and costs.

TAFEC: Will FAIR Health play as big a role in determining health care reimbursement rates as Ingenix once did?  

RG: We have been extremely heartened by the reception we have received in the marketplace since we began licensing our benchmark data in January 2011. Indeed, the strong appetite for fair, robust charge data has been demonstrated by the hundreds of licenses we currently have in place with insurers, TPAs and other organizations engaged in health care claims processing. Collectively, FAIR Health’s customers adjudicate claims for over 140 million covered lives nationally. Our data are also fueling workers' compensation, auto liability and other state health programs nationwide.

It has also been exciting to see how FAIR Health’s customers are applying our claims data and custom analytics to business uses that extend well beyond reimbursement.  We have observed an enormous increase in the number of customers that are using FAIR Health data to conduct market research and strategic planning. These customers are incorporating FAIR Health data in the evaluation of potential capital purchases, understanding trends in the use of different types of services in specific geographic markets, and the analysis of the impact of various reforms on care delivery.  These new applications reinforce the important role that unbiased, independent data have in the changing delivery system that we see evolving today.

TAFEC: What charge schedules do you all have available now?  

RG: We currently offer seven product modules that are organized by service type. These modules provide aggregated charge data at the level of procedure code and geozip (a geographic area typically encompassed by the first three digits of a zip code). The modules include medical-surgical, inpatient, outpatient, HCPCS, anesthesia, dental and allowed medical-surgical (which provides information on negotiated charges as opposed to billed charges). The modules are updated twice annually.

In addition to our standard modules, FAIR Health offers a number of tools targeted specifically to physicians. These smaller datasets are specialty-specific (including orthopaedics), and incorporate a more targeted set of geographic areas. For orthopaedics, we also create custom analyses that can be tailored to a particular practice. For example, a custom analytic might include charges for DME codes related to crutches, braces and wheelchairs in several geographic areas within a state. Similarly, we perform trend analyses that examine charges over time and that compare charges and utilization in similar rural or urban areas.

TAFEC: How have providers and health plans responded to FAIR Health?  Are they generally receptive to your product?

RG: A core element of FAIR Health’s identity is our neutrality. We believe that all stakeholders benefit from access to reliable, robust data that is not influenced by any particular agenda. Since our earliest days as an organization, we have strenuously maintained our independence by working with all stakeholder groups to shape useful, reliable data tools that a wide variety of customers can apply to their work. We established formal advisory groups with physicians, health plans, consumers and researchers, and also regularly participate in formal and informal dialogues throughout the industry.  This work, when combined with the solid reputation of our charge data, has helped us to gain the trust of both the plan and provider communities.

TAFEC: Where do you hope to see FAIR Health in five years?

RG: FAIR Health’s creation dovetailed with the growing spotlight on what health care costs in this country. We find ourselves in the enviable position of having data that can support the wide variety of conversations that are happening throughout the industry: between patients and their providers and health plans, between providers and insurers, between researchers and policymakers, etc.  Over the next five years, we hope to continue to make the inroads we are making to advance those conversations by continuing to service all stakeholder groups, support efforts to reform the health care system, and offer data and products that allow stakeholders to test and innovate with new models.

With respect to consumers, we see cost transparency as an increasingly important variable that is changing how decisions about provider and treatment course are made. We are committed to developing tools and educational resources that help patients appropriately apply cost information to the complex process of health care decision-making.

For our physician customers, we are committed to enhancing practice management by expanding the tools we offer for conducting financial modeling and market research. One exciting development to watch out for is an ASC module that we will begin developing this year. We also want to be able to assist physicians in the new conversations they are having with patients about price. We therefore intend to continue to partner with providers and offer rich, educational consumer tools that can be applied at the practice level.

For our plan customers, our goal is to ensure that we are supporting fair, equitable reimbursement practices. We therefore continue to evaluate the methodologies upon which our benchmarks are based. We also will be implementing a number of enhancements to our data contribution program to increase the value of the information that insurers receive in return for contributing claims data to FAIR Health.

Finally, with respect to legislators, government officials, policymakers and researchers, we are committed to making our data available to the ongoing work to better understand our health care system and test solutions that address cost and quality deficiencies. As states continue the challenging work of implementing the Affordable Care Act, and as they look to all payer claims databases (APCDs) to support that work and their other public health goals, we look forward to making our data and expertise available to facilitate the promulgation of best practices in consumer engagement, data warehousing and tool creation.