How Anthem Gets Away With Nonpayment and Denials

This discussion was recorded on August 31, 2022. This transcript has been edited for clarity.

Editor's Note: All views expressed are those of the authors and do not represent the opinions of any affiliates. Medscape reached out to Anthem with an opportunity to respond to claims made regarding payment denials mentioned in this interview. Since the alleged claims are currently the subject of litigation, Anthem could not comment on specifics.

Robert D. Glatter, MD: Welcome. I'm Dr Robert Glatter, medical advisor for Medscape Emergency Medicine. Today, we will be discussing a disturbing pattern of nonpayment and denials by the insurer Anthem that leaders at the American College of Emergency Physicians (ACEP) have recently drawn attention to.

Here to discuss this is Dr Andrew Fenton, an emergency physician with Napa Valley Emergency Medical Group and chief of staff at Queen of the Valley Medical Center in Napa, California. Also joining us is James (Jim) Blakeman, president of Kirk and Associates, a billing and coding firm in Newark, Delaware, along with Andrew (Andy) Selesnick, a partner with the Buchalter law firm in California, specializing in healthcare litigation.

Welcome, gentlemen.

Andrew N. Fenton, MD: Thank you.

James R. Blakeman, MDiv: Good morning.

Andrew H. Selesnick, JD: Good to be here.

Glatter: Dr Fenton, I would like to begin with you. Can you describe the pattern of denials and nonpayment that you're currently encountering on high-acuity level 5 patients in your emergency medicine group?

Fenton: About a year ago, we received a letter from Anthem Blue Cross stating that my group was going to be put into what's called a "prepayment review program." They sent us a letter, and it listed a number of cases that were reportedly going through this program, and it ended with saying that they were going to deny payment on all of these cases that they reviewed.

We inquired about this and looked into these cases and found out that these were all cases of what we call a "level 5 chart." These are the sickest patients or potentially the sickest patients who present to the emergency room (ER). These would be patients with cardiac risk factors and chest pain, in whom you're worried about heart attacks and possibly blood clots in the lung, and you do extensive testing and sometimes interventions. These might be trauma patients who had a significant trauma with head injury, potentially intraabdominal injury.

All these cases were those people who come to the ER and who are potentially quite ill. Testing is undertaken and interventions are performed. These cases were ones that we're happy to report that didn't have the most devastating injuries that could be life- or potentially limb-threatening, and they were discharged home.

Somehow the algorithm that was being used by Anthem was identifying these higher, potentially sicker patients that were eventually ruled out for the most serious illnesses and sent home. These were the ones they were going to deny.

When we found out about this, we obviously responded and have not heard back in any meaningful way from Anthem Blue Cross. We talked to our colleagues and found out that this was a program that was being instituted throughout Northern and Southern California.

We tried to identify a pattern, and they all seemed to be level 5, or the essentially sickest patients who are mostly discharged home. They also seem to involve groups similar to mine, which is a small independent group. We're not employees of the hospital or part of a large, nationwide contract management group. That seems to be the majority. They seem to be focusing on smaller groups, and they're focusing on these particular charts.

A year has passed, and we have not had any sort of satisfactory resolution despite our efforts with regulators, state leaders, and with Anthem Blue Cross. At this point, it's really impacting our bottom line.

Glatter: Jim and Andy, I want to bring you into this. First, Jim, what do you think is resulting in nonpayment and essentially outright denials as opposed to just downcoding these charts, these level 5 patients who are presenting with these serious situations?

Blakeman: Activities like with Anthem that Dr Fenton is experiencing have happened all over the country repeatedly; lawsuits happen, then the payer cleans up their act, and so on. In this instance, there are several issues they're addressing. In one, they say, "Those patients just weren't that sick. They didn't deserve a level 5 service and didn't need one. Whatever you did, even if you coded it as a level 5, we don't think the medical necessity is there." That's one of the most common reasons for denial these days in an audit like Dr Fenton's, a pre-payment audit.

Another is the concept of bundling, where they want to pay one service but not pay others that were performed at the same time. Bundling [as referred to in this interview] is when a patient receives two different services on the same day; one gets paid and the other doesn't, and the payer says, "Well, that one is included in the other service."

There is something called the surgical concept that, in the reimbursement world, says that some part of some procedures is included in other work. For instance, a debridement of a wound that you're repairing might actually be part of the laceration repair, so you would not bill it separately; you would bill a higher-complexity code. If the debridement happened elsewhere on the body outside the area of complaint, then it would be properly reported.

Anthem, in this case, wants to bundle both surgical procedures and fractures, and in Dr Fenton's case, his EKGs and x-rays. They're doing this around the country. I've argued for a long time that in many places of the country, even today, you got a better chance of imaging a fracture with a flashlight than getting a radiologist to read a flat film on the weekends.

I hope that's not your case, Dr Fenton. Many ERs have improved their radiology services and gotten radiology onboard, and that's all great for the patient. When you have to do that alone, those are separately payable services and have been for 35 years. Current Procedural Terminology (CPT) and Medicare say they're not bundled, and yet Anthem says they are.

Glatter: Andy, let me ask you from a legal standpoint. Maybe you can explain bundling to the audience, what that entails, the legality of that, and how it relates to these level 5 patients. Also, I want to get into the medical decision-making note and how it relates in the chart ultimately to bundling.

Selesnick: Sure. The first question, with regard to bundling, the payers have never met a claim that they didn't think should have been bundled, right? That you unbundled and included services that you shouldn't have. The providers obviously take a very different view. In emergency medicine, compared with other disciplines, it's actually quite common, and it's part of the coding nomenclature that certain events are coded separately and are payable separately.

Like what Jim was talking about, and what Andrew's group has experienced, is EKG interpretation. The payers say, "You provided a basic service, and although you read the EKG in the middle of the night on a Saturday night where the cardiologist was home, comfortably in bed, and you met all the requirements, you put a report into your medical record, we're not going to pay it." Even though it was contemporaneous and led to the valuation treatment of the patient. They just don't want to.

Because those rates tend to be lower, maybe $40-$50 for the interpretations, they figure they can get away with it. If you look at the payer's view — and Anthem is certainly part of a larger group on this particular issue — their business model is predicated on denying portions of claims. That's how they make their money.

Although many people talk about medical loss ratio and they have to spend a certain amount of medical care, that does include cost reserves. They're always looking for ways to do this. Sort of segueing to the other part, which is this level 5, zero pay, Anthem issue, they're the ones who have come up with this. It's part of a years- and decades-long review of claims, figuring that if don't pay and engage in what I call economic extortion, then 95% of the people won't do anything and they'll change their behavior positively for the payers, even though it's probably wrong, and the other ones will fight.

Medical decision-making (MDM), that's the critical component that they're looking at. They have — and I think Jim would agree — they usually have coders who are not experienced in emergency physician coding, which is a particular type of specialty. They'll say, "Well, we don't think this was as complicated as the emergency department (ED) doctor thought. Therefore, we're just not going to pay it unless you change the way you code." That's the crux of the issue right now, it seems.

Glatter: The charts that I reviewed from Dr Fenton that are level 5 do look very complex in terms of MDM for high-acuity patients. I'm not sure what the insurers are seeing, and these MDMs are very well documented. We're talking about sick patients — trauma and cardiac patients. How are they able to look at an MDM that's complex and then issue a complete denial?

Fenton: It's interesting, and I can see what Andy and Jim think about this, but I think in the past they've also been known to look at the final diagnosis, and that is what they use to determine whether or not the patient is a level 5 chart. Sometimes, the chest pain in the end does get a diagnosis of gastroesophageal reflux disease. To them, that's heartburn and the patient should never present to the ER.

They're looking at the MDM, but honestly, there's something else they're looking at. Maybe it's the final diagnosis. Again, I think the ultimate thing is just the disposition. Are they sent home or are they admitted? That's what's falling into that group, and then once they fall into that group via their algorithm, they almost all are denied. They deny nearly every one of them.

It's something sort of spitting out a list. I don't think there's much thought put into it from their behalf. As a matter of fact, we've worked with them on individual charts, going over the MDM and even their own coders agree it's a level 5, but they still deny it.

Blakeman: That's what I discovered when I talked to Dr Fenton's billing company after they spoke to Anthem. They said it all lines up. It's perfectly documented as a high medical decision. We don't think it merits a level 5.

Well, there's a way to score these charts. There are rules, and you're saying these meet all the rules, but you just don't like it so you're not going to pay it. That's a kind of disingenuous work they're doing in the audit process, and that should bring in Andy's response to, "Hey, you got to cut that out."

Selesnick: We're litigating on behalf of a large number of emergency department groups in California that are subject to this Anthem policy. Before we litigate, we worked with California ACEP and some of the state legislators and got into a meeting with the Department of Managed Health Care (DMHC) at Anthem, and Anthem wouldn't even go on camera. Their position was, "You either code it our way or we're not going to pay. We're not going to deny many of the claims, too." That way, the group can't even collect the copay deductible or co-insurance.

The regulators at the DMHC, which has jurisdiction over some of these claims, essentially punted on the whole thing and is not getting involved. You leave the emergency physicians in this really difficult position. Ultimately, a large number of them decided they were going to move forward. They were owed millions of dollars, and so we're currently fighting with Anthem over it.

As I told their lawyers point blank, "I'm very interested to hear what your arguments are because you're not contending that they're not an emergency, but you won't pay them. It'll be interesting to see what you say to the judge." We have a hearing in a few weeks, and it will be interesting to see what they say.

Glatter: If some of these patients got admitted and weren't discharged, would that change the paradigm here in terms of reimbursement? Is there any thought on that? Jim, I'll start with you.

Blakeman: It does in many cases, but it also does not in many cases, too. It's surprising that they just make it up. It's hard to determine a rule that they're following. Dr Fenton is right. Often, it's diagnosis coding or the diagnosis on the bottom line of the chart, but there is no direct correlation. They like to deny discharged patients because, well, if the patient didn't need to go in the hospital, they weren't that sick. That's never been a component of coding. They know that. There's some number of admitted patients that they deny, too. Again, it's disingenuousness, as far as I can read it.

Glatter: In terms of the No Surprises Act (NSA) passed in 2020 that is currently implemented and having independent dispute resolution as part of the approach, has that panned out in any positive way?

Selesnick: I personally think the independent dispute resolution (IDR) process is a joke. They don't really require much in the way of expertise for these "arbitrators." They don't pay them very much to deal with complicated disputes. The Centers for Medicare & Medicaid Services (CMS) has set up a process that makes it very hard to group large numbers of claims when you have an egregious payer. They recently came out with some additional requirements that the payers are supposed to tell you if they're downcoding and what they would have paid had they accepted the code.

We already know that there are multiple payers out there who don't follow the NSA and require that you have to submit any disputes through their own proprietary portal, which requires an immense amount of time. The regulators aren't really cracking down at all. I'm not a fan of the IDR NSA process.

If I'm going to take the 50,000-foot view, I think it impacts every person in the United States. If the payers, who already make large amounts of money, record profits across the board for a long time, they'll continue to make more money, but there'll be less money for emergency medicine. If there's less money for emergency medicine, that means either the hospitals make it out to be a subsidy, which for them is a four-letter word, or there are going to be cuts in staffing and people's lives are going to be impacted.

Glatter: I think you're hitting on the main point. I want to bring Dr Fenton into this. If physician groups can't be paid and hospitals are paid — they're paid facility fees — this is a very serious imbalance that's happening. ACEP is drawing attention to this from a legislative standpoint, and elevating this to a state level - but more importantly to the federal level - is really something that has to happen. Dr Fenton, I'll let you address this.

Fenton: You're absolutely right. One thing I would say about the NSA is that if they were to pay $1 to us, then we could go into arbitration. The fact that they pay zero means it's not subject to the NSA, so we can't even arbitrate it. We're just stuck with zero until the regulators do their job.

This is a major issue, and it's already impacting my group after the pandemic. It went on still during the pandemic. At the height of the pandemic, we had many challenges with staffing and we still have those challenges. Now that we're busy again and people are returning to the ER and some of them have delayed care, we're having to try to increase our staffing. Our goal always is, as soon as a patient is in a room, we're going to have a doctor or provider in there to see them and there's no wait time. To meet that, it requires us to be able to have the staff there available.

That's been a real challenge financially, making ends meet with my small group — we're basically just a small business. If we have one of our largest payers not paying a dime, I can't staff, I can't get the supplies we need, and it's going to really be challenging to us locally. It's going to impact wait times. It's going to impact our local community.

It does need to be elevated, and I appreciate those whose efforts are on our behalf. To do that, we've tried to engage our state senator and state assembly person, and they've hopefully taken the ball and are going to take this to the DMHC and others to try to highlight what's going on here. We've spoken to our local congressmen, and we've talked to our local hospital.

I thought it was interesting that you mentioned the facility fees. When you come to the ER, you'll get a charge from the facility, and because we're not employees of the hospital, you often get a physician charge. A physician charge is minuscule compared with the hospital charge. Anyone who has ever gone to an ER, they've seen the bills from the hospital, and they're large.

Interestingly, on these same claims that they've denied us, they paid the hospital for the exact same level of acuity. Saying that our charges are unreasonable at that certain coding level is indefensible.

Glatter: You had mentioned that you are out-of-network with Anthem, but this is happening to in-network groups as well. I think that's important to talk about. This is not just limited to that segment.

Fenton: The entire geography of the state of California is being affected, so it's impacting everyone. We've sat down for years and tried to contract with Anthem, and they've walked away from the table. They really have no incentive to contract with us because they can just pay us whatever they want. In this case, they pay us nothing.

Glatter: Andy, is there any way to have any class action litigation from multiple groups to approach Anthem? I guess that's what you're doing, essentially, right now. How effective will that be in the long run?

Selesnick: All of our actions are direct action, which means we're suing directly. I'm not a fan of the class actions personally in these sorts of areas, because I think the lawyers end up with a lot and the physicians end up with not so much. That's just my personal opinion on it.

We are trying to effectuate change, and we have been successful in other litigation in effectuating change through litigation because we don't go away. The ED and the payers will always have a relationship. These issues just continue to percolate unless you force the payer to make some sort of modification of their policy.

That's one of the things that we're seeking here — that exact change in Anthem's policy, which is to defend your policy in court or remove it. I think that is going to be the challenge for them. Obviously, they have deep pockets and they have very talented and creative lawyers that I've litigated against for many years, but I think this one's a hard one.

How do you pay $0 on an admitted emergency? Admittedly, it's an emergency. It's not a question of was this an emergency or not. As Dr Fenton was talking about, some of these are very serious. There's no question. How do you pay zero? You don't like the way they coded. We asked them, why don't you pay something? Pay whatever you think is appropriate on it, and we can fight over that. They won't do it because they know that this really hurts the groups, so they are remaining stubborn.

Glatter: This black box that exists in coding really is something that I think needs to change. I think that's where maybe there has to be some grassroots efforts.

Blakeman: That's a great point, Dr Glatter. There has been, and for many years, coders have complained that the rules are not clear. Payers get to make stuff up. CPT changed the rules in 2021, and it now applies to emergency medicine — or it will next year. Those newer rules are much clearer. It'll be interesting to see the novel approaches that the payers come up with now, because there's much more quantification in what's called "medical decision making."

So that we don't sound like we're just tilting against the wind on these lawsuits, there was a lawsuit in Nevada where the courts found on a $60 million award to the physicians because UnitedHealthcare had behaved very badly and very much like what Anthem is doing now. These do sometimes result in awards. To Andy's point, even when they don't and they get settled, their behavior often has to change.

Now, a side note that UnitedHealthcare appears not to have changed their behavior, even though they got hit with a huge penalty. They're still doing the same stuff; I don't know to what extent. The fact is that that these are worth pursuing, and I appreciate Andy's efforts and all the healthcare attorneys' efforts to defend emergency medicine's rights.

Fenton: Anthem has had lawsuits and some findings against them, too. I think these penalties that you mentioned, Jim, they have to be put in the context of the type of revenues and profits that these health insurers bring in every year. It really is a slap on the wrist. They've crunched the numbers, and they realized that their payments that they have to pay out and these fines that they have to pay, in the end, they make more money by instituting these programs. If the regulators are going to institute a fine, it really does need to have some teeth if you want to change behavior.

Glatter: One question, Andy, that I had for you is, certainly there are state regulations for insurers, but what about on a federal level with the Affordable Care Act? Did that in any way implement any kind of watchdog or oversight for the insurers?

Selesnick: It did not. One of the things, obviously, is that they had to sort of standardize their payment in the reimbursement. I think there are some positives that came out of the Affordable Care Act, including more people being insured, which helps sort of spread the risk. There's no real national regulatory enforcement scheme.

My numbers might be slightly off, but CMS thought that their system was going to be so excellent and well received that there would be only maybe 20,000 appeals a year nationwide. I think in the first 6 weeks, they had 40,000 appeals. They vastly underestimated. If they had really listened to, instead of the payers, the providers and the other stakeholders, they would have realized that there are serious issues with the system they set up and it was going to create many problems and controversies.

In fact, they tried to put their thumb — well, more like their hand — on the scale in favor of payers. When an arbitrator looks at the amount that the insurance company paid and the emergency physician is objecting to it, and they're in arbitration, initially, the rules were that the arbitrator had to pick the amount the insurance company paid unless there was some sort of extraordinary factor otherwise.

The Texas Medical Association and others sued, and a Trump appointee in Texas threw it out and said, "That's not consistent with what Congress said." The department, after much handwringing, recently came out with new guidance, where they said, "Arbitrators, you should consider the qualifying payment amount (QPA) and other factors." To try to get around this, they ordered the arbitrators to write these opinions that said, "If you decide to deviate from the QPA, you have to give all the reasons why."

I don't know why they're doing it, but they're not going to change. The least they could do is force the payers to follow the law in terms of clear notices of what they're paying, clear delineations of downcoding, follow the law in terms of a letter that starts the open negotiation process. There are many things they can do. I hope that they do. I'm a skeptic, unfortunately.

Glatter: I want to thank everyone for shining light on this very complex topic. Certainly, solutions to this are something that we're all looking for. We want our patients to be taken care of. We want hospitals to be paid. We want physicians to be paid. There has to be equity here.

Arriving at this is going to take a joint effort. It's going to take compromise and oversight. I think that this discussion, hopefully, has enlightened our audience, but there's more to come.

Thank you again to everyone for your incredible expertise here.

Robert D. Glatter, MD, is assistant professor of emergency medicine at Lenox Hill Hospital in New York City and at Zucker School of Medicine at Hofstra/Northwell in Hempstead, New York. He is an editorial advisor and hosts the Hot Topics in EM series on Medscape. He is also a medical contributor for Forbes.

Andrew N. Fenton, MD, is an emergency physician with Napa Valley Emergency Medical Group and chief of staff at Queen of the Valley Medical Center in Napa, California.

James R. Blakeman, president of Kirk and Associates, a billing and coding firm located in Newark, Delaware, is a recognized writer and speaker on physician reimbursement topics. He taught the popular course "Beyond Basics: Issues and Answers about Reimbursement and Coding" for more than 20 years, educating hundreds of emergency physicians and coders in the principles of practice management, billing, coding, and documentation.

Andrew H. Selesnick, JD, is a shareholder in Buchalter's Los Angeles office and is a member of the Firm's Litigation and Health Care Practice Groups. With more than 20 years of experience as a healthcare and commercial litigator, Selesnick represents healthcare providers in numerous areas of litigation, such as seeking reimbursement from insurance companies or defending government investigations.

Follow Medscape on Facebook, Twitter, Instagram, and YouTube