The Wall Street Journal reports on the new CMS regulations and fines concerning bad provider directories:
Starting Friday, they could be costly for insurers. New regulations allow the Centers for Medicare and Medicaid Services to fine insurers up to $25,000 per beneficiary for errors in Medicare Advantage plan directories and up to $100 per beneficiary for errors in plans sold on the federally run insurance exchanges in 37 states.
This is real money that will transform how directories are seen in insurance companies. Now they are usually a cost center that just has to be good enough to minimize the number of bad press articles in the local newspaper. The Legal department could resolve any big problems that come up. However with fines that quickly accumulate to millions of dollars for Medicare Advantage plans, the directories will be seen as cost centers that can be sources of tight control and loss minimization through accuracy. It becomes a much easier internal bureaucratic argument for the directory team to get five more full time workers to chase directory data if the alternative analysis shows that 15% of the directory is known to be wrong and another 10% is suspected to be a mess.
Before, that argument had to focus on customer service and executive anal retentiveness. Now the argument is customer service and real money.
The second difference these fines will make is it will change what type of error insurers are willing to make on their directories.
most insurers are making a decision (given my experience, an unconscious decision) to have errors that cast the illusion of a much broader network. Right now the cost of errors going in that direction are mostly borne by members and not the insurance company unless the state has aggressive regulators with strong tools to do their job….
The Maryland study does show an interesting possibility of a counter-example. There a decision was made to show an accurate network and potentially under-report the network. Errors would be errors of omitting participating providers instead of errors of including non-participating providers. Members would be very confident that if they picked up the phone, they would be talking to a provider that could help them. In the other cases, it was a crap shoot if the provider that they reached was actually able to help them. There may have been providers in the network but out of the directory…
Networks will appear smaller, but the odds of making a call and being able to reach someone who can help should increase significantly over the next couple of months.