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Navigating the Sea of Changes: Understanding CMS Fee and Policy Schedule Updates

In the ever-evolving landscape of healthcare, one of the most challenging aspects for healthcare payers is keeping up with the constant changes in fee and policy schedules set by the Centers for Medicare & Medicaid Services (CMS). Each year, CMS makes numerous adjustments, amendments, and updates to these schedules that can create financial challenges and increase administrative burdens for payers.

The Frequency of CMS Updates 

CMS plays an important role in administering healthcare programs for more than 150M Americans according to CMS Fast Facts for CY 2022. As part of this responsibility, CMS continually reviews and revises its fee and policy schedules. The frequency of these updates can be daunting:

  • Annually: CMS routinely publishes updates to various fee schedules and policies on an annual basis. These annual updates are eagerly anticipated by healthcare providers and payers, as they often involve significant changes to reimbursement rates and regulatory requirements.
  • Quarterly: Beyond the annual updates, CMS also releases quarterly updates to fee schedules, which can include changes to payment rates, coding guidelines, and coverage policies. These quarterly updates are aimed at addressing emerging healthcare trends and issues.
  • Ad Hoc Updates: In addition to the regularly scheduled updates, CMS may issue ad hoc updates in response to urgent healthcare needs or changes in legislation. These updates can have immediate and profound effects on the healthcare industry.

The Impact of CMS Updates on Payers

These updates encompass changes to reimbursement rates, policies, and regulations that directly influence how payers operate.

Reimbursement Rates:

One of the most significant aspects of CMS updates for healthcare payers is the adjustment of reimbursement rates. CMS sets rates for services covered under Medicare and Medicaid, which serve as benchmarks for many private payers. When CMS updates reimbursement rates, it affects the revenue that healthcare payers receive from government-sponsored plans and, subsequently, the rates they negotiate with providers.

Financial Sustainability:

CMS updates can pose financial challenges for healthcare payers. Reductions in reimbursement rates or changes in payment methodologies can impact the profitability of managing government-sponsored plans. Payers may need to adapt their cost structures, premium pricing, or network strategies to maintain financial sustainability.

Compliance Burden:

CMS updates often come with changes in documentation, coding, and billing requirements. Healthcare payers must invest in compliance efforts to ensure they meet the evolving regulatory standards. This can increase administrative costs and necessitate ongoing training and education for staff.

Network Management:

Changes in CMS policies can also impact payer-provider relationships. Negotiating contracts with providers may become more complex due to changes in reimbursement rates and performance-based incentives.

Member Services:

CMS updates can directly affect the services and benefits offered to members of government-sponsored plans. Changes in coverage policies, eligibility criteria, or access to certain treatments can influence member satisfaction and retention. Healthcare payers must communicate these changes effectively to members and provide support to navigate evolving plan options.

Care Coordination:

CMS emphasizes care coordination and value-based care models in its updates. Healthcare payers need to align their strategies with these priorities to improve patient outcomes and control costs.

Regulatory Compliance:

Staying compliant with CMS updates is paramount for healthcare payers. Non-compliance can lead to penalties, reputational damage, and potential legal issues. Payers must continually monitor CMS changes, update their policies and procedures, and ensure that staff members are well-versed in the evolving regulations.

Navigating CMS Changes 

One of the ways many payers are choosing to navigate all of these changes is through the use of modern technology. Payers who use HealthEdge’s core administrative processing system (CAPS), HealthRules® Payer, have the unique opportunity to leverage the company’s award-winning prospective payment integrity solution, HealthEdge Source™, as a secondary editing solution.

This productized integration, called Payer-Source, is now available as a secondary editor, which means claims can go through another layer of validation so inaccurate and inappropriate claims are more likely to be caught before they are paid. This not only reduces the risks of overpayments and underpayments, but it also helps minimize provider abrasion.

And the good news is, there is no need for payers to replace or change their primary editing solution, which can be HealthRules Payer or other primary editing vendors, to take advantage of this new capability. It simply slips in the payment workflow after the primary editor but before the claim has been fully adjudicated. Users have complete flexibility and control over whether they want to accept the Source recommendations or not.

Powerful Savings Identified 

The Source Data Study team recently completed several data studies with payers, using the Payer-Source integrated solution as a secondary editor, and the savings opportunities the solution identified were significant:

  • A national health plan was able to generate $8.7M, or 1.1% in incremental savings, on 5.1M claims, representing $790M in spend from its Medicaid and Dual-Eligible populations
  • A regional health plan was able to generate $9.1M, or 1.6% in incremental savings, on 2.1M claims, representing $571M in spend
  • A mid-sized regional health plan was able to generate $11.1M, or 1.6% in incremental savings, on 1.7M claims, representing $684M spend

Learn more about how payers can future-proof their claims editing for real savings here.