U.S. Military Retirees of the Philippines Group

Tricare Philippines Newsletter 13003

Policy Changes and Reversals that Dramatically Increase the Cost of Care under the Demo

Recent information obtained during a teleconference with International SOS (ISOS) and an email response to our questions asked of the TRICARE Overseas Program Office clearly demonstrate that previous unilateral policy changes and a recent total reversal in policy with regard to the Demonstration will result in major increases to the costs beneficiaries are required to pay including copay increases by as much as 390% for outpatient visits and more than 240% for inpatient stays when using Approved Providers under the Demonstration and where the provider is supposedly going  to file a claim.
28 February 2012 Teleconference report for a detailed discussion of the dialogue.
The recent and unilateral policy change that reverses the original premise, stated from the very start of this experiment, that beneficiaries would see providers and only pay deductibles or copays upon the processing of a claim by WPS and the resultant EOB that would indicate the amount owed to the provider. This plan was sound and insured that the provider was incentivized to file claims in a timely manner, regardless of the TRICARE Management Activity (TMA) extended timelines for filing claims. It also would have eliminated all the confusion that it appears the ISOS trainers and providers have surrounding deductibles that resulted in providers demanding full payment of deductibles, claims that deductibles are required each time a new provider is used, claims that a sponsors individual deductible increases from $150 to $300 simply because they are married, etc.
Under the current modified policy providers sign into their account on the ISOS claims web page and check a beneficiary’s deductible status. If there is unmet deductible they are told they have to pay the full cost of the encounter up to the amount still owed. In other words if a beneficiary still has $125 to pay on his deductible he will be required to pay the full amount of a visit or any pathology or radiology tests. As an example let’s take the previously stated cost of a demonstration outpatient visit at AUFMC of P1,066, 113% above the customary fee, which equates to $26.65, a urine C&S at $32.00 and an ultrasound of the kidneys, bladder and prostate at $30 for a total cost for this outpatient visit and ordered tests of $88.65. Until the providers submit claims and they are adjudicated and paid by WPS, the beneficiary will not receive one penny credit towards their deductible. Until they are processed every time they present for care their owed deductible will remain $125.
Because of that and because we already have multiple beneficiaries who paid the full amount weeks ago and who have yet to see claims appear as in-processing at WPS, I submitted the following question to ISOS and TMA for discussion during their teleconference on 28 Feb 13.
Since the rule requiring payment of deductibles up front was unilaterally implemented beneficiaries have no assurances that providers will file claims for encounters that are paid in full by the deductible. Since the encounter was paid in full the provider has no incentive, but a disincentive, to process a claim; it takes additional resources to file a claim and it may be denied or an amount disallowed. Unless a claim is filed the beneficiary will never get credit towards the deductible.
Please provide an explanation of what safeguards ISOS has put in place to monitor and insure these specific claims are submitted in a timely manner and indicate the number of days that is considered timely.
Because I submitted the question I took good notes on what they said about this issue and when I wanted additional clarification I pushed them for more information. They talked around the issue and tried to address the issue of claims submissions in general while ignoring the issues of providers having no incentive to file fully paid claims. Instead they claimed they have “full visibility of clams submitted” and that they know because of this that “some claims have already been submitted”; but if a claim is not submitted they probably will not know. They further went on to say that they are actively involved in insuring all providers are fully aware of how to file claims and that all providers “agreed to file claims” and all providers understood the “timely submission rule”. They also said they would continue to monitor claims submitted in the future. This was essentially the answer to the question of what safeguards are in place and what was considered timely submission.
What they left out.
They provided no assurances of any safeguards in place to insure that a specific claim is submitted. In fact they have no idea who has been seen, for what and the status of any claim until it actually is submitted and recorded into the WPS database.
After being questioned again on the issue of being submitted in a timely manner they admitted that the “timely submission rule” means the provider must submit a claim within 3 years of the date of service or the claim will be denied. (As usual they prefer to withhold critical information in the hope people will believe something different than reality.) By that time families would have paid for the total cost of their outpatient care for more than two years before they saw even one dime back from the first year and could end up paying thousands of dollars out of their own pocket year after year while waiting for claims to be submitted, if submitted at all. If they are never submitted they will end up paying the full cost of their care under the Demonstration; a likely outcome.
What they also obviously avoided admitting but which is evident is that these providers, while they agreed to file claims have no mandated requirement to file a specific claim because the assumption is that a provider that has agreed to submit claims on the behalf of a beneficiary, in lieu of payment from the beneficiary, will do so because otherwise he will not be reimbursed. But the policy reversal removed that incentive. They also don’t have binding contracts with these providers but something like a memorandum of understanding. So when they changed the playing field in the middle of the game and allowed providers to collect deductibles at time of care they also removed the incentive to file the claim. So we are now at the mercy of a provider and hope he is generous and will expend time and effort for no return or even a loss if the claim is denied. Previous experience with local providers who filed claims in the past resulted in hundreds of claims never being filed and copays never credited to the cap. In other instances claims were submitted close to a year after the provision of care. Now that TMA extended the “timely filing deadline” to three years the expectation is that many will take even longer. This is also a likely outcome now as well and even with those where the provider would be paid. So if they can’t keep up with claims they must submit to be paid, what are the chances they are going to put a priority or even consider submitting claims they get nothing back from?
Bottom line, while some of these fully paid claims maybe filed it is highly unlikely the majority of them will. So beneficiaries will end up paying for the majority of their outpatient care while they wait for providers to submit the claims. Because providers have 3 years to submit a claim TMA has no ability to force them to submit them earlier or probably even address untimely submission of claims or the failure to file claims at all. In addition while TMA and ISOS claim that any overpayments of deductibles will be reimbursed by TMA, it will only happen if all the claims that are paid in full are submitted. So it is very possible a family of three, who has a total deductible of $300, could end up paying thousands of dollars or more for visits and ancillary care or the total cost of their outpatient care for many years. Then start over again the next fiscal year the same way. I already know of two individuals with claims that fit this category who received care more than 6 weeks ago who have not seen the claims appear for processing. One even was told when he called the provider that they had no record of filing a claim.
Copays will double and triple or more
The recent total reversal of previous policy involves providers doubling or tripling their fees under the Demonstration. I inquired of TMA about this issue and other related issues dealing with the Demonstration. Below is my question on excessive fees and their response.
Question: When can we expect to be able to once again see providers without paying double or other increases over local normal and customary fees?
Response:  TRICARE will reimburse health care costs based on the lesser of billed charges or the Philippine fee schedule located online at http://www.tricare.mil/CMAC/ProcedurePricing/SearchResults.aspx.  To participate in the TRICARE Department of Defense Philippine Demonstration Project, the Institutional providers have acknowledged that they will bill at the lesser of the billed charges or CMAC rates.  There may be instances in which Institutional providers are charging up to the CMAC rate because of the added time and effort they expend to submit claims and understand the TRICARE Program.  This is not an uncommon practice in the Philippines (and elsewhere in the world).  Patients with medical insurance will in many cases be charged a higher fee to cover the costs of  the additional effort in processing the claim and recovering their invoiced amounts as the providers are accepting financial risk of getting paid the outstanding amounts as opposed to an immediate cash payment from an individual.
In essence they are saying that the doubling or quadruple of fees is acceptable and in fact expected. This complete turnaround seems to be an attempt to cover them and their contractor’s actions where they allegedly told providers to increase their fees and is a total and complete reversal of years of previous claims and even their manuals. The claim that doubling and tripling of fees for insured patients is a complete fabrication and the reverse holds true in the states, see
Health Care: The Cost With and Without Insurance. Seems they don’t keep up with the times. Below are examples of their previous claims of fraud involving local providers who doubled their fees when filing claims and with links to support them. There are also examples where TMA repeatedly proclaimed that providers would have to agree to only charge at the lower of the usual and customary charges and the established fee schedule. This abrupt change is so extreme and fraught with problems it is hard to get your head around the consequences, but I will try below.
Program Integrity is the office responsible for fighting fraud and has been fixated on the Philippines for years. Most of the references below come from them.
States on Page 8: In 2011, TMA PI, with support from International SOS (ISOS) as well as their subcontractor Wisconsin Physicians Service (WPS), continued to work diligently to curtail and prevent health care fraud and abuse throughout the world. To aid in this effort, ISOS’ contract was modified to improve provider certification in the Philippines to include educating the provider on the requirements in 32 CFR, Part 199.9 and the TRICARE Operations Manual (TOM), Chapters 13 and 24, as they relate to fraud and abuse. 

Extract from 32 CFR, Part 199.9 that ISOS is required to educate providers on per above.

199.9 (b) (2) Improper billing practices. Examples include, charging CHAMPUS beneficiaries rates for services and supplies that are in excess of those charges routinely charged by the provider to the general public, commercial health insurance carriers, or other federal health benefit entitlement programs for the same or similar services.
TMA claims that it is common in the Philippines to apparently double and even quadruple fees for health care services when billing health insurance. Under the CMAC the two top procedure codes paid by TMA are 99213 and 99214. 99213 has a maximum allowed charge of $40.16 (P1,647) and 99214 has a maximum allowed charge of $59.37 (P2,434); 99214 is a very common procedure level for those over 65 due to multiple system issues and is the top E&M code used for Medicare outpatient visits. So any provider that charges any fee up to these amounts will be paid in full and we will be responsible for deductibles and copays. In Angeles the local normal fee is generally P500 to P600 and already high compared to similar cities. So instead of paying the historical fee of P500 we will pay P1,647 to P2,434 or at rates between 229% and 387% above the usual customary fee and in excess of those charges routinely charged by the provider to the general public. There is not a single local insurance company, PPO or HMO that would stay in business if they agreed to pay those kinds of rates above the usual customary rates. In fact the vast majority either get the usual customary rate or a discount off that rate. In some instances, but not common, the PPO/HMO will pay a few percentage points over the local rate but that is rare and generally in locations with limited health care services according to my previous contacts with management of a PPO. Discussions with well respected physicians also showed that they do not increase charges when seeing patients with local insurance. Additionally if a beneficiary pays cash for a visit to these same providers they will pay P500 with a copay of P125. At P2,434, which TMA now says is acceptable and expected under their program a beneficiary will pay a copay of P608.50. So in reality a beneficiary is better off paying cash and not even filing a claim. In essence this policy reversal has made it cheaper for beneficiaries to pay for their own care rather than bother with TRICARE at all.
In August 2010 the TRICARE Management Activity Program Integrity office presented a slid show at the Communications & Customer Service Conference.
http://db.tt/5yHbTHP for the full PPT presentation.
In addressing fraud they addressed some past practices, below, and taken from slide 7
  • Charging beneficiaries rates for services/supplies in excess of those in locale
  • Billing substantially in excess of customary or reasonable charges
  • Padding bill w/network administrative costs disguised as health care charges
Fraud from slide 8
Philippines Presents Greatest Overseas Program Integrity Challenge
From slide 17 (This was the first time we knew about the demonstration)
Establish a Closed Network in the Philippines (three year demo)
  • Overseas contractor will establish an approved list of providers and inpatient facilities
  • Providers will be selected based on quality, accurate claims submission, and cost
  • Waivers will be provided for emergency situations
  • Providers who agree to join the network will be reimbursed at the lower of the usual and customary charges and the established fee schedule
  • Providers may be terminated from network without cause or appeal
  • TMA will evaluate project progress and may seek permanent authority to continue program
They seemed to have major issues with providers that charged them higher rates than they charged locals or substantially in excess of customary or reasonable charges. To counter these higher fees in the demonstration they claimed they would only sign up providers that agreed to charge the LOWER of the usual and customary charges and the established fees schedule and was a key element of the demo. With this complete reversal of position it appears rates as high as 387% above local customary and reasonable charges are no longer excessive and the requirement to charge the lower of the usual and customary local charge or the CMAC is out the window as well. It also seems the so called practice of padding bills with administrative costs as stated above are now acceptable in that doubling or tripling the normal fees to cover risk and other administrative costs is now acceptable but which was considered fraud before as shown above.
Federal Register Notice of Philippine Demonstration published 09/28/2011
From Supplementary Information, A. Background
Because of this concern [excessive charges and aberrant practices], the purpose of this demonstration is to validate an alternative approach to providing healthcare services for those beneficiaries covered under the TRICARE Standard option in the Philippines, controlling costs, eliminating any balance billing issues, and ensuring that the billing practices comply with regulatory requirements.
From Supplementary Information, B. Description of Demonstration Project

To be included on the approved list, a provider must agree to accept reimbursement at the lower of the usual and customary charges and the established fee schedule.
The sudden reversal in policy seems to invalidate much of the major reason for this demonstration as providers are allowed to charge much higher rates, more than 300%, above their usual and customary charges in favor of those up to a CMAC that waffles all over the place with some rates almost 400% above local rates and others at more than 50% below local rates. It was considered fraud to pad the bills with administrative costs/overhead in the past but now that TMA is orchestrating the overcharges it is legitimate and above board.
Thomas Lutz and Health Visions Indictment Press Release from 18 October 2006
In addition, Health Visions and Lutz inflated the bills of other providers by one hundred percent or more before submitting the bills for payment by the United States Government.
This guy was prosecuted for this crime of fraud but one could argue that since he was paying for the care up front and submitting the claim that these claims met the now stated policy of TMA as above and restated here that he was assuming financial risk and the cost of processing claims and recovering the invoiced amounts it cost his medical clinics to obtain the care from qualified physicians which they paid in cash and then submitted a claim. While he only inflated the bills by 100% TMA feels their Demonstration providers are well within their rights to inflate theirs up to 387% over their normal fees. Under TMA’s program, really not much different than what Health Visions did, approved hospitals direct patients to see individual practice providers and then bill for the cost of care, the effort to process a claim, administrative costs, financial risk and to learn TRICARE rules. It seems amazing how an act, committed by someone else is considered fraud but when committed by the agency that previously prosecuted someone for the same behavior it is no longer fraud but called an acceptable and common practice around the world.
For those that want to see pages of additional claims of past fraud in the Philippines on the part of TMA for doing just what they are doing to us now see Additional TMA Claims of Past Fraud
How this affects inpatient care

This is a real example of an inpatient stay for hospital charges only, based on the new reversal of policy, which will cost beneficiaries tens of thousands of dollars in additional copays. This is one more example of the CMAC, one size fits all mentality, that TMA used when they built this mess. Under the CMAC policy they pay a fixed amount by disease group on a per diem basis. So you take the rate and multiple it times the number of days stay. In order to cover a huge assortment of conditions and associated costs, from surgery to infections to observation stays, they used a percentage of the average cost of all hospitalizations within this disease group in the U.S. It has to address the higher cost of care in accredited hospitals in major cities to minimally acceptable rural hospitals in the provinces. This example of my actual hospitalization comes from Medical City, a high end accredited facility in Manila, and for a hospitalization that included minimal care or services. In a rural hospital in the provinces the usual and customary charge would have been less by maybe 30%. However during a later stay at Medical City under the same disease group but that included major surgery and high cost antibiotics the billed amount was much closer to the CMAC allowed amount and just covered. But this is a clear example where approved hospitals can and will take advantage of the new policy that says “There may be instances in which Institutional providers are charging up to the CMAC rate because of the added time and effort they expend to submit claims and understand the TRICARE Program.” In this example TMA is saying they see nothing wrong with a hospital increasing their usual and customary fee from $1,144 to $3,873, an increase in cost of $2,729 or an increased charge of 239% for the “added time and effort they expend to submit claims and understand the TRICARE Program” by “charging up to the CMAC rate”. This new and complete reversal of TMA policy would have increased my actual copay in the example above from $286 to $968. Obviously their previously stated claim that “You will have reduced out-of-pocket costs” is at most a pipe dream and this doesn’t even consider the massive increased cost to the taxpayer due to this policy reversal.
What’s good for the goose should be good for the gander.

Consider the following revised statement of policy; “Patients with medical insurance will in many cases be charged a higher fee to cover the costs of the additional effort in processing the claim and recovering their invoiced amounts as the providers are accepting financial risk of getting paid the outstanding amounts as opposed to an immediate cash payment from an individual.” This begs the question, if providers are entitled to double or triple their normal fees to cover the cost of their effort to process a claim and take a risk of getting paid the outstanding amounts why shouldn’t beneficiaries also be able to double or triple the fee on claims they pay cash for as they are then assuming that same costs of processing the claim and financial risk of getting paid. Since these additional administrative fees are now considered a common practice it only stands to reason the beneficiary should be reimbursed for at least his financial risk as well even if they are only allowed to double the fees instead of increasing them by as much as 387%.
What will Congress think?

If we have to pay 100% to 387% over the usual and customary fees our out-of-pocket cost will not only increase by those amounts but the taxpayers cost will also under this total reversal of policy by TMA. Given attempts to cut cost, finding out that TMA now considers what they previously called fraud, that doubled and tripled the taxpayers cost, is now considered an acceptable practice now that TMA declared it so may not sit well with them.

How can you protect yourself?
Consider paying cash for your outpatient care
and submitting claims. This single act will eliminate both the issues above. See Newsletter, Alert: Deliberate Overcharges under the Demonstration (Closed Network) for a previous discussion on this issue and filing your own claims to save the higher costs under the Demonstration. Note: You must still use approved providers within the demo areas even if you cannot benefit from the higher costs.
Watch the rates approved hospitals intend to charge for inpatient care. Compare their cash price and the inflated price they intend to charge under the TMA Demonstration. Remember, depending of the severity of your case, they could triple the cash price and TMA will willingly pay them. If the cash price is lower and you can afford to pay for the care and submit a claim you could save substantially on your copays as clearly demonstrated above. Let them bill for professional fees under the Demonstration and file the hospital portion following the guidance in Newsletter,
How to File a Claim for the Hospital Portion of a Hospitalization.
Please report your experiences and examples of over charges and claim denials to USMRoP

USMRoP Contact us at: US Military Retires of the Philippines
What’s Next?
As we gather more information from TMA, the contractor and beneficiaries we will continue to send out newsletters but generally not more than once a month.
What we are seeing is rapidly put together policy that then changes within a few days only to be changed once again. These in turn raise new issues or other unforeseen problem surface. To keep up with these we will post shorter topic specific updates and notices on our blog,
TRICARE Overseas Philippines Blog. Recommend those interested in keeping informed on the experiment check it frequently or alternately add your email address and click “Follow” about midway down the front page and on the right. This will automatically email you a link to each new entry.
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oing to U.S. Military Retirees of the Philippines Group TRICARE Newsletter Archive.
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