ing cost is to be charged to Medicare and that 50 percent exceeds certain threshold amounts. 1976 PRIME CONTRACT PROPOSALS In March, 1976, the Commissioner gave BCA Notice of Intent to modify the BCA prime contract ". . . particularly as it relates to those functions that are peculiar to the BCA National Organization in its oversight of Plan activities." In May, 1976, the Bureau proposed six changes to the BCA prime contract: 1. Provider nomination.—Add a specific requirement for BCA to obtain the Secretary's approval if BCA wishes to change a provider's local Medicare service from one subcontracting Plan to another subcontracting Plan. The Bureau views such a switch between Blue Cross Plans as a change of intermediary. 2. Prior approval of plan subcontracts and EDP changes.—Eliminate the BCA role in reviewing and approving those procurements, subcontracts and data processing changes which require the Bureau's prior approval. BCA would have no role in reviewing or approving its subcontractors' further subcontracting any of their Medicare activities. This is the same proposal as in 1975. 3. Telecommunications.-Eliminate BCA's right to use its private wire system in administering Medicare for subcontracting Blue Cross Plans and, upon request, Blue Shield Plans. The Bureau's proposal would require specific approval of the Secretary for the use of the private wire system for each Blue Cross or Blue Shield Plan. 4. Budget review.-Eliminate the BCA role in the budget process between Plans and the Bureau of Health Insurance Regional Offices. BCA would have no role in reviewing, approving or negotiating the budgets of its subcontracting Plans. Additionally, there would be no consolidated budget of BCA and subcontracting Plans submitted to the Bureau. This is the same proposal as in 1975. 5. Direct draw down of administrative funds by plans.-Eliminate BCA's function of reimbursing Plans their cost of administering Medicare. This is the same proposal as in 1975. 6. Final settlement of plan administrative expenses.-Eliminate BCA from the negotiation and final settlement process for determining and paying Plan Medicare administrative expenses. The Bureau's 1976 proposed contract changes give further evidence of the Bureau's expressed desired to eliminate BCA as the intermediary and ignore the prime contractor's responsibility for performance under a prime-subcontract relationship. Although three of the Bureau's proposals are the same as the 1975 proposals, they are not the result of the evaluation of BCA which the Bureau promised. The Bureau did not conduct an evaluation. BCA has reached tentative agreement with the Bureau on proposed changes (1) and (2) above, which BCA considers relatively minor. Provider nomination BCA does not agree with the Bureau's position that a provider switch between Blue Cross Plans is a change of intermediary. BCA, not the local subcontracting Plan, is the intermediary nominated by the provider. However, BCA has agreed to the Bureau's proposal because BCA has always coordinated such changes with the Bureau. Prior approval of plan subcontracts and data processing changes BCA's activities in prior approval of Plan procurement subcontracts and EDP changes are performance monitoring and contract-compliance activities. BCA does not attempt to evaluate each instance of Plan management decisions in placing procurement subcontracts or making EDP changes. BCA, the Bureau, and others should evaluate a Plan's total performance by reference to specific performance standards, rather than through detailed reviews and direction in internal management methods. The Bureau has withdrawn this proposal. BCA believes these four remaining contract porposals would have a major, detrimental effect on BCA's ability to fulfill its accountability for Blue Cross Plan Medicare performance: Telecommunications BCA is concerned about the Bureau's Telecommunication proposal because the proposal would deny the private sector the right to use its own capability. BCA also questions the cost effectiveness of the Bureau's proposal because reliable cost figures are not available to compare the BCA Telecommunications System with the proposed Government system. Budget review Direct drawn down of administrative funds by plans These three items, considered together, would remove BCA's ability to monitor and evaluate Plan Medicare financial planning and results. Additionally, the proposals ignore the reality of a prime-subcontract relationship-namely, it is axiomatic that a prime contractor provides interim and final funding to subcontractors. 1976 CHANGES PROPOSED FOR ALL CONTRACTORS As with the 1975 contract changes, the majority of items proposed by the Bureau to affect all contractors are technical contract changes. The three items listed below, however, are of major concern to the contractors. 1. Travel costs.-The Bureau has proposed a flat cents-per-mile limitation on reimbursement of automobile cost. The contractors believe this limitation is not necessary because the Bureau must regularly audit to determine that costs are reasonable. Further, the Medicare contracts are cost-reimbursement contracts, and a flat cost limitation is not appropriate in such a contract. The Bureau's proposal of 16¢ per mile may not cover actual operating cost. The contractors believe that automobile cost must be reasonable, and the Bureau should audit to determine reasonableness, rather than set a flat limit. 2. Billing services.-The Bureau has proposed a contract change to prohibit the contractor from providing computerized Medicare billing services for physicians and other suppliers of medical services. The Bureau believes these billing services constitute a conflict of interest for the contractors. The contractors do not believe the services represent a conflict of interest because the contractors are simply supplying a mechanical, computerized function to reduce the volume of physician paperwork, which has been so widely criticized. The Bureau's proposal would prohibit a contractor from providing these services even if the contractor did not subsequently process the Medicare bill or payment. The practical effect of this prohibition is the contractor could not effectively offer any billing services to physicians because the Medicare bills are only a portion of the total billing-service package physicians are seeking. 3. Consultative services and other computerized services for providers. The Bureau has proposed to prohibit contractors from furnishing any service to Medicare providers for preparation of Medicare cost reports or the compilation or maintenance of statistical and financial data which might be used for the preparation of Medicare cost reports. The Bureau's proposal does allow the contractor to perform general accounting services for providers, but the distinction between general accounting services, such as payroll, and compilation of statistical records which are later used for the Medicare cost report, is sufficiently vague to cause major concern among contractors. The contractors strongly believe the presently provided shared-hospital-accounting systems are of benefit to the providers and serve as effective means of administrative cost control in the provider setting. Further, many contractors are presently supplying these services, not just for Medicare, but for the providers' complete accounting and computer needs. These shared hospital services can be documented to be effective cost containment mechanisms. As with the billing services, a Bureau prohibition against furnishing these services for Medicare would also mean the contractor could not furnish these services in his other lines of business. Here again, the contractors do not believe these services represent a conflict of interest because the contractors are performing a mechanical, computerized process. All input to both billing and other types of provider account systems is under the control of the provider, not the Medicare contractor. Attachment 10 Attachment 11 LRSP PRODUCT PACKAGES Ten product packages as well as a logical release and implementation sequence have been identified. These product packages, in release sequence, are: 1. PLASM PLASM is the acronym given to a new programming language which converts contract benefit statements and Plan administrative regulations into machine instructions. Unlike other existing languages, it is specifically designed for health insurance claims applications. As described, in the PLASM Reference Manual, it can be used by underwriters or benefit administration personnel without the use of a programmer. The product package consists of the PLASM translator, a software package or compiler which converts the input statements into machine instructions and the PLASM Phase Generator, a second software package which converts the PLASM into simple English statements. When fully implemented, the Phrase Generator will be used both in training and in answering subscriber inquiries. It will also be useful in creating an explanation of benefits form. 2. AIDE (AUTOMATED INQUIRY AND DATA ENTRY) The data entry package allows a user to define and enter, in online or batch modes, either LRSP transactions of Plan transactions. Further, it provides for on-line correction re-entry and inquiry of both erroneous and good transactions. Additional features include mechanisms to allow convenient interface to and feedback from Plans' existing systems. To utilize these features, it will be necessary for a user Plan to write minor programs to accomplish the interface. It should be noted that "inquiry" here means inquiry into the data entry transaction files only, not access to data bases such as membership or claims history. 3. DATA BASE PREPARATION This product package is composed of the following data base preparatory components: Claims History Update Claims history update is that portion of processing that provides the capability for recording in the integrated data bases both current activity and prior history of claims processing and payments. To use this portion of the package, a Plan will need to develop either a manual mechanism for entering history into this component or an automated mechanism to read history data from their current system. Claims history update, via the interface, will allow Plans to build a suitable claims history in preparation for the claims component of this system. Provider Includes the updating, processing and reporting of information to maintain both demographic and reimbursement control data on individual providers and selected peer groupings. Usual, customary and institutional fees are recorded here. Diagnosis/Health Service Diagnosis/health service includes the updating, processing and related reporting necessary to maintain all the diagnosis and health care (procedure) information used in claims processing. Fee schedules are recorded here. Other Carrier Other carrier permits the maintenance of names and addresses of other insurers or their contacts that the using Plan must recognize as competition (marketing) and/or deal with regarding third party liability on COB claims. Sales Representative/Agency Sales representative/agency update is that portion of the marketing component which includes the updating, processing and related reporting necessary to maintain the marketing activities related to a Plan's enrollment operations. Capability is provided to maintain data for both sales representatives and agencies. Demographic information related to sales representatives and agencies are also maintained. 4. MEMBERSHIP The membership product package includes the following: Group For enrollment and maintenance of group, pseudo-group and prospective group data. All related reporting is included. Data elements are also maintained for special reporting including CRISP. Subscriber For enrollment and maintenance of subscriber dependent (member) status and demographic data and production of related reports such as contract certificates and ID cards. Billing For generation of billing based on data maintained by group, pseudo-group and subscriber with related billing and receivable reports on a daily or as needed basis. Reconciliation For recording and allocation of payments, maintenance of paid-to dates and related cash and subscription income as well as daily financial reports to support reconciliation. Additionally, reporting capability will be provided as part of the membership package to support the daily functions. These reports include group and subscriber enrollment reports, enrollment activity reports, as well as marketing related reports such as active group renewal reports and prospective group marketing data sheets. These reports may be obtained on either a cyclic or on request basis. 5. ON-LINE INQUIRY On-line inquiry includes inquiry processing against the LRSP integrated data bases for both subscriber inquiries and standardizing data base inquiries. On-line response and/or alternate print (data sheet) display may be selected. 6. FINANCIAL AND ACTUARIAL This package provides fiscal control for processing and reporting of income/ receipts and claims expense payables. It includes control and validation reports and trial balance by batch, day, month and year. The actuarial portion of the package provides a series of statistical analysis reports based on enrollment and exposure data, claim counts, and potential claims liability (expense). These reports are designed to produce experience analysis and rate development factors. The financial and actuarial package also supports the data requirements for SNAP. 7. CLAIMS PROCESSING The claims processing product package consists of all processes necessary for the automated adjudication and processing of claims. It includes the following: Automated handling of pre-authorization of health care; Notice of admission query and response; National account query and response; Query and response for government programs; Automated adjudication; and Claims history update and recording or proper payment information. 8. FINANCIAL PROCESSING The financial processing product package utilizes data established and recorded by the claims processing, membership processing and marketing processing areas to produce and control all related disbursements. This package uses the claims payment, refund payable, and commissions payable data to produce checks and vouchers for these payments and provide the corresponding financial controls and reports associated with a payment function. It also includes supportive processing for all recoverable disbursements including inter-Plan settlements such as NPCC, RECIPROCITY, BANK, CHAMPUS, FEP, etc. 9. UTILIZATION REVIEW The utilization review product package provides the necessary interfaces to allow claims history maintained in the LRSP integrated data bases to be processed through selected BCA/NABSP post payment analysis systems (JPC, POST MIPS, NBSI, etc.) for both institutional and non-institutional providers. These systems provide the ability to prepare comparative analysis of providers by one or more of the following criteria: Procedure. Length of stay. Peer Grouping. 10. MARKETING This product package provides processing and market analysis reports for use by marketing management. It includes identification of performance by individual sales representatives and/or territory, or region analysis as well as market research reports indicating information such as market trends and product penetration. [Whereupon, at 12:05 p.m. the subcommittee adjourned, to reconvene at the call of the Chair.] |