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CareSource scrutinized over late payments as new Medicaid work arrives

The nonprofit insurer says it has made significant recent improvements.

Ohio is flipping a switch July 1 to use CareSource and other private insurers to handle Medicaid behavioral health services, such as drug rehab and mental health care, for the state.

The move is expected to take millions of dollars now directly paid out by Ohio Medicaid and shift that spending to managed care organizations like Dayton-based CareSource, which are private insurance companies paid a set fee per patient to provide services.

The managed care system has cut costs for Ohio and the insurers are given flexibility to build their own payment models and programs to better coordinate care. These changes have allowed CareSource, headquartered in downtown Dayton, to grow into a giant in Ohio’s managed care system with a local staff of 2,800, making it one of the largest local employers.

But CareSource’s plan to take on this additional work follows months of complaints about late payments and bounced claims.

MORE: CareSource, one of Dayton’s largest employers, prepares for change

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In February, the Ohio Hospital Association noted a laundry list of issues the hospital lobbying group was working through with CareSource: “policy discrepancies, claim processing breakdowns, inappropriate denials, authorization issues surrounding medical treatment and failure to communicate effectively with Ohio providers.”

The complaints

The Ohio Council of Behavioral Health and Family Service Providers said this month that CareSource isn’t paying its bills on time. Giving them a contract to handle behavioral health will exacerbate the problem and imperil small providers that can’t wait months for payment or fight administrative battles with CareSource, according to the council, which

CareSource “is not fully paying their bills to health care providers now, and they become responsible for Medicaid-covered behavior health services on July 1. More than 50 percent of people on Medicaid are covered by CareSource, so a lot of people suffering from opioid addiction will depend on CareSource to pay their bills so they can access the care they need,” said Lori Criss, chief executive of the Ohio Council.

Fast-growing CareSource, which covers 56 percent of the 3.1 million Ohioans enrolled in Medicaid, says it has had staffing and IT problems. The company missed its benchmark for timely payments to providers in the last two quarters of 2017 — triggering financial penalties and a remediation plan.

MORE: Ohio Medicaid overhauling how it pays for addiction, mental health care

CareSource is required to pay 90 percent of its “clean” claims within 30 days and 99 percent within 90 days. But smaller health care providers argue that CareSource is rejecting large swaths of claims, deeming them not clean.

Still, the Ohio Department of Medicaid said that CareSource is ready to take on more work.

“It is true that CareSource has had payment issues of late. I would specify that it’s not related to behavioral health, it’s much broader than that,” said Patrick Stephan, Ohio Medicaid’s managed care director. “They were fined and they were penalized.”

Four separate fines against CareSource totaled $786,879, according to Ohio Medicaid.

Stephan added, “They have new leadership there and they are laser focused on this right now. We are feeling better than we have in a long time with respect to their ability to right the ship.”

Ready for work

CareSource, which last year managed $6.95 billion for Ohio, said it is ready to take on the additional management of behavioral health services.

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CareSource Ohio Market President Steve Ringel, who has personally been involved in working through the issues with the providers and the state, said the insurance company made significant investments into improving its processes since then.

“We have made the necessary corrections and that has been confirmed by the state and we continue to make improvements every day,” Ringel said.

“We take this responsibility extremely seriously,” Ringel added.

CareSource has more than 40,000 provider contracts and gets about 100,000 claims a day. Ringel said the behavioral health redesign will add about 2 to 3 percent more claims per day.

He said CareSource has been working to upgrade its systems and change how it manages provider information, cutting down on the backlog.

Measures to protect

There will also be measures to protect providers as the plan rolls out. Each insurer will have rapid response teams to work with the providers and during the early months of the redesign will be required to pay claims faster than the 30 day standard, gradually shifting to a 30 day window.

John Palmer, spokesman for the Ohio Hospital Association, said the association has been actively meeting with CareSource and other insurers closely since August of 2017 and have been able to work through many of the issues.

The hospital association is expecting answers by the end of the month on some of the payment issues.

State Sen. Bill Coley, R-West Chester, a member of the state’s Joint Medicaid Oversight Committee (JMOC), said he is convinced CareSource has the issues “under control” and the behavioral health redesign shouldn’t be delayed.

“We’re going to have to do this sooner or later and sooner is looking better,” Coley said. “At some point, we’re going to have to rip the Band Aid off.”

Several years in the works, the Medicaid behavioral health redesign is more than just shifting contractors. Ohio re-worked all the billing codes and upgraded the information technology requirements for providers. Some delayed payments can be blamed on those changes. Still, some worry that payment problems could put undue financial strain on smaller behavioral health providers.

“We are not talking about a normal business here that if we make a mistake, it just costs us money. I mean these are people’s lives at stake and frankly as hard as we have worked for the last five or six years to increase access (to care) for (drug) addicts around the state, particularly rural areas, I don’t want to see these smaller operations who don’t have a lot of capital to operate on — if they get slowed down at all, it could put them out of business,” said Ohio House Speaker Ryan Smith, R-Bidwell. “I just want to make sure that we are prepared.”

MORE: Did drug distributors contribute to opioid crisis? Yes, says local exec.

Outstanding claims

Jonathan Lee, chief executive of Signature Health, which runs a federally-qualified health clinic as well as a community mental health program for 20,000 patients in northeast Ohio, told JMOC members that CareSource owed Signature Health $1.4 million on 10,000 unpaid claims, some of which go back more than a year. Ringel said as of Wednesday that Signature Health had just 76 outstanding claims with CareSource.

CareSource’s information technology systems are misconfigured and staff lacks the expertise to manually process claims accurately and as a result 30 percent of Signature’s claims are getting rejected, Lee said.

Susan Bichsel, chief executive of Jewish Family Service Association of Cleveland, said her agency has had similar problems with CareSource failing to promptly pay Medicaid claims for services such as home health care.

At one point, the association was owed nearly $1 million on claims, some of which stretched back two years, she said. The backlog has since been cut in half. “For us to be floating that much money for CareSource is insane,” she said.

CareSource said as of today, Jewish Family Services has 60 outstanding claims.

Bichsel said she had to hire three additional people in her finance department to deal with the rejected claims and make appeals to CareSource.

“No one (at CareSource) answers the phone or you just sit on the phone for hours. Who has staff for that? It’s just crazy,” she said.

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