# September 13, 2006 Coordination of Benefits Option Paper

Options for the Coordination of Benefits
for Consumers of DMH-Funded Community Mental Health Services
Who Are Not Enrolled in a DHFS Program
09/13/06

These are six options for determining a payable amount for a consumer of DHS-funded community mental health services when the consumer is not enrolled in a DHFS health care program (such as Medicaid, Kid Care, All Kids) and there are other payers for the service. DHS funding may be used to pay for community mental health services for persons enrolled in a DHFS health care program, but the policies and procedures for determining the payable amount in those cases are already established. In all options presented here, it is understood that DHS payment for community mental health services will not exceed the DHS rate or the provider's usual and customary charge, whichever is the lower.

For these options, third party payments are generally payments from insurance or other benefit programs, including Medicare, that have an obligation to pay for services provided to a beneficiary. In instances in which a consumer is a beneficiary of more than one program with a third party payer, these options assume that third party payments represent the sum of all payments from these other parties. Consumer payment in these discussions means any payment made by the consumer or the consumer's family. In all cases, payment means the actual receipt of payment, not just a charge. If a consumer is charged a fee of \$5 for a service but does not make any payment, the consumer payment is zero.

## Option 1:

• DHS payment is not payment in full.
• Calculation of DHS payable amount is based upon the provider's reported usual and customary charge.
• Third party payments and consumer payments are considered in the calculation of the payable amount.
1. DHS rate \$ 75.00
2. Provider usual and customary charge \$ 120.00
3. Third party payments \$ 60.00
4. Consumer payment \$ 10.00
5. DHS payable amount [ Line 2 - (Line 3 + Line 4) ] \$ 50.00
6. Total revenue from all payers \$ 120.00
• Implications:
• Option maintains provider revenue.
• Option does not depend upon DHS determining a standard charge, which may be higher or lower than the provider's usual and customary charge.
• Consumers with third party payers and personal resources represent more revenue to providers than consumers without these resources.
• Without standards for providers' usual and customary charges the policy could lead to inflation of usual and customary charges to maximize DHS payment.
• DHS payment per consumer will be more than under other options.
• Uncertainty of consumer payments may complicate or delay the determination of the payable amount.

## Option 2:

• DHS payment is not payment in full.
• Calculation of DHS payable amount is based upon the provider's reported usual and customary charge.
• Third party payments only are considered in the calculation of the payable amount.
1. DHS rate \$ 75.00
2. Provider usual and customary charge \$ 120.00
3. Third party payments \$ 60.00
4. Consumer payment \$ 10.00
5. DHS payable amount [ Line 2 - Line 3] \$ 60.00
6. Total revenue from all payers \$ 130.00
• Implications:
• Option maintains provider revenue.
• Option does not depend upon DHS determining a standard charge, which may be higher or lower than the provider's usual and customary charge.
• Option may allow for total revenue above the provider's reported usual and customary charge, unless other restrictions are imposed.
• Consumers with third party payers and personal resources represent more revenue to providers than consumers without these resources.
• Without standards for providers' usual and customary charges the policy could lead to inflation of usual and customary charges to maximize DHS payment.
• DHS payment per consumer will be the highest among all options.

## Option 3:

• DHS payment is not payment in full.
• Calculation of DHS payable amount is based upon a standard charge, determined by DHS.
• Third party payments and consumer payments are considered in the calculation of the payable amount.
1. DHS rate \$ 75.00
2. Provider usual and customary charge \$ 120.00
3. DHS standard usual and customary charge \$ 100.00
4. Third party payments \$ 60.00
5. Consumer payment \$ 10.00
6. DHS payable amount [ Line 3 - (Line 3 + Line 4) ] \$ 30.00
7. Total revenue from all payers \$ 100.00
• Implications:
• Option maintains provider revenue relative to some options but reduces revenue relative to others.
• Option requires that DHS develop a standard charge, which could be subject to dispute unless an acceptable methodology is developed.
• Consumers with third party payers and personal resources represent more revenue to providers than consumers without these resources.
• DHS payment per consumer will be lower than some other options.
• Option does not contribute to inflation of usual and customary charges.
• Uncertainty of consumer payments may complicate or delay the determination of the payable amount.

## Option 4:

• DHS payment is not payment in full.
• Calculation of DHS payable amount is based upon a standard charge, determined by DHS.
• Third party payments only are considered in the calculation of the payable amount.
1. DHS rate \$ 75.00
2. Provider usual and customary charge \$ 120.00
3. DHS standard usual and customary charge \$ 100.00
4. Third party payments \$ 60.00
5. Consumer payment \$ 10.00
6. DHS payable amount [ Line 3 - Line 4 ] \$ 40.00
7. Total revenue from all payers \$ 110.00
• Implications:
• Option maintains most provider revenue.
• Option requires that DHS develop a standard charge, which could be subject to dispute unless an acceptable methodology is developed.
• Consumers with third party payers and personal resources represent more revenue to providers than consumers without these resources.
• DHS payment per consumer will be higher than in most other options.
• Option does not contribute to inflation of usual and customary charges.

## Option 5:

• DHS payment for all consumers (Medicaid and non-Medicaid) is payment in full.
• Calculation of DHS payable amount is based upon the DHS rate.
• Third party payments and consumer payments are considered in the calculation of the payable amount.
1. DHS rate \$ 75.00
2. Provider usual and customary charge \$ 120.00
3. Third party payments \$ 60.00
4. Consumer payment \$ 10.00
5. DHS payable amount [ Line 1 - (Line 3 + Line 4) ] \$ 5.00
6. Total revenue from all payers \$ 75.00
• Implications:
• Option reduces provider revenue.
• Consumers with third party payers and personal resources do not represent more revenue to providers than consumers without these resources.
• DHS payment per consumer is the lowest among all options.
• Uncertainty of consumer payments may complicate or delay the determination of the payable amount.

## Option 6:

• DHS payment for all consumers (Medicaid and non-Medicaid) is payment in full (with consumer payment exempted).
• Calculation of DHS payable amount is based upon the DHS rate.
• Third party payments only are considered in the calculation of the payable amount.
1. DHS rate \$ 75.00
2. Provider usual and customary charge \$ 120.00
3. Third party payments \$ 60.00
4. Consumer payment \$ 10.00
5. DHS payable amount [ Line 1 - Line 3 ] \$ 15.00
6. Total revenue from all payers \$ 85.00
• Implications:
• Option reduces provider revenue from third party payers but not from consumers.
• Option allows for simpler Medicaid claiming for persons with retroactive Medicaid eligibility.
• Consumers with third party payers and personal resources do not represent more revenue to providers than consumers without these resources.
• DHS payment per consumer will be less than under most other options.