Guest Columnists

50 states 50 standards It's time to standardize health insurance laws

I  have been working on the administrative side of the health care community for almost three decades — serving physical, speech and occupational therapists all across the U.S.

My work has varied from privately held to publicly traded companies, serving in corporate offices first in Texas and Tennessee and for the past 19 years here in my hometown: Cedar Rapids.

In the past 10 years, more change has been forced upon the medical provider community than in all previous years combined, in my opinion. While I am not saying this change isn’t necessary, I do feel health insurers need to work with medical providers to develop cohesive standards that simplify the exchange of information between payers, providers and patients. Right now we have 50 states, 50 sets of insurance regulations and four federal insurance programs — Medicare, Medicaid, Tricare (U.S. military) and Self-Funded ERISA plans. The result is a complex tangle of regulations and policies that lead to needless denials of payment and consume significant administrative resources.

For the past four years, I have been serving on the American Physical Therapy Association Private Practice Section’s Payment Policy Committee. The purpose of this committee is to educate members on changes in the industry and how they impact their practices. The goal is to assist members in being not only competitive, but compliant with regulations — a huge issue for health care providers.

Recently, some members of our committee worked with doctoral students at Marquette University to research, locate and grade how easy or difficult it was to find the same, consistent information on the websites of three top payers in all 50 states. The intent of the study was to develop a research tool to help APTA PPS members comply with regulations and appeal denials of coverage, but students found many items were difficult to locate. If you cannot locate information you need about regulations, how can you possibly comply?


But while I was certainly interested in the raw data provided by this study, I was more interested in what it didn’t speak to: The large number of insurance payers and potential medical policies providers must understand and comply with. How many are there, exactly? I decided to start with information I could find. I went out to a couple of clearinghouses we do business with and downloaded their lists of commercial insurance companies that process claims electronically — not a comprehensive list of every insurance company, but a start. The first list contained more than 6,400 payers. I estimate that for every electronic payer, there are two more health insurance companies that don’t accept electronic payments — which gives us a ballpark number of 19,200 payers nationwide.

What does this mean for providers? Let’s use a single policy — the physical therapy medical policy — from the top three Iowa insurance companies as an example. Although all three insurers do business in Iowa, all three have different policies regarding physical therapy. These policies were 45, 43 and 18 pages long, respectively — 106 pages collectively. Assuming an average of 35 pages for physical therapy medical policies, that’s 225,000 pages worth of medical policy for the 6,400 electronic payers nationwide. Using my estimate of providers, above, that number skyrockets to 675,000 pages for a single policy. If I started today I might be able to complete reading all of them before I die …, assuming none of those payers implement a change to their written policy — which unfortunately, is a regular occurrence.


Realistically, a therapy provider in Iowa will not have patients represented by every possible payer. So I contacted Nic Pottebaum, Gov. Terry Branstad’s Health Policy Advisor, and Nick Gerhart, the Iowa Insurance Commissioner, to determine how many health insurance companies are registered to do business in the state.

According to records, there 334 registered health insurance companies in Iowa. So a physical therapy provider should have only 11,690 pages of policy to digest. If you want to visualize this, a ream of paper is 500 sheets. A box of copy paper has 10 reams in it. So Iowa physical therapy medical policy is two boxes and additional three reams of paper long.

I asked the CFO of one Iowa therapy company how many payers his company must work with to process claims. He told me that last year, his company billed out therapy claims to over 300 different insurance companies. So I believe my example above is realistic, if my 35-page average for physical therapy medical policies is accurate.


There are seemingly endless complexities caused by the lack of standard regulations and policy. For example: A patient that is injured on the job out of state but who lives and is treated here in Iowa will have to be treated according to the other state’s Workers’ Compensation laws; not Iowa’s. Another example: A patient who lives in Cedar Rapids but whose employer has corporate offices out of state might have an out-of-state insurance coverage — such as Blue Cross. Typically, that patient’s Iowa-based medical provider will sign up as a participating provider with that out-of-state company. So the claim has to be submitted to Wellmark of Iowa for adjudication. Only after the claim goes through Wellmark is it forwarded to the out-of-state plan for review. So Wellmark of Iowa’s Medical Policy is no longer in effect, the out-of-state plan’s policy takes precedent.

In fairness, the overwhelming majority of claims generally process and are paid without any issues. However, those that are denied require significant administrative staff time in medical appeals. Many companies don’t have or cannot afford the staff to chase these denials. As a result, they choose to write patient care off without receiving payment. (As an aside, now that Medicaid has been privatized in Iowa, one Medicaid policy has been replaced by three interpretations and unique administrative requirements. Perhaps the projected savings of privatization will occur because providers who do not complete these unique administrative tasks will have the honor of treating those patients for free.)

In contrast, because Medicare falls under federal jurisdiction, there is one physical therapy medical policy for Medicare recipients in every state. This policy is published and disclosed to all providers. It is clear and consistent. Providers know what the Medicare expectation is and can treat accordingly.

Do not misunderstand my intent here, I am not an advocate of a single payer system. But federal laws that set standard polices for all insurance companies would dramatically reduce guesswork related to coverage and level the playing field for competition and pricing.

l Jim Hall is the General Manager of Rehab Management Services, a Cedar Rapids-based medical billing company serving approximately 40 physical, speech and occupational therapy companies in more than 20 states.

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