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Reminder: Health Net policy changes to Medicare Advantage and Medi-Cal managed care products take effect May 16



April 30, 2018
Area(s) of Interest: Commercial Payors Payor Issues and Reimbursement Practice Management 

Health Net notified physicians in March of new payment policies for its Medicare and Medi-Cal lines of business, effective May 16, 2018. The California Medical Association (CMA) is very concerned with the adverse impact these policies would have on physician practices and recently met with Health Net representatives to voice concerns and request that it rescind the policies.


The new policies would:



  • Reduce reimbursement of evaluation and management (E/M) services when billed with modifier 25 under the following circumstances:

    • When a minor surgical procedure code is reported on the same day as an E/M code by the same physician, payment for the E/M code will be reduced by 50 percent.

    • When a preventative/wellness exam and a problem-oriented E/M are billed during the same encounter, payment for the problem-oriented E/M code will be reduced by 50 percent.





  • Reduce reimbursement for level 4 (CPT 99284) and level 5 (CPT 99285) emergency room services that are billed with what Health Net deems a non-emergent diagnosis to a level 3 (CPT 99283) contracted rate.



  • No longer honor or reimburse for consultation codes (99241-99255); however, consultation codes billed will be crosswalked to the appropriate E/M level code for reimbursement.


Health Net’s policy change to reduce reimbursement of E/M codes by 50 percent when billed with a same day minor surgical procedure follows Anthem Blue Cross’ attempt to implement a similar policy. However, due to overwhelming opposition from organized medicine, Anthem rescinded the policy before it was implemented.


The Health Net Update states the policy changes “…follow the Centers for Medicare and Medicaid Services (CMS) National Correct Coding Initiative guidelines and will impact providers who are coding outside of fair and appropriate use.” However, only one of the four changes actually aligns with CMS guidelines.


Physicians are urged to thoroughly review and assess the impact any proposed modifications to their contract would have on their individual practices. To assist physicians in analyzing the modifier 25 change, CMA has developed a simple worksheet that will help calculate the net financial impact to their practice resulting from this change. The Modifier -25 financial impact worksheet is available free to CMA members.


California law requires health plans and their contracting medical groups/IPAs to provide 45 business days’ advance notice of a material change to a contract, manual, policy or procedure (28 C.C.R. §1300.71(m)). A change is considered “material” if “a reasonable person would attach importance [to it] in determining the action to be taken upon the provision.”


Physicians have the right to terminate the agreement prior to the implementation of the change if the physician does not agree to the proposed change (Health & Safety Code §1375.7; Insurance Code §10133.65). For more information on physicians’ rights and options when a health plan makes a material change to a contract, manual, policy or procedure, see CMA’s resource titled, “Contract Amendments: An Action Guide for Physicians.”

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