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Health Net announces policy changes to Medicare Advantage and Medi-Cal managed care product lines



March 23, 2018
Area(s) of Interest: Commercial Payors Emergency Services Payor Issues and Reimbursement 

Health Net recently announced several 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.

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.

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Health Net’s proposed policy change on modifier -25 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Cross’ attempt to implement a similar policy, however, due to overwhelming opposition from organized medicine, Anthem rescinded the policy before it was implemented.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.

CMA has raised concerns with Health Net about these new policies and the payor has committed to engage with CMA on these issues prior to the implementation date in May.

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. This is available free to CMA members.

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