By David Van Houtte, Chief Growth Officer, Santech
LinkedIn: David Van Houtte
LinkedIn: Santech Solution, Inc.
CMS is Increasing its Scrutiny and Regulation of Payors Across Provider Networks
With a recent increase in rules and regulations from the Centers for Medicare and Medicaid Services (CMS), health plans are feeling the pressure of more scrutiny, and the fear of penalties looms. For example, the No Surprises Act (NSA), passed in 2022, has already resulted in healthcare facilities, payors, and providers paying more than $11 million in penalties. Just this year, CMS required state-based marketplace plans to comply with time and distance adequacy requirements–or risk being kicked out of the exchange–as part of its recent rule regarding network adequacy standards. And in May, CMS announced it will be aggressively auditing all Medicare Advantage plan contracts, going back as far as 2018 and increasing the number of audits it does yearly from about 60 in past years to all 550 Medicare Advantage plans going forward.
Payor Provider Directory Errors are Common and Could Prove Costly
With this new scrutiny and regulation, payor provider directories are especially vulnerable. Directories are riddled with errors, putting payors at risk for penalties from CMS across multiple programs. According to JAMA Network, 81% of payor directories had entries that were inaccurate across five major payors. Errors in provider directories are so pervasive and problematic, payors are putting themselves at risk for penalties, hefty fines, and/or loss of patients. It is only a matter of time before CMS and states begin enforcing existing penalties for payors for violations regarding incorrect information in provider directories.
Incorrect provider directories are a major cause of out-of–network surprise bills. The NSA includes provisions requiring plans to verify and update provider directories at least every 90 days, and payors must respond to patient inquiries about a provider’s network status within one business day. The bill also allowed for the creation of an independent dispute resolution (IDR) process. The IDR process has been inundated with hundreds of thousands of cases. One year after the bill was put into effect, more than 650,000 new disputes were filed according to a recent analysis published in Health Affairs. Violations of the NSA can result in fines of up to $10,000 per violation as well as applicable state-specific penalties.
In 2025, payors in state-based exchanges and marketplaces that use the HealthCare.gov must meet adequacy standards and starting in 2026, all plans in state-based-exchanges must meet the requirements. When payor provider directories list providers who aren’t actually available or have other incorrect information, state-based marketplace plans may appear to meet adequacy requirements on paper but fail to provide real access to care, putting them in violation of the CMS’s recent rule. When directories don’t meet network adequacy requirements, payors may have to pay for network gap exceptions or risk being shut out of the program. And some states, like Illinois, have their own laws regarding adequacy and have already imposed fines against payors.
The 2024 Medicare Advantage (MA) Rule introduced several significant new requirements for MA plan directories including linguistic capabilities, accessibility for disabilities, and requiring searchability. So in addition to basic information, plans must now ensure that these new requirements are accurate and current. All the while, CMS is scrutinizing MA plans. The potential liability to health plans is enormous—payors can be fined up to $25,000 per beneficiary for errors in Medicare Advantage plan directories and up to $100 per beneficiary.
Looming Fines Demand Provider Data Modernization
With regulatory fines and penalties looming, payors must act immediately to modernize their provider data management. New CMS rules leave no room for error—outdated or inaccurate provider directories can now result in significant financial and reputational consequences.
Fortunately, advanced Provider Data Management (PDM) platforms offer an immediate technology solution to the problem of existing antiquated provider data maintenance processes. These automated solutions offer real-time directory validation, automated verification, self-service provider portals, and seamless integration with existing systems. Every interaction is tracked and auditable, ensuring compliance and drastically reducing manual effort and errors.
What should payors do now?
- Quickly assess current provider data workflows and compliance risks
- Evaluate and implement automated PDM solutions
- Educate teams and providers on new, streamlined processes
With technology solutions readily available, there are no excuses for inaction. Payors can adopt these tools now to avoid penalties and ensure data accuracy.