Can California Regulations Fix Medical Provider Directory Accuracy?

Provider directories—in which insurance plans publish information about the healthcare practitioners in their networks—are taxing for everyone.

Insurers fret about compliance with regulatory requirements, which has turned into a multimillion-dollar liability for some of the nation’s biggest health plans. Doctors and hospitals field frequent faxes and phone calls from insurers seeking to verify directory information. And consumers find that the accuracy of directories often leaves much to be desired.

Now California is attempting to attack the problem by pairing the Golden State’s most dependable weapon—regulatory muscle—with clever technology. We would do well to pay attention given California’s history of leadership on consumer issues. From automobile mileage standards to medical marijuana, California has time and again set the pace for the country.

For insurers, the directories pose a daunting logistical challenge. With tens of thousands of providers practicing myriad specialties in offices across any given state, insurers often deploy a small army to keep directories current, in both online and (mandated) hard copy formats. Directories are subject to a variety of federal and state regulations, as are provider networks, which must be sufficiently robust to meet the medical needs of patients in each geographic area. And when regulators crack down, the plaintiffs’ bar typically follows, resulting in enormous restitution payments for consumers who unwittingly paid out-of-network charges for providers that were mistakenly listed in directories.

Consumer (and doctor) frustrations with provider directory accuracy

For their part, providers want to practice medicine. They find it bothersome to constantly update data with the dozen or more health plans they accept. They receive frequent calls and faxes from the plans urging them to confirm their information, yet they are typically under no regulatory pressure to do so. As they say, doctors vote, health plans don’t.

Consumers vote, too, yet their frustrations with provider directories seem endless, stemming from a variety of problems ranging from incorrect contact details to inaccurate specialty information that sends them to the wrong doctor’s office—a potentially serious problem in the event of an urgent health need. Many consumers are also familiar with pricey surprise bills for out-of-network services; these typically occur when providers stop participating in a plan and directories aren’t updated, or when out-of-network practitioners operate in an in-network facility.

A 2018 survey by the University of Chicago’s NORC research institute found that 57 percent of respondents had been surprised by a medical bill they thought would be covered by their insurance. Eighty-six percent said insurance companies were “very” or “somewhat” responsible for these surprise bills. “People are definitely confused by their insurance and struggle to understand benefit design, what their deductible is or who is going to be in network,” said Caroline Pearson, senior fellow at NORC.

Tougher California standards impose new provider directory accuracy regulations

California has been an aggressive advocate for consumers, with regulators levying major fines against two large HMOs in 2015. The state has also imposed even stricter standards in the form of Senate Bill 137, which went into effect on January 1, 2018. Among other troublesome provisions for health plans, the California law requires them to update directories within one week after they learn of a change. This is far more onerous than any other state in the country besides Delaware and boosts insurers’ exposure to crackdowns. By contrast, the federal government only requires Medicare Advantage plans to update their directories within 30 days. But again, other states are bound to follow California’s lead.

Another novel California stipulation is a requirement that insurers offer an online interface so that healthcare providers can update their information. On the surface, this seems like a good idea, simplifying matters for insurers. But given the quantity and variety of data points, developing portals and ensuring data quality has proven challenging for many insurers. Moreover, it is uncertain whether providers will actually use the interfaces, although the California law does provide some leverage for insurers. It requires providers to inform plans of changes within five business days. If they fail to provide “accurate or timely updates,” plans can terminate provider contracts or withhold payment.

A portal to more accurate healthcare provider directory data

Relief may come in the form of California’s “Statewide Provider Directory Utility Initiative.” The utility, slated to be fully available in early 2019, promises a single portal across the state for providers to update their data for health plans. This will “[simplify] the process and [lead] to more accurate provider data, improved quality, and a better customer experience for Californians,” according to the Integrated Healthcare Association (IHA), a nonprofit overseeing development of the utility.

IHA contends the utility will reduce costs for health plans and make it “far easier” to meet state and federal requirements. Although providers are still not required to update their data, the hope is that they will do so to stanch the flood of requests from insurers.

While the utility is a private initiative, it stems from a regulatory agreement approving California Blue Shield’s 2015 acquisition of Care1st Health Plan. Under the agreement, Blue Shield agreed to underwrite startup costs. Ultimately, the utility is intended to become a self-sustaining business through end-user fees paid by insurers.

For now, the initiative is focused on California, but its website notes that “maintaining provider directories is a challenge not just in California but across the nation.” That’s telling, because given California’s status as a regulatory trendsetter, parties across the country involved in the directory equation—from insurers to providers to consumers—should keep a close eye on events there in the coming months and years. Already, other states—including Rhode Island and Oregon—are seeking to develop similar statewide provider directories.