Legal Update: Insurance Reimbursement Issues HFMA Spring Conference

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1 Legal Update: Insurance Reimbursement Issues HFMA Spring Conference Veronica Small, CPAM, CPAT, CCT, Director of PFS Boca Raton Regional Hospital Tracy Lutz, Esquire, Managing Partner Specialized Healthcare Partners May 9, 2013

2 Agenda Appeals Management Case Study Florida Claim Dispute Resolution Process Federal External Review Process ACA and Florida Reimbursement Statutes Managed Care Contract Provisions Industry News & Resources

3 Provider Challenges Forced to Do More with Less; Staff Frustration; Lack of Consistent Approach to Addressing Claim Issues; Complex Claim & Payer Issues. Case Study

4 Goals Established Provide staff with easy-to-use tools to increase effectiveness and efficiency; Exhaust All Appeal Avenues Both Internal & External Hold Payers Accountable; Utilize All Assets in the Revenue Cycle. Case Study

5 Reference Manual Three ring binder with index and sections separated by tabs; Electronic version located on a shared drive in separate, consecutive folders; Living, breathing tool box constantly updated and refined. Easy to Use Tools

6 Reference Manual Appeal Letter Templates; Summary of Florida State Statutes; Summary of Important Managed Care Contract Provisions; Matrix of Appeal Submission Requirements; List of Provider Relations Representatives; Database of Policy Manuals by Payer. Easy to Use Tools

7 Reference Manual Clearly defined protocols for all claim issues; Number of appeal attempts; Standard Denial codes / notes; Process for Eliciting the Assistance of Case Management Department & Physician Advisors; Involvement of the Managed Care Negotiator; Timing of Legal Intervention. Easy to Use Tools

8 Florida External Dispute Resolution Filed within 1 year of final determination; Aggregate claims by type of service; Dollar thresholds: $25k inpt & $10k outpt; $75 non-refundable filing fee & review costs paid for by non-prevailing party; Patient Authorization Not Required; Administered by Maximus; Exhaust Appeal Avenues

9 Florida External Dispute Resolution Eligible Claims: HMOs, PPOs, Major Medical Individual / Group Policies; Claim Disputes Related to Payment Amounts; Ineligible Claims; Late Payment or Interest Payment Disputes; Medicare & Managed Medicare Claim Disputes; Medicaid Claim Disputes that are Subject to Fair Hearings; Non-State Regulated Health Plans (i.e., Self-Funded). Exhaust Appeal Avenues

10 Florida External Dispute Resolution 107 cases were submitted to Maximus in 2012; 55 cases were not accepted due to Eligibility Requirements or Incomplete Information Submitted by the Provider; 10 cases the health plan Opted Out; Of the cases accepted & adjudicated, only 1 case was not awarded to the provider; Payers included Aetna, AvMed, AmeriGroup, Coventry, Humana, Cigna, NHP, UHC, & Blue Cross of Florida; Review Fees ranged from $87.50 to $343.75; Exhaust Appeal Avenues

11 Florida External Dispute Resolution Documents filed with Maximus must also be filed with the payer; Proof of receipt by payer must be obtained & filed with Maximus; Filing Must Include; EOBs for Claims with Payments; Most Recent Denial Letter; UB04 Full Payer Contract; Completed Maximus Forms; Filing Should Include a List of Schedules & an Index of Exhibits; Documents should be assigned an identifier & clearly labeled; Individual Appeals Must Include; Procedural Arguments; Clinical Arguments; Amount in Dispute & Instructions on Calculation of Reimbursement. Exhaust Appeal Avenues

12 Florida External Dispute Resolution Case filed against Neighborhood Health Partnership ( NHP ); Filing included inpatient claims denied for medical necessity or preauthorization; Within 30 days, and prior to official acceptance by Maximus, NHP overturned several of the claims included in the filing and issued payment such payment equaled 20% of the originally filed aggregated amount in dispute; Individual Appeals Included Mandatory Documents as well as: Medical Records; Patient Accounting System Notes; NHP Preauthorization Policy; Case Management s Fax Confirmations (as Proof of Receipt); Independent Physician Review. Case Study

13 Federal External Review Process Affordable Care Act ( ACA ) requires nongrandfathered ERISA plans and insurance issuers to establish an external appeals process that meets certain minimum consumer protections; Florida s external review process does not meet such standards, therefore, issuers must participate in (i) the federally-administered external review process or (ii) the privately accredited independent review organization ( IRO ) process; IRO decides the claim de novo with no deference to the plan s decision rendered during internal appeal process. Exhaust Appeal Avenues

14 Federal External Review Process Patient has 4 months to request external review; Patient must sign authorized representative form Providers may not submit external appeal directly; There is no cost for the review; Applies to adverse benefit determinations that involve: Medical Necessity; Level of Care; Experimental or Investigational; Any matter that involves medical judgment; Rescission. Exhaust Appeal Avenues

15 Self-Funded ERISA Denial BRRH claims for hyperbaric wound treatments denied because BC TN s medical policy considered hyperbaric treatment investigational / experimental; Other carriers policies considered hyperbaric treatment medically necessary and covered such treatment (i.e., Cigna, BC FL, BC IL, Aetna, Medicare); Federal Law (the Women s Health and Cancer Rights Act), required deference to the treating physician and prevailing medical standards; BC TN denied both of BRRH s internal appeals; With cooperation of the patient, we were able to convince employer to adopt the BC FL medical policy related to hyperbaric treatment and re-process the claim for payment. Experimental / Investigational Denial Case Study

16 Koehler v. Aetna (2012) Appeals court found the summary plan description ( SPD ) was ambiguous as to the pre-authorization requirements for out-of-network services. The SPD did not state that failing to submit the referral request before the services are completed would forfeit coverage. SPD gave Aetna discretion to resolve ambiguities in its favor; however, the appeals court noted that under its precedent, ambiguities in the plan summary are resolved in favor of the beneficiary. Therefore appeals court resolved the ambiguity against requiring pre-authorization. Pre-Authorization Denials ERISA Case Law

17 Zalduondo v. Aetna (2013) District court denied Aetna's motion for summary judgment and instructed Aetna to supplement the administrative record with the official summary plan description ( SPD ). The court noted it requires the SPD to determine whether the member was inappropriately denied benefits under the terms of the SPD. Pre-Authorization Denials ERISA Case Law

18 Strategy for a Self-Funded ERISA Denials: Elicit the Cooperation of the Patient / Employee; Obtain a Copy of the Summary Plan Description; Contact the Employer s HR Director / Benefits Manager; Ask the Employer to request that the plan administrator process the claim as an Exception to the Summary Plan Description; Ask the Employer to Adopt of different Medical Policy; Explore filing through Federal External Review Process. ERISA Denials What Can You Do?

19 Payer Focus BRRH Patient Account Representatives Organized by Payer; Held Patient Account Representatives Accountable for Their Payer s Accounts Receivable; All Contracts posted to the Intranet / Directory for Review by Patient Account Representatives; Bookmark Contracts; Scheduled Quarterly Meetings with Payer s Provider Relations Representatives. Hold Payers Accountable

20 Payer Focus Ensured All Claims Submitted to Provider Relations Representatives were Valid. Established Protocols Related to Claims Submitted to Provider Relations Representatives; Eliminated Warehousing of Payer Claims on Separate Work List; Set Expectations with Payers Regarding Chronic Claim Issue Resolution; Held Payers Accountable for Resolution of Issues; Pushed Back Against Certain Payer Tactics/Policies. Hold Payers Accountable

21 BGT Group, Inc. v. Tradewinds Engine Services, LLC (Fla. 4 th DCA 2011) To incorporate by reference a collateral document, the contract must identify an actual document that exists; mere reference to a policy on a website is insufficient, especially when the incorporated policy materially alters the parties rights. Industry News

22 Notification Penalties New York recently passed legislation which prohibits health plans from denying reimbursement for failure to provide timely notification for medically necessary emergency hospital admissions. While hospitals and insurers can, as part of the contracting process, agree to penalties for untimely notification, the penalties are capped at the lesser of 12% or $2,000. Penalties cannot be imposed if the patient s coverage is not known at the time services are provided. Insurers must allow for extended timeframes for notification on weekends and Federal holidays. Industry News

23 Fla. Stat. Ann Emergency Services In providing for emergency services, an HMO may not: Require prior authorization for the treatment or for emergency services and care; or Only cover emergencies if care is secured within a certain period of time;or Use terms such as "life threatening" or "bona fide" to qualify the kind of emergency that is covered; or Deny payment based on the subscriber's failure to notify the HMO in advance of seeking treatment or within a certain period of time after the care is given. Pre-Authorization Denials Florida State Statutes

24 Fla. Stat. Ann Emergency Services Hospital must make a reasonable attempt to notify the PCP or HMO of the existence of the emergency medical condition. Specifically, Hospital must notify the HMO as soon as possible prior to discharge or within 24 hours or on the next business day after admission as an inpatient. If notification is not accomplished, Hospital must document its attempts to notify the HMO, but an HMO may not deny payment for emergency services and care based on Hospital s failure to notify. Pre-Authorization Denials Florida State Statutes

25 Fla. Stat. Ann Authorization An HMO must pay any hospital service which was authorized by a provider empowered by contract with the HMO to authorize, unless the hospital provided information to the HMO with the willful intention to misinform the HMO. A claim may not be denied if a provider follows the HMO s authorization procedures and receives authorization for a covered service for an eligible subscriber unless there was a willful intention to misinform the HMO. Pre-Authorization Denials Florida State Statutes

26 Payor A In the event payment is denied for Facility s failure to comply with a protocol regarding notification or regarding lack of coverage approval on file, Facility may request reconsideration of the denial, and the denial will be reversed if Facility can show: The denial was incorrect because Facility complied with the Protocol; or Facility s services were medically necessary (as Medically Necessary is defined in the agreement); or At the time the Protocols required notification or prior authorization, Facility did not know and was unable to reasonably determine that the patient was a Customer, and Facility promptly submitted a claim after learning the patient was a customer. Pre-Authorization Denials Sample Contract Language

27 Payor B If member fails to identify Plan status at admission, such member will be covered from date Plan is notified but such coverage will not be retroactive unless member is medically unable to communicate at admission. If member medically able to communicate, but fails to, Hospital may bill member. Payor C Payor may deny payment of claims which have not been approved by its utilization review program. However, there shall be no retroactive denial of claims on the basis of medical necessity for claims which have been approved by the utilization review program. Payor D Provider may conclusively rely on authorization obtained from plan or plan s agent for medically necessary covered services pursuant to Florida Statute Pre-Authorization Denials Sample Contract Language

28 Promissory Estoppel Occurs when Payer makes a promise to Hospital and Hospital reasonably relies on that promise to its detriment. Hospital is entitled to rely on superior knowledge of HMO and cannot be faulted for HMO s error in verifying coverage. In other words, HMO is in the best position to know who is covered, what is covered, and what requires pre-authorization under their policies. Pre-Authorization Denials Legal Concept

29 Strong appeals can be based on the fact that: Preauthorization was attempted, but not obtained; Member failed to advise the hospital of the coverage; Member provided inaccurate insurance information; Patient medically unable to communicate insurance information; Hospital was told that authorization is unnecessary for specified treatment; Authorization was obtained for procedure Substantially Similar to procedure actually performed; or Treatment was medically necessary. Pre-Authorization Denials What Can You Do?

30 Merkle v. Health Options (2006) ER provider sued Health Options, Aetna, and NHP under Fla. Stat. Ann Court held that providers have a private cause of action for violations of Court held that clearly imposes a duty on HMOs to reimburse non-participating providers according to the statute s dictates, not based on Medicare reimbursement rate. Underpayment Appeals Florida Case Law

31 Goble v. Frohman 848 So.2d 406 (Fla. 2d DCA 2003) Evidence of contractual discounts received by managed care providers is insufficient, standing alone, to prove that non-discounted medical bills were unreasonable. Usual & Customary Florida Case Law

32 Harrison v. Aetna, 925 F.Supp. 744 (M.D.FL 1996) A plan that requires only reasonable charges be paid, but makes no reference to a predetermined rate in the definition of charges requires analysis of the provider s rate and not the substitution of another rate that the administrator finds more favorable. Aetna relied on a compilation of rates which it stated were usual & customary in the area but produced no evidence as to whether the compilation actually results in charges that reflect the prevailing charges in Central Florida. Usual & Customary Florida Case Law

33 Fair Health Nonprofit group operating a free web site that allows consumers to investigate costs for out-of-network care. The site contains continually updated claims data from insurers and third-party administrators covering 126 million people. Provides usual & customary rates for services in a geographic area as well as the rates that Medicare pays. Site also contains an online calculator that providers comprehensive out-of-network estimates for more than 30 common procedures. Usual & Customary Industry Resources

34 Tenet v. Co-Operators Life, TIC Travel, Select Care v. Olympus Managed Health Care, Inc. Tenet s South Florida hospitals sued three Canadian Travel Insurance companies for underpayment of claims (i.e., Silent PPO scenario). The Travel Insurance companies moved to dismiss for lack of personal jurisdiction. Court refused to dismiss, finding that the insurance companies' representation of full coverage via telephone calls and facsimiles to the hospitals was sufficient to establish personal jurisdiction. Florida hospitals now have some leverage against these Travel Insurance companies that were previously thought unreachable. Silent PPO Industry News

35 Kingsway Amigo Insurance Co. v. Ocean Health Inc. (2011) A PIP Insurer may not elect to use the Medicare Part B Fee Schedules set forth in FLA. STAT (5)(a)(2) when the subject PIP Policy specifies that the PIP Insurer will pay 80% of medically necessary expenses. The PIP Insurer s policy established an agreement to reimburse 80% of medically necessary expenses (i.e., (1)(a)) rather than the safe harbor amount of 200% of Medicare Part B (i.e., (5)(a)). Case law holds that when a policy provides for coverage greater than that required by statute, the terms of the policy control. Underpayments PIP Carriers Florida Case Law

36 Fla. Stat. Ann & No later than 20 days after receiving an electronic claim (or 40 days for a paper claim), an insurer must pay the contracted amount, or Pay portion of claim not in dispute, or Notify provider, in writing, why claim will not be paid and request specific information necessary. Penalty is interest at 12% per year on unpaid amount, payable with payment of claim. Failure pay or deny a claim within 120 days for electronic claims (or 140 days for paper claims), creates an uncontestable obligation for the insurer to pay the claim. Prompt Payment Florida State Statutes

37 Foundation Health v. Westside EKG Associates, 944 So.2d 188 (2006) Supreme Court of Florida held that a provider can bring a cause of action against an HMO for failure to comply with the prompt payment provisions of the Florida Statute. Prompt Payment Florida Case Law

38 Payor A Except where coordination of benefits applies, Payer or its agent shall make all payments due to Provider within 30 days following receipt by Payer or its agent of a claim and other information required to determine the claim is payable under the plan or within the time period required by the applicable state s prompt payment statute. If payment is not made within such time frame, Hospital may elect not to extend the discount under this agreement but only if Hospital requests an adjustment to the claim within the applicable payer within 60 days of receipt of payment. Prompt Payment Sample Contract Language

39 Fla. Stat. Ann Carrier shall pay a claim within 45 days. Carrier has 120 days to adjust, disallow, or deny a claim. Interest in the amount of 12% per year shall be added to all balances not timely paid. Retrospective review to determine medical necessity of hospital services shall not toll the 45 day time period. Provider may file a complaint of non-payment with the Division of Workers Compensation, Office of Medical services (refer to Florida Statute Spreadsheet for specifics). Workers Compensation Prompt Payment Florida State Statutes

40 Fla. Stat. Ann Carrier shall pay a claim within 30 days. All overdue payments shall bear simple interest or the rate established by the insurance contract. Interest is due at the time payment of the overdue claim is made. PIP Carriers Prompt Payment Florida State Statutes