insurance legal reimbursement issues presented to western reserve aaham

Insurance Legal Reimbursement Insurance Legal Reimbursement IssuesIssues

presented topresented to

Western Reserve AAHAMWestern Reserve AAHAM

Legal Reimbursement Issues

© AHC, Inc. 2010

Western Reserve AAHAM

♦A/R Management Firm- Founded in 1992- 512 Clients in 43

States, including DC- 600+ Employees (100+

Attorneys)

♦Attorney Involvement- Accounts worked or

managed by an attorney- Attorney-written

payment demands and appeals

- Research and litigation attorneys

Who We Are

♦Utilization of the Law- State and federal

regulations drive protocols

♦Technological Advantages- Denial management

technologies- Document imaging and

workflow distribution- Web based client

reporting


© AHC, Inc. 2010


♦ Parental Liability

♦ Spousal Liability

♦ Wrongfully Delayed

Claims

♦ Usual & Customary

Denials

♦ Silent PPOs

♦ Pre-existing Conditions

♦ Misquote of Benefits

♦ COBRA

♦ Medical Necessity

Denials

♦ Preauthorization Denials

♦ Refund Demands

♦ Auto Accident/Third

Party Liability

Reimbursement Issues


© AHC, Inc. 2010


Parental Liability Common Scenario

♦ Child is 5 years old, is covered

under father’s health insurance plan,

but lives with mother.

♦ Child is hospitalized.

♦ Who is ultimately responsible for

Child’s hospital bill?


© AHC, Inc. 2010


Parental LiabilityLegal Concepts

Doctrine of Necessaries

♦ Minor child is not responsible.

♦ Parents’ liability for necessary medical

treatment is ‘joint and several’,

meaning each parent may be pursued

individually for the obligations of both.


© AHC, Inc. 2010


Spousal LiabilityCommon Scenario

♦ Mary and Jason are married. However,

they file separate taxes and have

separate bank accounts.

♦ Jason becomes hospitalized for a

heart related illness and dies.

♦ Who is ultimately responsible for

Jason’s hospital bill?


© AHC, Inc. 2010


Spousal LiabilityLegal Concepts - Pennsylvania

In Pennsylvania, an individual may be held liable for the necessary medical care of his or her spouse. See Porter v. Karivalis,718 A.2d 823 (1998) & Pa. Stat. Ann. tit. 23, § 4102.

♦ Practically speaking: If Husband cannot pay his bills, Provider can seek payment from Wife’s assets.


© AHC, Inc. 2010


♦ High balance review♦ Medical review♦ Audit♦ Deny receipt of claim♦ “The claim shuffle”

Wrongfully Delayed ClaimsCommon Scenarios


© AHC, Inc. 2010


31 Pa. Code § 154.18 & 40 P.S. § 991.2166

♦ Licensed insurer or managed care plan must pay clean claim or uncontested portion of claim within 45 days of receipt.

♦ “Paid” is defined as check mailed or funds transferred.

♦ Penalty is interest equal to 10% per annum on the proceeds or benefits due on claims delayed for more than 45 days. Interest must be paid within 30 days of claim payment. Interest less than $2 does not have to be paid.

Wrongfully Delayed Claims Health Insurance - Prompt Pay


© AHC, Inc. 2010


ERISAState v. Federal Jurisdiction

Self-funded

ERISA & U.S. DOL

Fully-funded

State Insurance

Laws


© AHC, Inc. 2010


Wrongfully Delayed Claims ERISA Claims

ACTION TIME LIMIT

Initial Benefit Decision 30 days from date of claim

Extension 15 days if plan notifies claimant

Claimant Forward Requested Info

45 days from date of notice

Appeal a denial 180 days from notice of decision

Decision on 1st Level Appeal 60 days from receipt

Decision on 2nd Level Appeal 30 days from receipt


© AHC, Inc. 2010


Pa. Stat. Ann. tit. 77, § 531(5) & 34 Pa. Code § 127.210

♦ Within 30 days of receiving a completed medical bill the carrier must: pay per fee guidelines; or dispute the reasonableness or necessity of the treatment.

♦ Penalty: 10% per annum on claims not paid timely.

Wrongfully Delayed Claims Workers’ Compensation - Pennsylvania


© AHC, Inc. 2010


Wrongfully Delayed ClaimsWhat Can You Do?

♦ Verify date claim received.

♦ If receipt denied, fax claim and confirm receipt with claims representative.

♦ Overnight or mail claim return receipt requested.

♦ Quote statutory language when speaking to claims representative.


© AHC, Inc. 2010


Usual & Customary DenialsCommon Scenario

♦ Hospital is not contracted with Stonewall Insurance.

♦ Patient is insured through Stonewall Insurance and comes to Hospital for treatment.

♦ Hospital submits claim to Stonewall Insurance for payment.

♦ Stonewall Insurance pays a small part of the claim and denies the balance as “above the usual & customary rate.”

♦ Hospital receives an explanation of benefits with only partial payment.


© AHC, Inc. 2010


Usual & Customary DenialsLegal Concepts

♦ If provider is not contracted with payer, payer is NOT entitled to a discount.

DISCOUNT


© AHC, Inc. 2010


Usual & Customary DenialsWhat Can You Do?

♦ Verify that patient is not a member of a contracted PPO.

♦ Do not accept payer’s determination at face value. Demand… - a detailed itemization of all denied or reduced charges;- an explanation of the evidence relied upon in

determining that charges were excessive; - a printout containing the charges of the other providers

against which your facility was compared; and- the age of the evidence utilized in the comparison.


© AHC, Inc. 2010


Silent Preferred Provider OrganizationsCommon Scenario

Patient$100,000 Total Charges

PayerNon-Contracted100% of Total Charges

HospitalExpected Reimbursement = $100,000


© AHC, Inc. 2010


Silent PPOCommon Scenario

Patient$100,000 Total Charges

PayerBuy Into Existing Network

HospitalActual Reimbursement = $60,000EOB notates “ABC Network Discount – 40%”

PPO Broker

ABC Network40% Discount


© AHC, Inc. 2010


Silent PPOLegal Concepts

There is no quid pro quo!

♦ Payer has not given anything

to the provider, and is

therefore not entitledentitled to

anything from the provider.


© AHC, Inc. 2010


Silent PPOWhat Can You Do?

♦ Copy patient’s insurance card during admission, and note PPO logos in the computer.

♦ Cross check this with the EOB upon receipt.

♦ Unexpected discount? Contact payer and question it.

♦ Check your contracts…


© AHC, Inc. 2010


Silent PPOWhat Can You Do?

Check your contracts to ensure . . . . . .♦ Insurer is not permitted to sell or distribute negotiated

rates♦ Mandatory notification when payers are added or

deleted♦ Provider can cancel if network unacceptably expanded♦ Logo type and location on card is specified


© AHC, Inc. 2010


Silent PPO PPO Logos

♦ PPO logos appear on insurance cards to indicate the networks the payer is a part of.

♦ Rule of thumb: Use largest logo on card to determine expected network discount.

♦ If all logos are the same size, go in order from left to right, top to bottom.

♦ Copy the patient’s ID card and note all logos that appear on the card in the account notes.


© AHC, Inc. 2010


Pre-existing Condition Investigations/Denials

Common Scenario

♦ Patient enrolls in her group health plan 10/1/10.♦ Patient is treated by Hospital for an injury to

her right knee on 03/01/11.♦ Hospital submits claim to Payer and 30 days

later is told that the claim is pending a pre-existing condition investigation.

♦ Hospital does some research and finds out that Patient’s left knee was treated on 07/01/10.


© AHC, Inc. 2010


Pre-existing Condition Investigations/DenialsLegal Concepts - HIPAA

Health Insurance Portability and Accountability Act of 1996 (HIPAA)♦ Applies to most group health plans. ♦ Limits pre-existing condition exclusions:

- 6 month maximum look-back and- 12 or 18 month maximum exclusionary period.

♦ Credits prior coverage to reduce exclusionary period.♦ HIPAA mandates that state law cannot be broader.♦ Never a pre-existing condition: pregnancy & genetic information.♦ Newborns & adopted children added within 30 days are not subject to

pre-existing condition exclusions.


© AHC, Inc. 2010


Pre-existing Condition Investigations/Denials

Legal Concepts - Pennsylvania

Group Health Plans (31 Pa. Code § 89.402)♦ The look-back period can be no more than 90 days; the

pre-existing waiting period can be no longer than 12 months.

Individual Health Plans (Pa. Stat. Ann. tit. 40, § 776.6)♦ The pre-existing waiting period can be no longer than 12

months for any pre-existing condition not specifically excluded from coverage by the policy.


© AHC, Inc. 2010


Pre-Existing ConditionsWhat Can You Do?

♦ Get policy’s definition of ‘pre-existing condition.’♦ If enrolled in group health plan, make sure payer applies HIPAA

definition: “A condition for which medical advice, diagnosis, care or treatment

was recommended or received within 6 months of the enrollment date.”

♦ Review records for any prior treatment for same condition♦ Two types of appeals are possible:

Demand end of investigation with medical evidence showing condition could not be pre-existing, OR

Demand end of investigation with evidence of prior creditable coverage showing there is no applicable exclusion period. To illustrate…


© AHC, Inc. 2010


Pre-Existing ConditionsEvaluate Creditable Coverage/Effective

Dates8/5/2007 Began working for XYZ Chemical

9/15/2010 Last day at XYZ Chemical

10/17/2010

Began working at ABC Printing

11/17/2010

ABC Group Health Plan effective date

12/15/2010

Treatment Date

3 Yrs & 45 Days

31 Days

30 Days


© AHC, Inc. 2010


Misquote of BenefitsCommon Scenario

♦ Patient insured through Cigna.

♦ Needs elective back surgery.

♦ Hospital calls Cigna to verify benefits prior to admission.

♦ Hospital is told by Cigna representative that Patient has coverage.

♦ Hospital submits claim.

♦ Claim denies due to “No coverage on that date of service.”


© AHC, Inc. 2010


Misquote of BenefitsLegal Concepts

Promissory Estoppel♦ Occurs when Payer makes a

promise to Hospital and Hospital reasonably relies on that promise to its detriment.


© AHC, Inc. 2010


Misquote of BenefitsWhat Can You Do?

♦ Verify benefits.

♦ Be timely.

♦ Keep detailed records

of phone calls.


© AHC, Inc. 2010


COBRACommon Scenario

♦ Patient has a major medical condition and is provided extensive care by the Hospital.

♦ Patient does not have health insurance and does not qualify for Medicaid.

♦ Patient recently had health insurance, but was “downsized” last month.

♦ Is there any way Patient could still have health insurance?


© AHC, Inc. 2010


COBRALegal Concepts

Consolidated Omnibus Budget Reconciliation Act of 1985

♦ Applies to Employer-sponsored Health Insurance Coverage.♦ Requires Employer to notify COBRA eligible employees.

- When must Employer notify?- How must Employer notify?

♦ Qualifying event results in 18 or 36 months of coverage.♦ 60 days to elect COBRA coverage.♦ 45 days to pay premium.

- Who can pay premium?


© AHC, Inc. 2010


COBRAWhat Can You Do?

♦ If patient’s coverage has lapsed, determine whether patient has COBRA coverage or can elect it.

♦ If election period has passed, determine whether employer gave patient sufficient notice.

- Employer who fails to notify is responsible for claims.

♦ If patient has not paid his premium, Hospital can pay premium.

- Weigh costs and benefits of paying premium as there are no restrictions on who may pay premium.


© AHC, Inc. 2010


Medical Necessity DenialsCommon Scenario

♦ Patient was admitted via the Emergency Room for chest pain.

♦ Patient spent 2 days inpatient.

♦ Hospital submits Patient’s claim to Blue Cross for payment.

♦ Blue Cross pays Day 1, but denies Day 2 stating “Patient could have been treated at a lesser level of care.”


© AHC, Inc. 2010


Medical NecessityLength of Stay Reviews

Appropriate ReasonsAppropriate Reasons Fever Wound Infection Labs IV/IM Medications Pain Other procedures requiring

acute professional care

Inappropriate ReasonsInappropriate Reasonsx No rooms for transferx Patient not readyx Family not readyx Weekendx Additional Testingx Patient Agex Delays of any kind

60% of medical necessity issues are due to length of stay


© AHC, Inc. 2010


Preauthorization DenialsCommon Scenario

♦ Patient was assessed and stabilized in the Emergency Room and was then admitted for further observation and testing.

♦ Hospital calls number on Patient’s Humana card and attempts authorization, but can only leave a message. Humana does not call back.

♦ Hospital submits Patient’s claim to Humana for payment.

♦ Humana denies claim as not preauthorized and states that balance should be written off.


© AHC, Inc. 2010


Medical Necessity DenialsLegal Concepts

♦ Medical standards applied by Insurer in its determination must be consistent with community medical standards.

♦ Policy definition of “medically necessary” should be construed liberally so that uncertainties about the reasonableness of treatment is resolved in favor of coverage.


© AHC, Inc. 2010


Medical Necessity DenialsWhat Can You Do?

♦ Obtain specific reason for the denial and criteria utilized by carrier to determine medical necessity.

♦ Have utilization review examine the entire medical record.

♦ Use Interqual Criteria and DRG guidelines in appeal.♦ Appeal to payer more than once.

- Try to get claim to independent medical examiner; often at a second level of appeal.


© AHC, Inc. 2010


31 Pa. Code § 154.14

♦ Managed Care Plans are prohibited from requiring that enrollees or health care providers obtain prior authorization for emergency services.

♦ Plans are required to pay all reasonably necessary costs for enrollees meeting the prudent layperson definition of emergency services provided.

♦ The provider should notify the managed care plan of the emergency services delivered within 48 hours of treatment or on the next business day, whichever is later.

Preauthorization Denials Legal Concepts - Pennsylvania


© AHC, Inc. 2010


♦ Document all information from preauthorization call♦ Strong appeals can be based on the fact that:

- preauthorization was attempted, but not obtained and insurer does not allow authorization 24 to 48 hours after admit;

- hospital was told that authorization is unnecessary for specified treatment; or

- member failed to advise the hospital of the coverage.♦ If scope of treatment changes after authorization

- verbally request that the authorization be changed; or - submit appeal requesting retroactive authorization of the

admission, with the medical records to show the medical necessity of the inpatient treatment.

Preauthorization Denials What Can You Do?


© AHC, Inc. 2010


Refund DemandsCommon Scenario

♦ Hospital submits Patient’s $5,500 claim to Aetna for payment.

♦ Hospital received a $5,000 payment from Aetna.

♦ Three weeks later, “Accent Recoveries” sends a letter saying:

- Patient’s coverage limits exceeded; and- Aetna’s payment was in error; and - Hospital must refund $5,000.

♦ Is Hospital legally required to refund Aetna the $5,000?


© AHC, Inc. 2010


Refund DemandsLegal Concepts

Contract♦ Contract language will dictate outcome of refund

request

Unjust Enrichment♦ Occurs only when provider receives payment that

exceeds total charges.

Knowledge of Mistake or Fraud♦ Provider has knowledge of mistake or fraud

regarding coverage.


© AHC, Inc. 2010


Refund DemandsWhat Can You Do?

Assess the situation!Assess the situation!♦ Contracted payer. Language may dictate outcome♦ Non-contracted payer. Do notnot automatically

refund. Argue that… Care was authorized, provided, reimbursed in good faith; Hospital had no knowledge of mistake in payment; and Hospital would not be unjustly enriched. Lastly, appeal based on the reason for the refund request.


© AHC, Inc. 2010


Auto Accident/Third Party Liability

Common Scenario♦ Bessie and Carl were in an auto accident

because Carl ran the red light.♦ Bessie was rendered unconscious due to serious

head trauma.♦ Bessie was rushed to Hospital’s Emergency

Room.♦ Bessie later sues Carl for damages, including the

hospital bill.♦ Who is responsible for Bessie’s hospital bills?


© AHC, Inc. 2010



Legal Concepts - PennsylvaniaLiens♦ Pennsylvania statute does not provide for a lien

by a healthcare provider against a settlement from a third party liability action paid to a patient.

Letters of Protection♦ Necessary to protect hospital’s right to payment

from damages recovered from a liable third-party.

Subrogation Agreements


© AHC, Inc. 2010



What Can You Do?♦ Obtain all necessary information including:

- date of injury and accident details; - city and county where the injury occurred; and - relevant accident insurance (usually automobile insurance) policy

information and health insurance information.

♦ Make sure Liens are filed before money is paid to an entitled person and in strict compliance with the statute.

♦ Scrutinize Letters of Protection and make sure they have:- Promise to pay and promise for full payment prior to any payment to

patient; and- Promise that no additional attorney’s fees will be taken from the

provider’s portion and Promise for regular status updates.

Insurance Legal Reimbursement Insurance Legal Reimbursement IssuesIssues

presented topresented to

THE ENDTHE END

Are There Any Questions?Are There Any Questions?

Western Reserve AAHAMWestern Reserve AAHAM

insurance legal reimbursement issues presented to western reserve aaham

Documents

western reserve aaham31

days of claim payment

days of receipt

clean claim

fathers health insurance

uncontested portion

necessary medical care

managed care plan