Recent Developments in Managed Care
The following is an update on some of the improper payment patterns that Hooper, Lundy & Bookman attorneys have discovered in representing a number of our clients.
Line Item Review
Cigna Healthcare, Aetna Health of California, Inc., and Heritage Provider Network, Inc. are engaging in the practice of Line Item Review in paying hospital stop loss claims. Like other health plans have attempted to do in the past, these payors are improperly applying Medicare guidelines to disallow supplies and services on the grounds that they should be bundled into the room or other charges.
We have successfully represented many hospitals on this issue against Blue Shield of California, Health Net, United Healthcare, and Aetna. In numerous arbitrations to date, the arbitrators have found the health plans’ interpretation of Medicare rules to be incorrect, and their disallowance of the supply and services charges to be improper.
Non-Contracted Payments
With health plans’ rates and contract terms becoming more onerous, more hospitals are choosing to become non-contracted providers, particularly with Blue Cross and United Healthcare. We have discovered that these health plans have not been appropriately calculating reasonable and customary rates, and have been significantly underpaying these non-contracted claims. We are currently representing a number of hospitals and surgery centers in challenging these improper payments.
Improper Payments to Patients
As more providers are becoming non-contracted with payors, the payors are increasingly refusing to acknowledge assignments of benefits, and instead are paying the patients for the healthcare services they receive. We are currently investigating ways to challenge this practice, have advised many clients on this issue, and may bring legal challenges to this practice shortly.
Blue Cross’ Failure to Pay Co-Payments for Medicare Claims
It has come to our attention that Blue Cross has instituted a practice of requiring providers to waive co-payments and deductibles for senior Blue Cross members. It does this by refusing to pay the co-payments and deductibles when Blue Cross is secondary to Medicare, and then prohibiting hospitals from billing the members for such co-payments and deductibles. We believe that this practice potentially violates the Medicare anti-kickback statute. The Office of Inspector General of the Department of Health and Human Services (“OIG”) has explicitly stated that health plans cannot use coordination of benefit provisions in their contracts with providers to require the providers to waive co-payments or deductibles to Medicare beneficiaries.
Level of Care Downgrades
A number of health plans are improperly paying claims based upon the level of care allegedly authorized, rather than the level of care ordered by the treating physician and actually provided to the patients. We have discovered that these alleged authorizations are often made by individuals unqualified to make these determinations, and without complete and accurate reviews of the medical records.
Improper Payment of Mother-Baby Claims
Many contracts provide that baby claims, including claims for healthy babies, are to be paid separately from the mother’s claim for delivery of the baby. We have discovered that Aetna’s claims payment system is not set up to pay baby claims separately and accurately, but rather Aetna pays 80% of the case rate on the mother’s claim and the remaining 20% on the baby’s claim.
Furthermore, we have discovered that some payors who are non-contracted with hospitals routinely fail to pay for services to the baby, claiming that the baby’s charges should be included with the payment for the mother’s charges. Absent an agreement to the contrary, a mother and a baby are two different patients for whom separate payments are owed.
Implant Charges
A number of plans continue to fail to pay implant charges correctly. They (a) improperly include the implant charges as part of the case rate payments for the claims, (b) fail to calculate implant charges correctly in stop loss claims, or (c) improperly disallow implants as not qualifying as implants. For example, United/PacifiCare improperly disallows certain implants, such as screws, on the grounds that they are “fixation devices.”
Additionally, other payors fail to pay implant charges correctly in stop loss claims. We have found that they either refuse to pay for the implant if it is provided prior to the time the second-dollar stop loss threshold has been reached, or they fail to pay the implant charge as a percentage of charges when the implant is provided after the stop loss threshold has been reached.
Notifications for Inpatient Admissions and Radiology Services
Without seeking to amend their contracts with hospitals, some health plans are improperly disallowing all or part of inpatient claims on the grounds that the hospitals did not timely inform the plans of the inpatient admission. Similarly, some health plans, such as United, are improperly disallowing outpatient radiology claims on the grounds that the physician did not notify United that he or she ordered radiology services to be provided to the patient. We believe that the plans cannot unilaterally impose these conditions, and that these practices violate the plans’ contracts with hospitals.
If your hospital is experiencing these or similar problems, or you would like to find out more about these issues, please contact Daron Tooch at dtooch@health-law.com (310) 551-8192 or Glenn Solomon at gsolomon@health-law.com (310) 551-8179.
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