Insurance Legal Reimbursement Issues presented to

1. Insurance Legal Reimbursement Issuespresented to Western Reserve AAHAM

2. 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 • 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

3. 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

4. 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?

5. 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.

6. 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?

7. Spousal LiabilityLegal Concepts - Pennsylvania In Pennsylvania, an individual may be held liable for the necessary medical care of his or her spouse. SeePorter 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.

8. Wrongfully Delayed ClaimsCommon Scenarios • High balance review • Medical review • Audit • Deny receipt of claim • “The claim shuffle”

9. Wrongfully Delayed ClaimsHealth Insurance - Prompt Pay 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.

10. ERISAState v. Federal Jurisdiction

11. Wrongfully Delayed Claims ERISA Claims

12. Wrongfully Delayed ClaimsWorkers’ Compensation - Pennsylvania 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.

13. 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. Wrongfully Delayed ClaimsWhat Can You Do?

14. 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.

15. Usual & Customary DenialsLegal Concepts • If provider is not contracted with payer, payer is NOT entitled to a discount. DISCOUNT

16. 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. Usual & Customary DenialsWhat Can You Do?

17. Silent Preferred Provider OrganizationsCommon Scenario Patient $100,000 Total Charges Payer Non-Contracted 100% of Total Charges Hospital Expected Reimbursement = $100,000

18. Silent PPOCommon Scenario Patient $100,000 Total Charges Payer Buy Into Existing Network PPO Broker Hospital Actual Reimbursement = $60,000 EOB notates “ABC Network Discount – 40%” ABC Network 40% Discount

19. Silent PPOLegal Concepts There is no quid pro quo! • Payer has not given anything to the provider, and is therefore not entitled to anything from the provider.

20. 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…

21. 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

22. 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.

23. Pre-existing Condition Investigations/DenialsCommon 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.

24. 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.

25. Pre-existing Condition Investigations/DenialsLegal 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.

26. 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…

27. Pre-Existing ConditionsEvaluate Creditable Coverage/Effective Dates 3 Yrs & 45 Days 31 Days 30 Days

28. 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.”

29. Misquote of BenefitsLegal Concepts Promissory Estoppel • Occurs when Payer makes a promise to Hospital and Hospital reasonably relies on that promise to its detriment.

30. Misquote of BenefitsWhat Can You Do? • Verify benefits. • Be timely. • Keep detailed records of phone calls.

31. 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?

32. 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?

33. 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.

34. 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.”

35. Appropriate Reasons Fever Wound Infection Labs IV/IM Medications Pain Other procedures requiring acute professional care Inappropriate Reasons No rooms for transfer Patient not ready Family not ready Weekend Additional Testing Patient Age Delays of any kind Medical NecessityLength of Stay Reviews 60% of medical necessity issues are due to length of stay

36. 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.

37. 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.

38. 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.

39. Preauthorization DenialsLegal Concepts - Pennsylvania 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.

40. Preauthorization Denials What Can You Do? • 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.

41. 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?

42. 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.

43. Refund DemandsWhat Can You Do? Assess the situation! • Contracted payer. Language may dictate outcome • Non-contracted payer. Do not 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.

44. Auto Accident/Third Party LiabilityCommon 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?

45. Auto Accident/Third Party LiabilityLegal Concepts - Pennsylvania Liens • 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

46. Auto Accident/Third Party LiabilityWhat 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.

47. Insurance Legal Reimbursement Issuespresented to Western Reserve AAHAM THE END Are There Any Questions?