Phia Group Media

rss

Phia Group Media


I Fought The Law and…Unpredictable Results Ensued
By: Jon Jablon, Esq.

Are you a landlord? If so, you might know that the law is not on your side. Or, are you a criminal? The law isn’t on your side either, but that one might be more obvious. Last question: are you a benefit plan with members being balance-billed?

There are certain legal protections that our country’s various legislative and regulatory bodies have put in place, such Section 501(r) of the Internal Revenue Code, so-called “surprise billing” legislation, and others – but in general, the majority of medical providers are not subject to legal restrictions in terms of whether they can balance-bill patients. In other words, in most circumstances, a medical provider is permitted to balance-bill a patient for the full balance on a non-contracted claim.

There are many health plans, TPAs, and brokers who want nothing more than to show a facility who's boss and refuse to pay another cent. Are there tactics and arguments that can be used to combat balance-billing? Of course there are! But, if a medical provider calls the plan’s bluff and continues to balance-bill, there is the real threat of collections and potentially a lawsuit, which many of us have witnessed first-hand, and it can be a nightmare for the patient.

For health plans that want to stand strong and not negotiate, litigation is an option! Litigation instituted by the health plan or the patient, that is. Even just the threat of litigation can have great effects on balance-billing support; many facilities, when faced with allegations of egregious billing and evidence that their charges are dozens of times Medicare rates, will close out accounts, or look to sign a direct contract for open and future claims.

Look out, though – because if a medical provider says “let’s dance” in response to a threat of litigation, the plan sponsor or patient will need to either back down or follow through. If the latter, it’s truly unpredictable how the court might react. On the one hand, non-contracted claims must, like all other non-contracted transactions in any other market, be billed at some measure of the fair market value. On the other hand, the patient generally signs the provider’s standard assignment of benefits form that says, in small print, “if your insurance doesn’t pay this whole bill, you agree to pay the rest.” In that case, can the claim truly be called non-contracted, after the patient has agreed (read: contracted) to pay the balance?

There are certain factors that work in the plan’s and patient’s favor, but there are perhaps just as many factors that work against them in a given case. It’s a tough call; whether or not to litigate should depend on many factors, including claim size, balance size, and the bill as a percentage of Medicare. For a $3,000 claim billed at 180% of Medicare, I’d recommend against litigation – but for a $150,000 claim billed at 1,300% of Medicare, it might be worth rolling the dice…


Bidding Against Themselves: $750K Air Ambulance Claim Adventure
I have a weird claim on my desk right now involving an Air Ambulance (AA) carrier that is billing a client $750K for a flight from the east coast to the west coast.

It is not uncommon for an AA carrier to argue that their charges are reasonable and even show us some so-called usual, customary, reasonable (UCR) charge data to justify their charges.  We find ourselves commonly reminding them that their calculation of UCR is not relevant to the Plan’s payment – but rather the reimbursement will be based on the terms of the Plan Document.  We also counter with data of our own (because we want do want to be fair), and we end up settling at a rate that everyone can live with.  

…usually

In the case I mentioned above, the AA carrier is sticking to their UCR plastic guns, and they are presenting a 10% discount proudly, as if the employer should be thankful.  To be clear, the AA carrier has a UCR database that is showing their charges are “normal.” $750K! UC-R you kidding me?  

If it were up to me, we would send them a check and tell them where to stick their 10% discount, but our client, as is common, would like an agreement on the claim to protect the member from harassment.  This is a classic ransom scenario; the balance-billing and credit-ruining boogieman is meant to scare the employer into paying more than a reasonable amount for this flight.  Regardless, our directives are to use our legal and claim data expertise to “persuade” the AA carrier to accept a lower reasonable price.  

In this case, to do this, we secured two quotes from other competitive AA carriers for the same flight (distance, resources, etc.) and the quotes came in at $35K and $50K.  Yes, you read that right – basically $700K less than these billed charges.  For good measure, we also consulted another UCR publisher, which quoted UCR at $47K – right in line with the quotes received.  Now, we understand that pre-service quotes are less than post-service charges, but certainly this is enough data to get them “in range.”  

…uh…no

We presented these market-based quotes and other UCR data to the AA carrier as a benchmark of “fair market value.” They scoffed, refusing to budge, and they are now saying they want to take this to court because of their “ironclad” UCR data.  

Here’s the best part.  We managed to secure a quote from the very same AA carrier that billed $750K (everything is the same).  The SAME carrier. The SAME flight.  They offered in writing, $35K (insert nausea).  

Believe it or not, we are still trying to get this matter resolved. Moral of the story? Don’t let anyone else (despite their best intentions) exclusively define and calculate UCR for you, because they may get it wrong, as this case clearly shows.  Instead, make sure your plan documents have a comprehensive definition that is fair to the provider, the member, and the Plan based on objective, real-world, fair market measures. At best, an unreasonable UCR calculation shocks the conscience; at worst, it can obliterate your wallet.

Bidding Against Themselves: $750K Air Ambulance Claim Adventure
I have a weird claim on my desk right now involving an Air Ambulance (AA) carrier that is billing a client $750K for a flight from the east coast to the west coast.

It is not uncommon for an AA carrier to argue that their charges are reasonable and even show us some so-called usual, customary, reasonable (UCR) charge data to justify their charges. We find ourselves commonly reminding them that their calculation of UCR is not relevant to the Plan’s payment – but rather the reimbursement will be based on the terms of the Plan Document. We also counter with data of our own (because we want do want to be fair), and we end up settling at a rate that everyone can live with.

…usually

In the case I mentioned above, the AA carrier is sticking to their UCR plastic guns, and they are presenting a 10% discount proudly, as if the employer should be thankful. To be clear, the AA carrier has a UCR database that is showing their charges are “normal.” $750K! UC-R you kidding me?

If it were up to me, we would send them a check and tell them where to stick their 10% discount, but our client, as is common, would like an agreement on the claim to protect the member from harassment.  This is a classic ransom scenario; the balance-billing and credit-ruining boogieman is meant to scare the employer into paying more than a reasonable amount for this flight. Regardless, our directives are to use our legal and claim data expertise to “persuade” the AA carrier to accept a lower reasonable price.

In this case, to do this, we secured two quotes from other competitive AA carriers for the same flight (distance, resources, etc.) and the quotes came in at $35K and $50K. Yes, you read that right – basically $700K less than these billed charges. For good measure, we also consulted another UCR publisher, which quoted UCR at $47K – right in line with the quotes received. Now, we understand that pre-service quotes are less than post-service charges, but certainly this is enough data to get them “in range.”

…uh…no

We presented these market-based quotes and other UCR data to the AA carrier as a benchmark of “fair market value.” They scoffed, refusing to budge, and they are now saying they want to take this to court because of their “ironclad” UCR data.

Here’s the best part. We managed to secure a quote from the very same AA carrier that billed $750K (everything is the same). The SAME carrier. The SAME flight.  They offered in writing, $35K (insert nausea).

Believe it or not, we are still trying to get this matter resolved. Moral of the story? Don’t let anyone else (despite their best intentions) exclusively define and calculate UCR for you, because they may get it wrong, as this case clearly shows.  Instead, make sure your plan documents have a comprehensive definition that is fair to the provider, the member, and the Plan based on objective, real-world, fair market measures. At best, an unreasonable UCR calculation shocks the conscience; at worst, it can obliterate your wallet.

It will be my pleasure to balance bill the patient $1.3 Million…
…Is what a Hospital VP of Accounts Receivable said to me when I called to discuss a reference-based pricing (RBP) claim that was referred to The Phia Group for handling.  Upon review, the health plan had issued a reasonable percentage above Medicare on a large claim, and this was perfectly in line with the Plan Document’s language.  In fact, payment for this episode of care was subject to a percentage above a particularly high Diagnosis-Related Group (DRG) pricing, so the payment greatly exceeded the average commercial insurance reimbursement at this facility.

You see, hospitals report their complete financial information to the Centers for Medicare and Medicaid Services (CMS).  This publicly-available information is submitted in accordance with generally accepted accounting principles, and verified by the hospital to be accurate.  At The Phia Group, we use Medicare payment rates along with this data to assess the fair market value of services (what payors actually pay).

Back to my story. I would have understood had the Hospital VP said “I am sorry, Jason, but I have a policy that requires me to balance-bill the member,” or “We can’t write off the balance but let’s explore ways to close this account together,” or anything like that.  I get it – there are always policies to follow.  But to say “It will be my pleasure to balance bill the patient 1.3 million…”  Come on.

There is a lot of rhetoric out there about no one being happy with “the way things are” and how everyone wants to “do the right thing” as the market changes, but I don’t believe that.  I routinely see the ugliness of corporations gorging themselves on unreasonable reimbursements at the threat of destroying patients’ credit scores.  Patient credit is the ransom in exchange for payment of ridiculously high charges.  Thankfully, this generally proves to be the exception, as I deal with reasonable and helpful providers all the time; to those valued and reasonable healthcare providers: I salute you.

This particular interaction really shook me, and it stands as a stark reminder of the issues we need to address in achieving transparency and affordability in healthcare.

Secrets to Making Reference-based Pricing Work
MyHealthGuide Source: Adam Russo, Esq.,1/14/2016, Thompson Information Services Blog

In order for reference-based pricing (RBP) to work, health plan sponsors should do it in a way that involves implementing best practices for cost analysis, claim repricing, plan design, patient advocacy (including balance billing protection when necessary), and member education.

Ways to Make RBP Succeed

Employers, administrators, brokers and courts have begun to realize that determining the value of a health care service must involve something more than considering only a provider’s billed charges. More and more courts are accepting evidence based on the reasonable and customary value of the claims and not what the facility actually billed.

A health care provider’s billed price for particular services is not necessarily representative of either the cost of providing those services or their market value. The reasonable value of services (to be used to set the RBP payment your plan will pay) must consider evidence of the full range of fees that hospitals charge and actually accept as payment from private payers, Medicare or patients themselves.

Since Medicare reimbursement is almost universally accepted in the market, paying any willing provider the Medicare rate plus a percentage is an objectively reasonable approach to providing the broadest possible provider access for RBP plan participants. The problem is that these same facilities have been getting so much more than this from large insurers and networks for so long.

Toss Out the Red Herring

Since U.S. Department of Labor issued frequently asked questions on RBP in 2014, the argument was made that RBP must be illegal since the Affordable Care Act limits the out-of-pocket maximum that a patient can have. But the issue is that the agency wrote the ACA rule with in-network claims in mind.

Part of this confusion stems from the reality that networks have been so pervasive for so long that people cannot conceive of a world without them.

It is important to understand that a claim subject to RBP in many cases has no network and would be viewed under a typical network scenario as an out-of-network claim. Thus, according to DOL, balance billed amounts resulting from non-network claims are not included in the individual’s out-of-pocket cost limitations.

Protect Members from Balance Billing

This doesn’t make balance billing the patient desirable. The plan doesn’t want to be price gouged by facilities but also doesn’t want its patients to be balance billed. Plans have to play a balancing act, which is not easy to do.

If you are the patient, you start thinking that you are a pawn in a chess match when it comes to RBP. We repeatedly hear patients say they thought they had insurance and that getting balance billed must be a mistake. The upset patient runs to his or her HR department demanding answers, and in the end doesn’t care what the plan pays as long as he or she doesn’t get his or her credit scores ruined.

Employers typically do care about the employees’ well-being but also care about the plan’s finances. They realize that the more the plan has to pay, the pricier health insurance becomes. However, they have to balance this with understanding that balance billing is bad for business and for public relations.

Patient Advocacy Advised

The best RBP programs should have a patient advocacy process. The process should involve providers of all types. Any such negotiation would still require the plan administrator to determine any maximum payable amount within the parameters the plan defines for reasonable and appropriate reimbursement. Also, the plan administrator should be able to offer to cover any patient deductible.

Also, a comprehensive patient advocacy program will have information on providers in many service areas across the country and will help RBP plan members find providers that are unlikely to balance bill for their services.

Medical tourism is a favored aspect of RBP plans for the same reason that RBP plans are better for members who travel outside their normal service area. An RBP plan member who seeks care outside his or her regular service area is more likely to be able to find a provider that will accept RBP as payment in full.

Plan sponsors don’t want to pay beyond their RBP payment, especially if their stop-loss carrier limits its reimbursement to RBP levels. Under that circumstance, payments beyond RBP would sap the plan and not the stop-loss insurer.

Bring Providers Along

Good RBP programs have direct contracts with out-of-network facilities, and plan documents that give the plan administrator leeway to negotiate with providers.

Specifically, successful RBP plans have contracts in which out-of-network facilities agree to accept the plan’s RBP rates. At the same time, however, a readiness to negotiate claims when needed can prevent balance billing and collections. Facilities accepting the plan’s RBP rate sets off a virtuous chain of consequences: no balance, no patients being balance billed, no complaints and no scrutiny.

Further, plan language must:
1. allow for the use of RBP;
2. describe the sources of pricing data to be used by the plan; and
3. address assignment and appeals.
If those and related questions are not answered, third parties will be able to find ways to refute the plan’s payment methods. In order to do this correctly, you need to have great plan drafters, as well as experts at facilitating provider contracting and claim negotiations.

Patients must be educated about the process and understand the type of RBP practices involved. They must know whether the plan has a physician-only network or a narrow network, and what direct provider contracts exist. The plan should teach them what to do if they are balance billed, including: (1) who pays the balance and (2) what the worst case scenarios are.
Percentage of Medicare
Traditional networks have failed to stem the rising costs of health care. This has the overall effect of reducing access to health care. Further, networks have encouraged a pricing system where providers charge one thing for their services but accept an entirely different payment from plans with which they contract.

More and more plans are amending their plan language to Medicare-plus pricing if the patient goes out of network. This benefits the plan because it pays less per claim, and it does not pay the balance, because the patient chose to go outside of the network. It also doesn’t have to pay a vendor to negotiate these claims with the providers.

A typical RBP plan offers reimbursement at rates between 120 percent and 180 percent of Medicare. According to the American Hospital Association, Medicare payment, on average, covers only 86 percent of actual costs in treating Medicare patients. This means that to cover costs, providers need to receive, on average, 116 percent of Medicare payment or more.

Leverage Facilities’ Collections Issues

Last, but not least, we have to take a look at the provider’s mindset. Hospital billing departments are extremely busy these days. The problem is that they aren’t collecting a whole bunch of money. Collection of amounts that patients owe is large problem for many providers. Easing cost-sharing requirements offers a powerful incentive to providers to accept RBP, especially pricing that is well in excess of what many of those same providers receive from the Medicare and Medicaid programs.

Some hospitals and health systems are starting to review and revise their prices to make themselves more attractive to individual consumers, who increasingly experience sticker shock when they pay for services out of pocket under certain high-deductible health plans. The reality is that many hospital leaders are publicly admitting to scrutinizing their own charge masters. The master price list often just serves as the basis for rate negotiations with insurers in order to see how prices compare against the actual cost of delivering services.

As more consumers have to pay more things out of pocket, these pricing issues are gaining an increasing share of health systems’ attention. The reality is that patients are starting to buy into transparency of pricing. If you’re a patient at one facility and you go to four different hospitals and you get the same service and the bill is different, you begin to wonder why. Hospital charge masters have been widely criticized for irrational pricing. Yet hospitals and insurance companies continue to use those master price lists in some negotiations.

For many years, providers have relied on a PPO’s logo on a patient’s insurance identification card to determine a network plan’s reimbursement terms. Identification cards created for RBP plans have no PPO logo but they do contain detailed notice of the reimbursement terms stating that the payment will be based on a certain percentage above Medicare.

In Conclusion

Unlike network discounting from unrealistic gross charges, RBP plans use bottom-up pricing based on costs. Plan sponsors and drafters have a fiduciary duty to be prudent with plan assets. As more and more patients begin to look at the overall cost of care and the actual billed charges, it is getting harder for plan administrators to preach the benefits of network discounts since the bottom line is that most plan funds are coming from the contributions of members’ paychecks.
About the Author
Adam V. Russo, Esq. is the Co-Founder and Chief Executive Officer of The Phia Group LLC; an experienced provider of health care cost containment techniques offering comprehensive claims recovery, plan document and consulting services designed to control health care costs and protect plan assets. The Phia Group’s overall mission is to reduce the cost of plans through its recovery strategies, innovative technologies, legal expertise, and focused, flexible customer service.