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Assignment of What, Exactly?
Jonathan A. Jablon, Esq.

If you’ve ever been disgusted with how much the BUCAs charge for health insurance premiums, you’re not alone. If you’ve ever wondered how the BUCAs determine their premiums and whether they’re limited, a case decided in May of this year helps shed some light on that subject. More relevant to ERISA, though, the case also presents some interesting information regarding the scope of an assignment of benefits as it relates to when a provider can sue a self-funded plan under ERISA.

A case in the United States district Court for the Southern District of Florida, MRI Scan Ctr., LLC v. Nat’l Imaging Associates, Inc., 13-60051-CIV, 2013 WL 1899689 (S.D. Fla. May 7, 2013), was brought by a provider to challenge the amount that Cigna charged for health insurance premiums. Insurance companies are required to charge premiums based on what is known as a Medical Loss Ratio, or MLR. In general, the higher an insurer’s MLR, the more it can charge for premiums. The MLR is the percent of premiums that the insurer actually spends paying claims; average MLRs, measured in percents, range from the mid-70s to low 80s.

Federal law requires that an insurer calculate its MLR based on “medical care and health care quality improvement,” and that it not include expenditures for administrative costs. In this case, the plaintiff, a provider, alleged that Cigna was inflating its MLR by about by including administrative charges in the amounts Cigna claimed to have paid for health care alone. The plaintiff sued under ERISA, alleging that Cigna had violated its fiduciary duties.

Unfortunately, whether Cigna was in the wrong – the “meat” of the case – was not decided by the court. The court got sidetracked when it was forced to determine whether the provider had standing – indeed, whether the provider was permitted – to bring the suit in the first place. The court did, in fact, determine that the plaintiff did not have standing to bring the suit, pursuant to certain provisions of ERISA. Specifically, ERISA § 502(a)(1) permits an ERISA claim to be brought “by a participant or beneficiary.” Federal courts have divined that “[h]ealthcare providers generally are not considered ‘beneficiaries’ or ‘participants’ under ERISA and thus lack standing to sue under the statute.” Borrero v. United Healthcare of New York, Inc., 610 F.3d 1296, 1301 (11th Cir. 2010).

A common misconception about assignments of benefits is that any effective assignment enables the receiver of the assignment to use all the rights otherwise guaranteed to plan participants. That is not the case, as the holding of this case plainly reminds us. Though both the issuance and revocation (or threat of revocation) of an assignment of benefits are strong tools for the Plan (see Medical University Hosp. Authority v. Oceana Resorts, LLC, 2012 WL 683938, [D.S.C. Mar. 2, 2012]), the court interpreted ERISA § 502 to stand for the proposition that an assignment of benefits does not, in fact, automatically grant a plaintiff standing to sue for ERISA relief unrelated to that which is explicitly outlined within the assignment of benefits. In other words, if a Plan participant’s right isn’t specifically assigned to the provider, the provider does not have that right.

According to the court, “Plaintiff is a provider of health care services and, therefore, is not a beneficiary or participant. … Accordingly, Plaintiff has standing to bring ERISA claims only if it received from its patients assignments broad enough to cover Plaintiff’s claims.” The court noted that the assignment of benefits within the Plan explicitly pertained to the provider’s right to billing and receiving payments, but failed to contain any provision sufficient to be interpreted to assign the right to sue for ERISA relief unrelated to payment of benefits, including the relief requested in this case.

The court’s conclusion in determining whether the plaintiff had standing to sue, then, is that ERISA § 502 does not automatically grant those in receipt of an assignment of benefits standing to sue under ERISA. Standing to sue for ERISA relief must be granted by the applicable assignment of benefits. Though the court did not address the topic of whether such standing must be explicitly stated, general trends of Plan interpretation seem to indicate that language sufficient to assign to the provider all rights applicable to the participant should be an acceptable way to accomplish just that.

The court granted deference to the arbitration provision agreed to by both parties, so hopefully the merits of this case will eventually be determined in that forum. Aside from any inequitable tactics that may be employed by Cigna to determine its premiums (and who knows how many other insurers), the implications of this case go beyond the substance of the case. The procedural dismissal of this case – that is, the court’s determination that the plaintiff did not have standing to sue – is itself a lesson for the self-funded community with regard to assignment of benefits.

Plan Sponsors may want to examine their respective Plan Documents to ensure that the rights of providers are limited under the Plan to billing and accepting payment. Providers suing Plans for ERISA relief is a dangerous concept, but the court has provided Plans a clear method to thwart it. The Phia Group has an experienced staff of expert plan-drafters who know ERISA inside and out. We can provide Plans with the language they need to prevent overbroad assignments of benefits and prevent providers from having rights under the Plan beyond what is needed for them to provide services under the Plan. Contact Andrew Milesky at amilesky@phiagroup.com or (781) 535-5664 for all your plan drafting, subrogation, and general consulting needs.

Federal Judge Denies United Healthcare’s Motion to Dismiss in Case Brought by Texas General Hospital for Unpaid & Underpaid Claims

Background

Texas General Hospital is a private, acute care facility located in Grand Prairie, Texas. It is outside of UnitedHealthcare’s (“United”) provider network. In January of 2015, Texas General was the subject of intense scrutiny after a FOX 4 investigation revealed multiple billing complaints. A woman who underwent gastric sleeve surgery was charged a total of $622,000, most of which her insurance company, United, refused to pay. Another woman was charged $360,000 for a hysterectomy, including $18,000 for a disposable cup. United indicated to FOX 4 that it was deeply concerned about hospitals establishing an out-of-network strategy to hike the rates that they charge for services.[1]

A recent study by Johns Hopkins that was reported in the Dallas Morning News found that Texas General ranks 11th among the worst 50 hospital in the nation for inflating patients’ hospital charges and has the most inflated charges of any hospital in Texas.[2] The Office of Representative Chris Turner (D) of Arlington, Texas also conducted research looking at the cost of cardiology, general medicine, pulmonology, and urology at Texas General, then compared it to Texas Health Harris Methodist Hospital in Stephenville, Texas. His office found that the charges were egregiously high. In addition, National Nurses United conducted research which shows that Texas General is the most expensive hospital in Texas and the 8th most expensive nationwide.[3]

Lawsuit

In October 2015, Texas General Hospital sued UnitedHealthcare based in Minnetonka, Minnesota seeking more than $104 million in unpaid and underpaid medical bills. Texas General accused United of “drastically underpaying” and refusing to pay for medical care provided to United-insured members. The case is citation is Tex. Gen. Hosp., LP v. United Healthcare Servs., Inc., 2016 BL 208258, N.D. Tex., No. 3:15-CV-02096-M, 6/28/16.

Texas General’s Second Amended Complaint against United details an alleged pattern of United drastically underpaying and/or refusing to pay Texas General (the plaintiffs) for health insurance claims that Texas General submitted to United for reimbursement since at least March of 2012. The plaintiffs allege that United violated the terms of applicable plans which require reimbursement of medical expenses incurred by United members at “usual, customary, and reasonable rates.” Texas General contends that the total billed charges do reflect the usual, customary, and reasonable rates for the particular medical services provided at the hospital. According to the Complaint, United paid 25% of Texas Generals’ billed charges for 1,969 claims. The Complaint also alleges that United violated numerous provision of the Employee Retirement Income Security Act (“ERISA”) by breaching plan terms, breaching fiduciary duties of loyalty and due care, and failing to provide a full and fair review of denied claims. Finally, Texas General alleges breach of contract (for the non-ERISA plans) and breach of the duty of good faith and fair dealing.[4]

In November 2015, United filed a 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. Specifically, United argued that Texas General failed to allege facts that plausibly established that United withheld any plan benefits. As detailed in United’s Memorandum in Support of the Motion to Dismiss, United contends that Texas General’s charges do not constitute the usual, customary, and reasonable rates for those services. Moreover, United contends that Texas General failed to establish that denials of payment were invalid, mistaken, or unsupported by applicable plan terms. United also contends that since Texas General failed to exhaust its administrative remedies, the claims for benefits should be barred.[5]

On June 28, 2016, Chief Judge Barbara M.G. Lynn of the U.S. District Court for the Northern District of Texas denied United’s motion to dismiss. In particular, Judge Lynn found that Texas General sufficiently pleaded claims and that United failed to provide “meaningful access” to its appeals procedures. As a result of the dismissal, Texas General can now pursue its claims for benefits and relief under ERISA. Furthermore, Texas General is now able to bypass United’s internal appeals process for all 1,969 United members and bring these actions against United directly in federal court. [6]

The case now moves forward in the litigation process.

[1] Becky Oliver, A FOX 4 Investigation of Hospital Billing Struck a Nerve with Our Viewers, and Now, an Austin Lawmaker is Stepping In, FOX 4 (Jan. 22, 2015), http://www.fox4news.com/news/798051-story.

[2] News Release, Johns Hopkins Bloomberg Sch. of Pub. Health Pol’y Mgmt., Some Hospitals Marking Up Prices More Than 1,000 Percent (June 8, 2015), http://www.jhsph.edu/news/news-releases/2015/some-hospitals-marking-up-prices-more-than-1000-percent.html.

[3] FOX 4 Investigation, supra note 1.

[4] Plaintiff’s Second Amended Compl., Tex. Gen. Hosp., LP v. United Healthcare Servs., Inc., 2016 BL 208258, N.D. Tex., No. 3:15-CV-02096-M, 6/28/16.

[5] Memorandum in Support of Defendant’s Motion to Dismiss Plaintiff’s Second Amended Compl., Tex. Gen. Hosp., LP v. United Healthcare Servs., Inc., 2016 BL 208258, N.D. Tex., No. 3:15-CV-02096-M, 6/28/16.

[6] Jacklyn Wille, United HealthCare Can’t Duck Hospital’s $104M Lawsuit, Bloomberg BNA (June 30, 2016), http://www.bna.com/united-healthcare-cant-n57982076319/.

Employer-sponsored Plans Should Prepare to be Taxed
By: Brady Bizarro, Esq.

The latest news in the repeal and replace saga is that congressional Republicans are pushing to get a bill to the Senate by the end of this month. The ambitious timeline means that lawmakers and independent analysts will have very little time to review the components of the bill. The lack of transparency is already causing problems within the Republican Party itself. Yet, parts of the bill have leaked, and there are some provisions which will prove controversial across the political spectrum; specifically those that affect employer-sponsored health insurance.

The new plan, for which President Trump has signaled support, would offer aged-based tax credits that are paid for by taxing employer-sponsored health insurance plans. Employer groups across the country are already signaling their opposition to this idea, which is essentially a new version of the Cadillac Tax which is part of the Affordable Care Act and was delayed until 2020.

Why do House Republicans wants to tax employers? The truth is that Republicans want to keep as many people covered by health insurance as possible, and that means subsidizing care. Lawmakers have identified taxing employer-sponsored plans as one of the only feasible ways to raise enough revenue to pay for these tax credits.

This is unwelcome news for the self-insured industry because if the replacement bill also eliminates the coverage mandates and essential health benefits, we could see more movement from employer-sponsored coverage to individual plans, especially among younger and healthier workers. If the government gives workers tax credits to buy individual coverage, and that coverage can be very skimpy and cheap, then healthy people will be tempted to buy individual coverage outside of their employer plan. All the more reason for employers to transition to self-funding to be able to offer quality care and competitive prices to keep young, healthy workers on their plans.

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.


Empowering Plans Segment 03 - The Journey Continues
Once again The Phia Group’s CEO, Adam V. Russo, and Sr. VP, Ron E. Peck, delve into what makes their own company’s health benefit plan unique, and share tips employers (and those that service them) can use to improve their own plan’s performance.
Click here to open the Podcast!


The Guilty Shall Remain Nameless – Yet I shall Shame Them… Again
By Tim Callender, Esq.

In this second installment of “The Guilty Shall Remain Nameless” I can’t help but think back to an encounter I had with a walk-in clinic in Las Vegas, Nevada. Now… it’s worth noting that any walk-in clinic, one block from The Strip, is highly likely to be an interesting experience, period. And it was. First – this is the only urgent care clinic I’ve ever seen with armed guards. Now, it should be noted that I’m a small town guy from Idaho, so people walking around with guns is pretty normal, but not in this setting.  It was quite odd.

Armed medical professionals aside, the key point to this story is network confusion. I had a foot injury that I had “received” on The Strip while walking between casinos. I will leave the details alone for now. Long story short, I needed stitches. I was referred to this particular clinic by the concierge at Caesar’s Palace. One, quick Uber later and I was surrounded by armed guards and a whole mess of humanity.

I did not have my medical insurance card with me so I had my wife email me all the information. I took a sticky note and wrote down all the details for our health plan. When it was my turn at the counter, I presented all of this information to the “helpful” person manning the counter. She responded, “I’m sorry but I will need the information off of your insurance card.” I responded, “Yes. The info on that sticky note… it is literally all of the information from my insurance card.” She responded, “No. But I need the information off of the card.”  I responded, “Right. The info from my insurance card is copied, verbatim, onto this nice, yellow piece of paper. It’s all right there.” She responded, “Sir. I need the information from the card itself.” I responded, “Yes… Is there someone else here I can talk to?”

Three people later, someone finally understood that they could take the information from my sticky note and enter it into their system, just as if they had the insurance card in front of them. The information was… THE SAME! However, the battle was not over. Once the information was entered into their system, one of the helpful individuals asked me, “This shows you are in-network for ABC Network. But we see you are from Idaho. Will that work?” I responded, “Yes. ABC Network is the same.” They responded, “Where is Idaho?” I responded, “We are in Nevada right now, correct?” They responded, “Yes.” I responded, “Idaho borders Nevada…”

13 months later I received a bill from the urgent care clinic in Las Vegas. It was for north of $700.00 and listed as an out-of-network service provider.

I’m currently working through the details with all parties involved. Moral of the story… if it’s this hard for me – a sophisticated healthcare consumer… imagine how it is for everyone else.

4 main tenets of the GOP’s ACA replacement plan
By Emily Rappleye

House Republicans gathered Thursday to discuss a policy memo detailing their ACA replacement plan, according to The Washington Post.

While the meeting put many rank-and-file members at ease, they said the details presented at the meeting did not comprise a full-on plan and instead created more of a roadmap, according to the report.

The policy brief, which is fairly similar to the Republican Better Way plan, does not include information on how it will be passed into law, according to the report. House Speaker Paul Ryan, R-Wis., has promised to deliver ACA repeal legislation by the end of the month, and President Donald Trump said Thursday a replacement plan will be ready in March, according to the report.

For now, the policy memo is the closest to a replacement plan available to the public. Here are its four key features.

15 Things to Know About Stark Law
By Ayla Ellison

Enacted more than two decades ago with the simple purpose of curbing physician self-referral, Stark Law has evolved into a complex set of regulations, which some argue impede efforts to transition away from a fee-for-service system.

Here are 15 things to know about Stark Law.

Healthcare Need Not Be a Headache
By: Christopher Aguiar, Esq.

My PCP is a great doctor, but I hate visiting him. I only live 2 minutes from his office, but somehow, my quick visits usually turn into long excursions. Luckily, I’ve educated myself, understand how my benefit plan works, and have an urgent care clinic nearby. When needed (like last week when my back reminded me I’m losing my battle with father time) I make a quick stop and am in and out in under an hour with the meds I need, at no out of pocket cost thanks to my incentive laden benefit plan with no co-pays on urgent care or generic drugs.  The options are there, but you have to be educated and execute.

Summary of Benefits and Coverage- NEW Template
By: Kelly Dempsey, Esq.

The new Summary of Benefits and Coverage (SBC) template is applicable for plans that have open enrollment periods beginning on or after April 1, 2017. If there is no open enrollment period, it applies for plans renewing on or after April 1, 2017. Changes to the SBC include modified disclosures and benefits, embedded deductible/OOP information, a new coverage example, and some cosmetics. If you don’t find it as easy as 1, 2, 3, The Phia Group is here to help! Feel free to contact us at pgcreferral@phiagroup.com if you have questions or need assistance drafting in the new SBC template.