By Catherine Dowie

The facts of the latest healthcare subrogation challenge on the SupremeCourt’s docket (Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan) will be familiar to many. As you may recall from the June 2015 article,“TheRoad to Recovery: Subrogation Gets Its Day in Court… Again,” following a motor vehicle accident, Robert Montanile’s health plan paid over $120,000 on his behalf, subject to all plan terms, including a subrogation and reimbursement provision.
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By Carmen Castro-Pagan
The Federal Employees Health Benefits Act preempts a Kansas administrative regulation prohibiting subrogation and reimbursement clauses in health insurance contracts of federal government employees, the U.S. Court of Appeals for the Tenth Circuit ruled .
The appeals court, in the Oct. 29 opinion, joining other federal courts in ruling that FEHBA preempts state laws limiting subrogation and reimbursement clauses. The decision confirmed the lower court’s ruling that a federal employee must reimburse her insurer because federal common law also displaced Kansas regulation.
The case is Helfrich v. Blue Cross & Blue Shield Ass’n, 2015 BL 356222, 10th Cir., No. 14-3179, 10/29/15 

Making determinations on medical claim appeals is a frightening prospect. The process can involve complex factual, legal, and medical issues, and can distract a plan administrator from its ordinary business functions, posing a significant resource drain. The PACE service is designed to let the plan administrator shift the fiduciary duty away, onto the PACE, for final-level, internal claim appeals.

In the classic TPA arrangement, the TPA does not assume fiduciary duties, instead relying on the plan administrator for guidance on claims and appeals that require discretion. Many TPAs are still living in the past – an era where Plan Sponsors embraced fiduciary duties – but now,  plans and their brokers exist in a new paradigm, in which a TPA not offering a fiduciary option stands at a substantial disadvantage. As such, business opportunities are lost.

With this in mind, The Phia Group has developed PACE.  With a PACE, plan sponsors and TPAs assign the riskiest fiduciary duty (that is, the power to make payment decisions in response to final appeals), to The Phia Group.  This authority carries with it the most risk, because it is this final payment directive that will be scrutinized upon external review.

Self-funding veterans and novices alike will benefit from PACE. Groups that are moving from fully-insured or ASO arrangements can use PACE as a valuable tool to aid in the transition; these groups have never before had to be the fiduciary of their plans – and with the PACE, that daunting responsibility can be delegated to a neutral and capable third party.

The PACE not only enables the TPA to obtain new business not previously available to it, but also encourages client “stickiness” and also creates a new profit center for the TPA in the form of an administrative fee paid directly by The Phia Group to the TPA, in exchange for the TPA’s facilitation of the PACE service. In other words, PACE adds unprecedented value to the TPA from both a business and a revenue perspective.

In addition to having a third party expert analyze all appealed claims before they reach an external review, the PACE also ensures that legally mandated independent review organizations (IROs) are in place, and the PACE handles facilitation of external appeals with these IROs. Regardless of whether the PACE upholds or reverses a denial, the PACE’s service continues to apply.  From handling external appeals of denied claims to negotiating amounts payable for claims deemed to be covered by the benefit plan, the PACE works to ensure the correct and optimal outcome every time. This includes coordinating efforts with stop-loss, plan sponsors, brokers, and TPAs whenever these partners do not align.

As we know, any entity exercising control over a benefit plan or its assets may be deemed to be a fiduciary; third party administrators, brokers, and any other entity making decisions on behalf of these benefit plans may be dealing with liability for which it simply isn’t prepared. PACE is a way for the employer to be able to focus less on the complexities of its health plan, fiduciary duties, and stop-loss concerns, and more on what matters – its business.

PACE is also a way for the TPA to rest easy knowing that it is not unwittingly assuming fiduciary duties on final appeals.

For years, self-funded plan sponsors and TPAs have asked how they can avoid the risks inherent in self-funding, while still enjoying the benefits of that plan structure.  According to our CEO, Adam Russo, “With a PACE in place, we’re taking a giant step in the right direction. It’s a game changer.”

TPAs Recently Deemed Liable for Failed Overpayment Recoupment

Since the inception of ERISA, but with startling frequency in recent years (with major cases being decided in the past year, and ongoing presently), TPAs, brokers, and other entities servicing self-funded plans are deemed to be fiduciaries and held directly liable to their clients for failing to adequately enforce overpayment recoupment provisions.  So why are most TPAs merely sending a few letters to providers and filing away cases that fail to result in a refund?  Because they feel that there is no other option available to them… until now.


Overpayments are Not a Sign of TPA Negligence

We look to TPAs to ensure the right amount is paid to the right parties.  When an overpayment occurs, TPAs feel personally responsible, and seek to handle recoupment on their own.  This desire to resolve matters in-house is proper, and should be the first step… but failing to take additional action when internal efforts fail is inexcusable.  Overpayments occur for any number of reasons, most of which are entirely uncontrollable by the TPA, including incorrect eligibility information; misrepresentation by patients and providers; and incorrect discounting by networks.  Indeed, providers now employ entire billing schemes meant to maximize billable rates.  It is impossible to identify every outside attempt to “game the system,” before the claim is paid.

Improve Results by Improving Your Approach

It is a credit to TPAs that resultant overpayments are identified at all.  Given ever-increasing costs, and the increased frequency of instances where TPAs are deemed liable for failing to recoup overpaid funds, it is crucial that self-funded health plans and their TPAs stop wasting time and resources on fruitless efforts, and execute a new process that increases their chance for success – adding additional layers of overpayment pursuit to existing internal procedures.


We Can Help

By combining technology with experience, The Phia Group empowers overpayment recovery efforts, reviews existing procedures, provides best practices to improve in-house efforts, and offers options to pursue refunds when those internal efforts fail.  We implement unique methods, such as bundling refund demands when a single provider is involved, thereby submitting a demand that is so large no provider can ignore it.  Only with strategies such as these, a dedicated overpayment recovery team, and attorneys experienced in dealing with providers, can a fiduciary ensure that their duty to recover overpayments will be fulfilled.


To learn more about The Phia Group and its Overpayment Recovery Service, please contact Michael Branco at 781-535-5618 or mbranco@phiagroup.com.  
 

Case Studies

A case was transferred to The Phia Group by another subrogation vendor, at the request of the Arizona benefit plan involved.  The subrogation vendor failed to recoup any funds even though they had over two years to do so.  The Plan participant’s dependent was involved in a severe motorcycle accident and there were reportedly policy limits of $100,000.  It was also discovered that the patient may not have been eligible for some of the later paid plan benefits after a subsequent termination date.
The other vendor failed to request refunds of the overpayments from providers for a lack of eligibility, and focused instead entirely on the motorcycle’s policy; the case was at a standstill.  After failing to convince The Phia Group to waive reimbursement rights, the parties involved requested a 50% reduction of the Plan’s lien.  The Phia Group refused and entered into negotiations knowing that it could recoup funds from the providers (overpayments) as well.  As a result, this case was finalized within three months and the Plan received close to full recovery.
Plan Exposure:                   $213,000
Phia Intervention Saved:  $175,000
 

The Phia Group was presented with an overpayment case stemming from the member’s misrepresentation on an accident report. The police report had a separate page discussing the member’s intoxication during a motor vehicle accident, but when that police report was provided to the TPA, the addendum describing the intoxication was omitted. As a result, the claims were deniable by virtue of both the misrepresentation and the member’s intoxication.
The Phia Group discussed the case with the provider, which had already been paid, to attempt to recoup the funds. The provider initially refused to even acknowledge our request, but after lengthy discussions and the involvement of The Phia Group’s legal team, the provider ultimately conceded and returned the money to the health plan. The health plan proceeded to deny the claims, and the provider sought payment directly from the member.
Plan Exposure:                   $31,000
Phia Intervention Saved:  $31,000
 

To learn more about The Phia Group and its Overpayment Recovery Service, please contact Michael Branco at 781-535-5618 or mbranco@phiagroup.com.