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Cyborgs – Moving From Science Fiction to Science Fact
By: Garrick Hunt

The word “cybernetics” tends to invoke images of Robocop or The Million Dollar Man.  These examples are just the creation of the imagination, but how far away are we really from such technological and biological advancements?

The answer is that it has already begun. While we don’t have 7-foot-tall walking cyborgs that administer swift justice in some kind of post-apocalyptic nightmare world, we are seeing advancements in the realm of prosthetic limbs, ocular augmentation, and even artificially grown organs.

While I was recently traveling, I picked up a National Geographic which had an amazing article on the future of human evolution and how humans are beginning to influence biological advancements. The article discussed a man, who was born colorblind and underwent a procedure that implanted a device (a sort of antenna) at the back of his head. This device can interpret the ultraviolet (UV) light spectrum and infrared (IR) spectrum, then convert these light waves into sound that feeds to his brain and allows him to “hear” color. Technology is helping this man use synesthesia, often considered a disorder of sorts, to his advantage.  What could this mean for the future of healthcare?  Who would be responsible for the costs of such augmentations? What would be the medical standards and indications of such an adventurous advancement?

Implants, like the one described above, offers a glimpse of the future.  While all of this seems a little farfetched, I would argue that no one anticipated George Klein’s electric wheelchair in the early twentieth century nor the profound change it would cause in our industry and in the lives of so many people. No one thought that anyone would be able to afford one, and now I can buy one on eBay for a cool $700, cheaper than a road bike.

The initial shock of new technology will always be a cost concern.  For example, exoskeletons, like those being developed for the military to  increase  lifting power and allow the wearer to walk and run long distances without becoming fatigued, are currently very much cost-prohibitive, yet these  devices are also being developed for paraplegics to utilize in the civilian sector. The ReWalk is one such exoskeleton that has been FDA approved, and at a price point of $70,000, it poses a high cost barrier that most people could never afford on their own. This means benefit plans may be on the hook for this new bill and others like it. Now, if a healthy individual wants to squander their savings to purchase an exoskeleton and pretend to be Iron Man, then all the power to them – but what about someone who needs it?

It’s not just exoskeletons; many prosthetic limbs can cost up to $50,000 in the current market.  Throw in a few computer chips and motherboards that allow for advanced articulation and a wide range of movement, and we could be looking at a hefty $100,000 price tag for that prosthesis. It seems likely that early medical applications of new technologies would bring with them medical indications for periodic maintenance, upgrades, or replacement… on the health plan’s dime.

There are three major ways a health plan can address this emerging technology; all three stem from solid plan language. First, a plan should assure it has the ability to review invoices against some sort of cost standard. Ensuring that the plan includes language indicating that alternating pricing, at the Plan Administrator’s discretion, will be applied when a particular medical device exceeds the set standards will help ensure that the plan has secured its right to properly utilize such standards. Secondly, a plan should including language that grants the plan the ability to suggest to the member a more cost-effective treatment option so long as it does not reduce the quality of treatment – and if the member foregoes that suggestion, the plan should ideally retain the right to limit its payment for the chosen service to the price of the lower-cost service that the member has chosen to forego. This means that while the plan will cover treatment for medical device, it will only do so up to a reasonable cost limit, and members are encouraged to not be extravagant simply because their OOP amount is the same either way.  Finally, a plan must include strong “experimental and investigational” language, ensuring that the procedure is FDA approved, has been adequately tested, and is actual applied science rather than still science fiction.

It will still be many years before we see a proper medical cyborg, but this doesn’t mean that we shouldn’t prepare for costs now…


My Trip to the Emergency Room
By: Jen McCormick, Esq.

Since becoming a mom, I’ve experienced two pretty scary parenting adventures – taking a toddler to Disney World solo and taking a toddler to the emergency room. While I faced long lines, costly food, and anxiety during both events, it was the emergency department visit that by far was the scariest.

After a same-day sick visit at the pediatrician’s office, we were sent to the emergency room. Our pediatrician administered a treatment onsite, but after not quickly seeing results or improvement in my toddler’s condition, we were sent to the emergency department. This was terrifying to hear, but also a bit surprising to me. My toddler seemed in good spirits and seemed happy.

Of course I didn’t want to second guess the doctor, especially when my child’s health may be on the line, but I had to ask why they needed us to rush to the emergency department – was something happening and I just didn’t realize it? Not exactly. The pediatrician said that our toddler’s oxygen level was too low and his respiratory rate was too fast – and he needed to be monitored and that was not something the pediatrician’s office could do or had time to do.

I couldn’t help but question whether this was the most effective (cost or otherwise) way to manage care. Then again, it was my toddler and being a mom superseded my desire to argue. We went, and were monitored, and I continually questioned what was happening (and why) during each treatment step.

We try to encourage patients to take control of their health care – make informed decisions and properly utilize the emergency room (for emergency situations). I am not suggesting that our situation was not urgent or an emergency, but it was unexpected that the next step for us was the emergency department.  Maybe this is a trend (sending patients to emergency departments after a primary care visit) or due to time or resources. Either way, question what is happening so you better understand, and more importantly, ensure you receive the most appropriate care (particularly for our patients too young to speak for themselves).



Repeal and Replace Faces a False Start - Affordable Care Act Review

By: Brady Bizarro, Esq.

After the surprising collapse of the American Health Care Act (“AHCA”), House Speaker Paul Ryan (R-Wis.) remarked, “We’re going to be living with Obamacare for the foreseeable future.” Tom Price, the Secretary of Health and Human Services, proclaimed that Obamacare was “the law of the land.” In the immediate aftermath of the stunning political defeat, many political analysts concluded that the effort to repeal and replace Obamacare was finished. Only a few days later, however, there were talks of reviving the legislation over the next few weeks. The President himself took to social media to proclaim, “We are all going to make a deal on health care . . . that’s such an easy one.”

What changed? Republican leaders faced immense pressure from conservative activists, interest groups, the insurance lobby, donors, and constituents to follow through on one of their most significant campaign promises. In addition, the President has targeted individual congressmen, mostly from the House Freedom Caucus, and pressured them to get on board with the AHCA. Whatever the Republicans decide to do, they need to act fast. The legislative calendar is jam-packed with other top priorities, including passing a budget and tackling tax reform. Additionally, insurers are developing premiums and benefit packages for health plans to offer in 2018, and these will need to be reviewed by federal and state officials over the summer.

In the immediate future, despite the legislative failure, the Trump Administration still has plenty of ways it can cripple the ACA. The President himself has said the law would “explode” on its own, but that process could certainly be accelerated. For example, the Administration could block funding for ACA subsidies, refuse to enforce the individual and employer mandates, and redefine Essential Health Benefits (“EHBs”).

That last part, redefining EHBs, could have a significant impact on employer-sponsored health insurance. In fact, a new bill is in the works, and one of its provisions (included by the Freedom Caucus) is to repeal EHBs entirely. Essential Health Benefits are requirements that insurers have to cover services like maternity care, mental health care, and hospitalization. According to Republican lawmakers, removing these requirements would significantly lower the cost of certain health plans because they would not be forced to cover a defined list of services.

We will continue to follow new developments closely, especially those that impact employer-sponsored health care.
 

Contact The Phia Group today about an affordable care act external review!


Sometimes... The Truth Hurts...
By: Tim Callender, Esq.

The following is completely fictional.  Well, not really, but it makes me feel better to pretend that it’s not true.  As always, with my posts, the guilty (and innocent) shall remain nameless.  All the names and places I have used in this blog are fictional.

In the past 10 years I have attended many fundraisers for many different causes.  As I sit here today, pondering healthcare spend and the insanity that is our system, I think back to a particular fundraiser that I attended and how my experience at the event was so drastically different from all the other attendees.

A close family friend experienced a stroke.  For storytelling purposes I’ll name her Sally.  Obviously this was a terrible occurrence.

Sally had young children and she was the primary breadwinner for the household.  Sally spent weeks in the ICU and then months admitted to in-patient physical / occupational therapy.  Although she “recovered,” Sally would never be the same.

Sally’s medical bills piled high and her family buckled under the financial and emotional strain.  The community rallied around Sally and her family.  A fundraiser was put together, advertised, and executed incredibly.  There was live music, numerous food vendors, a silent auction, corporate sponsors, etc.

Oddly enough, the local health system sent representatives to the fundraiser.  They took the stage and provided heartwarming stories about Sally, her road to recovery, and how amazing it was to see the community rally around Sally to help pay her medical bills.  “Yeah… to pad your pockets,” I remember thinking as I stared at the stage, slack-jawed.

By the end of the evening, the event’s organizers announced that the event had raised nearly $80,000.00 for Sally and her family – a staggering amount.  Now.  Here’s where my pessimism (and knowledge of provider billing practices) overrides the “rainbows and unicorns” happy feeling of a successful fundraiser.  While everyone else applauded the giant, fake check being paraded across the stage, and cried while hugging one another, I leaned over to my friend and chirped, “You know she’s judgment proof, right?  The health system could sue her all day long, get a judgment against her, and end up garnishing $10 per paycheck for the next 40 years.  She doesn’t own anything they can attach a judgment to!  She’s judgment proof!  Why are we all here enabling the hospital’s egregious billing practices by helping Sally pay these ridiculous bills!”  That’s when I realized the room had gone silent and numerous people were listening to my ranting.  Suddenly I was the bad guy.  Oops.

Why do I tell this story?  Is it to reminisce about a Friday evening gone bad?  Is it to poke fun at Sally?  Is it to demonize a local health system?  No.  My purpose is none of these things.  Instead, I provide this brief story as a reminder that all of us “normal people” on the street own a great deal of responsibility when it comes to “feeding the dog.”  As often as we want to decry health systems for egregious billing – for predatory financial practices – for “war profiteering” – we need to step back and honestly assess whether we have enabled this reality.  Were there more claims that could have been negotiated?  Were there changes that could have been made to the health plan to control these charges such as a better definition of “maximum allowable?”  Were there plan member incentives that could have encouraged the member to choose other, high-result but less-expensive treatment options?  Were there wellness or medical management steps that were missed?  Was there an opportunity to educate plan beneficiaries as to the landscape of medical billing practices?  Were there plan design opportunities missed?  The list goes on.

In short, as we sit back and observe a system that is rife with out-of-control billing, we have a duty to not only criticize but also look for causes and real solutions at every step, including those that directly involve us.  And also – be careful who might be listening when you start popping off at fundraisers.

Trump’s Healthcare Bill Failed… Here’s Why
By: Adam Russo, Esq.

The fact that Trump’s healthcare bill failed is big news and now everyone in Washington and in the media is trying to place blame on someone, whether it’s president Trump, Speaker Ryan, the Freedom Caucus or the Democrats. The reality is that this bill would not have worked and I believe that no bill passed in the next few years will work either and the reason is simple. Neither the Democrats nor the Republicans are willing to truly lower the overall cost of healthcare.  The only way that we can have a successful health plan for all Americans is by fighting the root of the problem – the ridiculously high priced hospital and other facility bills and the huge sticker prices on specialty drugs.

There is an easy solution – force the hospitals to justify their charges and negotiate with the pharmaceutical companies on what they can charge. However, the politicians in Washington will never do it because these two entities are the reason they are in DC in the first place. They fund the campaigns, they feed the lobbyists, they are the biggest employers in most representatives’ districts.  They will never push them or fight them or even question them because they need them. If you are a politician and the largest employer in your district that employs the most people is the hospital, then are you really going to criticize their practices? Hell, no! Until this changes, we will see the same games being played as they are now. That’s why we are here at The Phia Group, because we are not afraid to criticize, to fight, to question and to ensure that our clients can offer their employees the best health care coverage at the lowest prices possible.

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.

Health Insurance is NOT Health Care
By: Ron E Peck, Esq.

The Congressional Budget Office (CBO) has provided its assessment of the American Health Care Act, and already Congressional would-be supporters of the law are jumping ship. The CBO’s analysis resulted in what is being called a “devastating blow” to the proposed law.  Primary among the negative reviews is the CBO analysis that predicted about 24 million fewer people would be insured by 2026 under the GOP bill, and that premiums would skyrocket for low-income Americans and the elderly. Yet this is exactly what (some) supporters of the proposed law expected. You likely heard about White House budget director, Mick Mulvaney’s remarks, shared with ABC News chief anchor George Stephanopoulos.  He said that critics worry too much about “getting people coverage,” and that the purpose of the law should instead be, “… focused on getting people affordable health care.”

It’s as if the two sides are talking past each other. If you value securing health insurance for everyone in the nation, then the CBO’s report should scare you. If you care more about securing affordable, accessible, health care for everyone – then the whole discussion over “insurance” should be irrelevant to you. Why? Because Health Insurance is NOT Health Care.

President Obama knew this, once. On the evening of September 9, 2009, President Obama advised a joint session of Congress, that the amount spent on health care is the root cause of skyrocketing insurance premiums. He said, “We spend one and a half times more per person on health care than any other country, but we aren’t any healthier for it. This is one of the reasons that insurance premiums have gone up three times faster than wages.”

Yet… when the Patient Protection and Affordable Care Act (“PPACA,” “ACA,” or “ObamaCare”) was revealed, that fundamental problem was essentially ignored, in exchange for a law whose primary mission was merely to get everyone insured.

So… the money comes out of a different pocket, but what are we doing to reduce the amount actually being spent? Nothing. If I go to a baseball game with my wife, and I buy a beer for $10, whether I pay for it with my debit card, a wad of cash my grandmother sent me for my birthday, or my wife’s credit card (thanks honey), it doesn’t make it any cheaper. $10 for a beer is outrageous, but not as outrageous as the cost of health care.

Just as health insurance is not health care, so too health insurance reform is not health care reform.  Yet, because the ACA got so much press, and many previously uninsured individuals did secure insurance (giving us all the warm and fuzzies), the result was a nationwide misconception that affordable insurance equates with affordable health care. For many, ObamaCare is therefore viewed as a success because millions of uninsured Americans are now insured.

Yet, insurance isn’t a magical money-tree. Like a college student wielding his first credit card, a newly insured America forgets that “someone” has to pay, eventually.  What you buy – with your own money, or with insurance – and how much it costs, still matters.  Insurance just passes the buck – to other insureds, and to you, when the time comes to renew. It blows my mind.  People are involved in car accidents, get out of their vehicle, examine the minor damage, and agree NOT TO REPORT IT TO THEIR INSURANCE, because they DON’T WANT THEIR PREMIUM TO INCREASE! People actually choose to pay for car repairs out of pocket, because they fear insurance premium increases and want to save their insurance for “when they really need it.”  Yet, if we treated auto insurance the way we treat health insurance, we’d be outraged that insurance doesn’t pay for the air in my tires, or the dancing hula girl on my dashboard.

Providing insurance (meaning, digging into another pocket to pay for healthcare) didn’t reduce the cost of said care. In fact, in many instances, having new, direct access to deeper pockets incentivized providers to increase their rates – and why not? Instead of balance billing an uninsured patient, I now have direct access to the deep pockets of a carrier? Sign me up!

Steven I. Weissman, a former hospital president, stated that, “Rates must be published in a uniform format such as industry standard CPT codes or a percentage of Medicare rates. Every citizen would be empowered to search any medical procedure online and see pricing for all providers within X miles. It would be as easy and familiar as checking the price of any other goods or services;” (http://www.orlandosentinel.com/opinion/os-ed-health-care-prices-myword-061015-20150609-story.html; https://www.change.org/p/end-predatory-healthcare-pricing).

In addition to addressing the actual cost of care, we need to be honest about what insurance is, and is not; as well as what it is, and is not, meant to cover. Insurance only works when the insurer is allowed to assess risk, and through underwriting, quote premiums and offer limits adjusted to the individual policy holder. Forcing a carrier or health plan to accept $1,000 in premium for coverage that we know, with certainty, will cost the carrier $1,000 is outrageous and – in my mind – amounts to a form of eminent domain or a governmental taking.

When insurance is required to cover people without regard for risk, forcibly collecting money from all to pay for benefits afforded to some more than others; with limits placed upon carriers regarding how much they can charge, what they must provide, and more, insurance ceases to be insurance and becomes an agent of wealth distribution, a.k.a. a tax collector.

A promise to pay for all but certain future costs eliminates the entire reason to engage in the business of insurance. It’s the reason why auto insurance doesn’t pay for oil changes, tire rotations, or gas changes!

The time has come to be honest with each other and ourselves. What do we hope to accomplish with health care reform? What is the easiest, most direct way to achieve that goal? Do that.  Commandeering an entire private industry to camouflage a tax because politicians are too scared to openly admit that is what they are doing – taxing the nation to raise capital for the purpose of paying out of control health care costs – just doesn’t work for me.


If I Can Change, So Can The Average American
By: Garrick Hunt

I recently celebrated my two year anniversary at The Phia Group; an organization that two years ago I didn’t know existed. In my time here, I have learned a great deal about an industry, which should matter to every American, but often is filed away the likes of cell phones bills, something that we pay for because we need it. Like many Americans, I did not question increases in my premium, I did not know what a plan document was, nor had I read one, as they often had small font and no pictures.

That changed when I joined The Phia Group. Shortly after, what was just another thing I was required to have, turned into something I scrutinized and questioned regularly. This was the first organization I had ever worked for that was transparent about health insurance, and unlike my former employers, they had all the answers to my questions. Naturally, such transparency is certainly indicative with the level of expertise The Phia Group has. As I began to step into the proverbial light, I began to understand why most Americans fail to comprehend the health insurance industry. They don’t understand healthcare and it is by design.

Healthcare and health insurance is structured upon rising costs, with everyone shifting the blame, and as long as Americans put their faith in policies and politicians to solve these issues, then the issues will persist. So how does one change the minds of the American people? Education and a reason to care about their healthcare; education that is objective and unbiased, and a reason beyond what if I get sick. It is up to us as industry leaders to provide this, but how does one do this? You guessed it! Pay them to care! When I found out that at The Phia Group I could get paid cash if I found an error in my bill, or consulted with HR prior to receiving treatment, I soon found myself scanning every bill and questioning every line item. This incentive was proven effective when I had my first child, and elected to go to a better rated and more cost efficient hospital, and was rewarded with free diapers and wipes for a year. This is enough incentive for any person who only cared about the co-pay and deductible before, to now look at the whole bill. 

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/.