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Phia Group Media

Don’t Confuse Appeals with Balance-Billing!

By: Jon Jablon, Esq.

If you draft, administer, or otherwise manage self-funded health plans, you are likely very familiar with the appeals submission timeframe requirements within the SPD. The relevant regulations prescribe certain timeframes within which a health plan must allow an appeal, and a health plan is certainly free to allow longer periods of time, but abiding by the legal minimums tends to be the common practice.

That’s all well and good, and relatively simple to administer, but they tend to fall flat when applied to balance-billing. Let me explain:

I received an email the other day from a very angry medical provider with whom I had been attempting to resolve a balance-billing scenario, in which the attorney explained that the TPA said to him (and I quote): “On page 83 the plan document says that all payment appeals must be submitted within twelve months of the date of the adverse benefit determination. You have billed the patient seventeen months following the determination. Therefore you are prohibited from billing the patient for the balance.”

A provider’s appeal is to the Plan itself, saying, essentially, “you have underpaid this claim,” whereas balance-billing is to the member, saying “you are responsible for the balance that your health plan has not paid.” While it is certainly possible for a provider to simultaneously appeal to the Plan and balance-bill the member, they constitute two very different demands, and only one – the appeal to the Plan – falls under the purview and limitations of the Plan Document.

I want to do my part to dispel the popular misconception that balance-billing can be eradicated with the right plan language in place. Balance-billing, by definition, is outside the terms of the Plan, and therefore nothing written in the Plan Document can change a provider’s rights. The Plan Document’s terms can and should be used as arguments against balance-billing, of course, and the Plan needs strong language to defend itself – but even the strongest Plan Document language cannot legally prohibit a provider from balance-billing.

Feel free to contact, and we’ll do our best to answer all your appeal and balance-billing questions!

The Reference Based Pricing Stew

By: Jon Jablon, Esq.

Reference-based pricing (or RBP) tends to be one of those things that there’s little ambivalence about; in general, if you are acquainted with reference-based pricing, you either love it or hate it. And, like so many hot topics, some of the intricacies are not quite clear. That’s partially due to the sheer complexity of the industry and reference-based pricing in general, but also partially due to the competing sales efforts floating around. Since the RBP stew has so many ingredients, like any stew recipe, there are tons of different ideas of what makes a good stew – but that also means it’s fairly easy to cook a bland one.

Some have historically advocated sticking to your guns and never settling at more than what the SPD provides. This is a mentality that has largely dissipated from the industry, but some still hold it dear, and many plan sponsors and their brokers adopt reference-based pricing programs with the expectation that all payments can be limited to a set percentage of Medicare with no provider pushback. That can best be described as the desire to have one’s stew and eat it too; in practice, it’s not possible for the Plan to pay significantly less than billed charges while simultaneously ensuring that members have access to quality health care with no balance-billing. The law just doesn’t provide any way to do that.

Plans adopting reference-based pricing programs should be urged to realize that although it can add a great deal of value, reference-based pricing also necessarily entails either a certain amount of member disruption, or increased payments to providers or vendors that indemnify patients or otherwise guarantee a lack of disruption. It is not wise, though, to expect that members will never be balance-billed, and that the Plan will be able to decide its own payment but not have to settle claims. Provider pushback can be managed by the right program, but unless someone is paying to settle claims, there is no way to avoid noise altogether and keep patients from collections and court.

Based on all this, it has been our experience that reference-based pricing works best when there are contracts in place with certain facilities. Steering members to contracted facilities provides the best value and avoids balance-billing; when a provider is willing to accept reasonable rates, giving that provider steerage can be enormously beneficial to the Plan. Creating a narrow network of providers gives the Plan options to incentivize members, and gives members a proactive way to avoid balance-billing.

There are of course other ingredients that need to go into the RBP stew – but having the right attitude is incredibly important, and knowing what to expect is vital. Expectations are the base of the stew; you can add all the carrots (member education?) and potatoes (ID card and EOB language?) you want – but if the base is wrong, then the stew can’t be perfect.

Magical Words in Claim Negotiation: “Please Send Claim Back for Processing”
I negotiate healthcare claims and I have been doing this off and on for nearly 15 years, so I have learned a few things along the way.  Lately, I am picking up on an uptick of a trend with providers and particularly with their third-party billers. Here’s the shtick:  The provider or rep advises of a low discount requirement (this is nothing new), but if you don’t accept that rate, they shut down and politely tell you to “please send claim back for processing.”  What is that all about?

I am a negotiator and I have been hired to present objective third-party data (and we have gobs of it) about the reasonable value of healthcare services to compel another party to willingly settle a claim with a signed agreement.  My raison d’etre is to minimize reimbursement and help health plans contain costs. In contrast, a third party biller’s job is to maximize revenue and cash flow – so they either believe that a settlement will accomplish their goals, or they don’t.  

When a provider representative tells you to send the claim back, they know the insurer has to pay the benefits outlined in the health plan, and so they are basically saying… “nice data, superior parsing of code edits, impressive legal argumentation, very persuasive, but I don’t think the plan has the language to support that level of reimbursement or that they will even apply the limits if they do exist…I think will likely get more money if the payer processes their payment, so please send claim back for processing.”  And you know what?  On average, and sadly, they are absolutely right.   

So what to do?  Two things: 1) make sure your plan language gives you the ability to pay a reasonable referenced-based price (RBP) for out-of-network (OON) services, and 2) if facing an “unreasonable” provider or one that basically says “buzz off” … you need to pay your RBP rate.  In a world where one party can just say flat-out no to settlement, and get paid more money, why would they ever say yes?  Your negotiation is only as good as your end-game.  

Believe you me, if you selectively enforce your RBP end-game (when it makes sense, and allowed by the Plan) you will find that seemingly abusive providers will be more malleable for settlement on your next claim.  As for balance-billing, you will experience it more rarely than you might expect.  Most providers follow the trend of high billing (since “everyone else is doing it…”) to maximize payments from payers but rarely intend to squeeze hapless patients directly.  If they do want to go down this route, there are ways to enforce the consumers’ rights and get the “balance” (that no one ever actually pays) absolved.  

At Phia, we try to have a meaningful meeting of minds to try and come to mutually acceptable agreements with providers, and we work with our clients to help guide them through the often nonsensical world of claim settlement.  Understandably, however, many of our clients have simply given up with even trying to engage in settlement, and they are moving directly to RBP on OON claims, dealing with the levels of balance-billing which can be managed appropriately (with our assistance).  In light of this change, maybe we will see providers start saying “please send back for negotiation.”  

Full Billed Charges: A Question of Geography
By: Jon Jablon, Esq.

It is increasingly common within the self-funded industry for medical providers to demand full billed charges for non-contracted claims. As we know, no one is actually required to pay full billed charges – but when push comes to shove, that tends to be the prevailing demand.

What about when the plan document limits payment at a percentage of Medicare? Say, 150%? The fiduciary has a duty to strictly abide by the terms of the plan document when making payments – and the definition of a non-contracted claim is that there is no contract to provide services at an agreed-upon price. Interestingly, though, and perhaps rendering it a misnomer, a non-contracted claim is still subject to two distinct contracts – an assignment of benefits, and the all-important plan document.

The plan document, of course, defines the Plan’s payment mechanisms and explains beneficiaries’ rights. When the plan document says that the Plan will pay $X, and the Plan does pay $X, the Plan has followed the terms of the plan document to a T. Or to an X, anyway. Let’s boil that down as simply as possible: X = X. What could be simpler than that?

Next, the assignment of benefits is an agreement between the patient and the provider. The patient says “I will transfer you all health plan benefits due to me ($X), and I promise that if $X does not compensate you fully, I will pay whatever balance you think makes sense.” In return, the medical provider promises to provide valuable medical services. We at The Phia Group have discussed the concept of assignments of benefits ad nauseum, and for good reason; this is the mechanism by which medical providers become beneficiaries of Plan benefits, and are due $X from the Plan.

Question: does an assignment of benefits give providers the right to receive full billed charges from the Plan, even though the Plan limits its benefits to an amount less than billed charges? There are a lot of moving parts in the self-funded industry, and this is yet another; the answer you may not have expected is maybe: it depends on the Plan’s geography.

Is the Plan domiciled in Fantasyland, home of laughable arguments, unexplainable oddities, and absurd logic? Then yes – billed charges will be due on every non-contracted claim, regardless of plan document language.

Or, is the Plan domiciled in Realityville, where general legal and market principles do exist, words have actual meaning, and hospitals and attorneys can be expected to be at least reasonably informed? If that’s where the Plan is, then no – of course an assignment of benefits doesn’t guarantee payment of full billed charges.

What are you, nuts?

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.


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.”


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.

Ensuring Cost Containment Success - Member Outreach & Support
Ensuring Cost Containment Success - Member Outreach & Support

On July 31st at 1 PM EST, The Phia Group’s CEO – Attorney Adam V. Russo – and The Phia Group’s Sr. VP and General Counsel – Attorney Ron E. Peck – will address one of the most pressing issues facing our industry today – balance billing.  In particular, they will discuss what benefit plan administrators can do to assist their participants and push back against this problem.
To maintain benefit program viability, employers are cracking down on excessive spending through auditing and implementing new methodologies, such as cost based reimbursement and Medicare pricing, in addition to traditional network policies.  In this new environment, participants will be thrust into the fray like never before; exposed to the threat of balance billing.

Topics that will be discussed include, but are not limited to –

•           When strict enforcement of the plan terms and preventing balance billing may not be harmonious goals

•           Undertaking efforts on behalf of benefit plans to resolve disputes with providers so that participants benefit as well, compared to “patient advocacy”

•           Providing support to participants facing balance billing by explaining why the payments were capped, describing the appeals process in detail, and providing arguments they can raise against the provider

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