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Overpayment Success Story: Dialysis Claim
By: Michael Branco

A dialysis claim was adjudicated at the regular out-of-network rate instead of the dialysis carve-out rate of 130% of Medicare. After unsuccessful attempts to recover the overpayment, the TPA, with expectations dashed, asked The Phia Group to attempt to make an attempt at recovery. After four months of arguing, back-and-forth correspondence, and what seemed like an endless amount of repetition, the provider finally agreed to refund the $137,500 overpayment based on the language in the plan document.

The Big Elephant in the Room….
By: Michael Branco

From day one, over 16 years ago, we have offered overpayment recovery services, but over the last year, I have seen the largest growth in this service. It’s not enough to simply make a call or send a letter, and it’s okay to have that uncomfortable conversation with your client on why an overpayment occurred.  Ignoring the issue is no longer an option.

Recoupment or Embezzlement? Cross-plan Offsets in the Crosshairs
By Andrew Silverio

When a self funded employee benefit plan, or indeed any payer of health benefits, overpays a benefit claim to a medical provider, it is often a tall task to later secure refunds.  This is especially true when the payment, even if clearly an “overpayment” pursuant to the terms of the plan document or policy, is still less than the amount of the provider’s billed charges.  From the provider’s prospective, they have received less than the amount of their bill, and from the payer’s perspective, the beneficiary and/or provider have been paid more in benefits than they are entitled to.  It is no surprise, then, that payers have developed various methods to facilitate overpayment recoveries beyond simply asking for refunds.  One of the most common such methods is “offsetting”, reducing the amount of future benefit claims to “cancel out” a previous overpayment.


The practice of offsetting claims as a method of overpayment recovery has been the subject of much conflict, and more than handful of lawsuits in the past months and years, and the practice does indeed appear more objectionable the farther removed the claims being offset are from the original overpayment.  For example, reducing a later benefit claim from the same plan participant for treatment at the same facility may seem perfectly reasonable.  However, reducing a benefit claim from another, unrelated participant may seem unjust, as the plan participant whose benefit payments are being reduced will be subject to additional exposure from the provider, despite having no connection to the original overpayment.

A major step beyond this practice of cross-participant offset is the primary conduct in question in Red oak Hospital, LLC v. AT&T Inc., AT&T Savings and Security Plan, and Larry Ruzicka, case 4:16-cv-01542 (S.Dist. TX, June 01, 2016).  In this case, it is alleged that United HealthCare, acting as claims administrator for AT&T’s self funded benefit plan under an ASO arrangement, violated ERISA by recouping claims overpaid by the plan from future claims submitted to a different payer, even, as is alleged, a fully-insured plan insured by United.  If true, this would mean that self-funded plan assets are essentially being converted into United HealthCare assets under the guise of overpayment recoupment. The Plaintiff’s complaint goes so far as to describe the practice as:

. . . an elaborate scheme to abstract, withhold, embezzle and convert self-insured Plan Assets that were approved and allegedly paid to Plaintiff for Plaintiff’s claim, to purportedly, but impermissibly, satisfy a falsely alleged ‘overpayment’ for another stranger claim, especially when the stranger is a plan beneficiary of a fully-insured plan that is insured by the Plan’s co-fiduciary, United Healthcare . . . Defendants knew or should have known . . . that converting the Plan Assets by a fiduciary or co-fiduciary of the Plan, in this case United, to the use of another and ultimately its own use, to pay to its own account is absolutely prohibited under ERISA statutes.

The complaint continues:

Defendants and United continued to conceal this kind of unlawful embezzlement and conversion of Plan Assets, camouflaged as overpayment recoupment or offset, even after becoming fully aware of   this self-dealing and embezzlement through investigation by the Department of Labor and repeated appeals, notices, and alerts from Plaintiff.  Defendants failed to remedy the verified embezzlement even after investigation by the Department of Labor and at least three (3) levels of administrative appeals, notices, and alerts by Plaintiff.

This complaint is not the first against UnitedHealth, and similar complaints have been filed against other large carriers acting as ASO claim administrators in the self-funded realm, such as Cigna. Interestingly, United HealthCare, the alleged perpetrator of the conduct in question, is not a party to the action.  The benefit plan itself, AT&T (as Plan Sponsor), and the plan’s individual Plan Administrator are collectively named as Defendants.  Employers and advocates of self funding everywhere should be cognizant of this fact – as plan fiduciaries, any of these parties can be found liable, and there is no better reason to seek out trustworthy and transparent partners.

Overpayment Recovery Services Suite | The Phia Group

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.


Are Overpayments Over?
Ron E. Peck, Esq.

Illinois Federal Court Issues a Troubling Decision Declaring Overpayment Recoupment to be Identical to Claim Denials; Requiring ERISA Compliant Notification of Adverse Benefit Determination, and Rights of Appeal for the Provider.

Any and all entities involved in the payment of claims must become familiar with the case of Pa. Chiropractic Ass’n v. Blue Cross Blue Shield Ass’n, No. 09 C 519, 2014 WL 1276585 (N.D. Ill. Mar. 28, 2014), and its impact on the pursuit of overpayment refunds!

Below we provide a brief summary of the case and its impact on our valued clients. Upon reviewing the facts, you’ll likely agree with us that a detailed approach to overpayment refunds is needed.

Fortunately for our overpayment clients, The Phia Group’s dedicated team of attorneys, paralegals, and overpayment specialists not only assist their clients in pursuing reimbursement of overpaid amounts, they also provide correspondence for use in that pursuit, which adequately describe the reason for the overpayment, identifies applicable plan document provisions, and opens a dialogue with the provider enabling them to respond and request further review.

What’s the Case About?

Do providers have rights under ERISA to file suit?

Determining whether providers are “beneficiaries” under an ERISA plan, the court interpreted “benefit” to include a provider’s rights to receive payment. The court also found that if the plan sets up a payment scheme by which they pay the provider directly, other “anti-assignment” language will not eliminate the provider’s beneficiary status.

Do providers suffer an adverse benefit determination within the meaning of ERISA when the payer recoups overpayments?

The court stated that the payer’s “… practice of withholding or reducing payments to a provider when it determines that a previous payment was made incorrectly” … “falls within the applicable regulation’s definition of an adverse benefit determination.” This decision was made in response to payer practices of pulling back overpaid claims electronically (when possible) and/or offsetting overpaid amounts by denying future claims submitted by the same provider (regardless of the patient’s identity).

We question whether the characterization of “adverse benefit determination” is tethered more to the determination that an overpayment occurred, or, the later claims denied as an offset. It is also not entirely clear whether recovery of a payment made by pure technical error (computer glitch or math error), rather than because of a coverage determination, would constitute an adverse benefit determination if the funds could be recouped in some way which does not impact unrelated benefit payments.

Regardless, this decision means payers seeking to recoup overpayments must initiate a process more akin to denying a claim, complete with notification and an appeals procedure.

The Takeaway:
This case does not deal a death blow to any and all efforts to identify erroneously paid claims and recoup these overpaid amounts. It does however, suggest that for any recoupment effort which constitutes an actual “adverse benefit determination” (with the term “benefit” now clearly including payments – even overpayments – made by plans directly to providers), a meaningful notice and appeal process must be set up.

Recouping amounts which were paid due to pure error rather than eligibility or benefits related considerations may not fall within the strictest literal reading of the language of this case, but it seems likely that a later court may interpret the holding to have contemplated the inclusion of such action – applying the term “adverse benefit determination” and all that entails under ERISA, to all overpayments – regardless of cause!

Thus, the safest course, after establishing proper notice and review policies for overpayment determinations, would be to utilize collection methods which do not affect future benefit payments. With this in mind, and in light of this recent ruling and its potential to spread (impacting other venues and jurisdictions), The Phia Group will continue to guide its clients regarding proper procedures for adverse benefit determinations, handling overpayment recoupment efforts, and compliance with applicable law.

To learn more about this case and The Phia Group, please contact me at:

Ron E. Peck, Esq.
The Phia Group, LLC
163 Bay State Dr.
Braintree, MA 02184
rpeck@phiagroup.com
781-535-5617