Unpacking a $1M Claim: PACE Clarifies Reimbursement in Complex Stop Loss Case

A Plan Sponsor of a self-funded plan was billed over $1,000,000 for a newborn baby and care rendered by an in-network hospital provider (Provider). The claim charges resulted in the member exceeding the specific deductible; the Third-Party Administrator (TPA) subsequently filed for appropriate reimbursement from the Plan Sponsor’s stop-loss carrier. The carrier, however, utilized an external third-party auditor who determined that the reimbursable charges were limited to $600,000 based on their interpretation of an allowable percentage of Medicare rates.

 

The Provider appealed for that fee reduction determination, citing the absence of any relevant contract language supporting third-party audit or unilateral repricing for pre-negotiated, in-network contracted rates. The TPA upheld its original adjudication of the claim costs based on its own review of the Plan Document and Summary Plan Description language and stop-loss policy provisions. The Provider submitted a second level appeal which was subsequently referred to PACE for an independent, objective review.

 

Upon careful consideration of all the facts and governing contract/plan provisions, PACE determined that the Provider’s network agreement did not, in fact, stipulate the stop-loss carrier could reduce the allowable amount based on its own audit of the claim. The PACE decision determined that the correct allowable amount (after considering the negotiated network discount) was $720,000—which the stop-loss carrier agreed to and promptly reimbursed.

 

By partnering with The Phia Group and utilizing the independent PACE review, the Plan Sponsor recovered an additional $120,000 and prevented further legal action via an Independent Review Organization (IRO) or court of law.