THE CHANGING MANAGED CARE LANDSCAPE: AN UPDATE FOR PROVIDERS Zumpano Patricios & Winker, P.A. Joseph I. Zumpano, Esq. Lori C. Desnick, Esq. Martha M. Esperon, Esq. I. Non-Participating Provider Issues 1. Disputes Regarding Charges and Reimbursement Update on Florida Court Cases involving UCR and other payment issues: A. Adventist Health System/ Sunbelt, Inc., a/k/a Florida Hospital v. Blue Cross and Blue Shield of Florida, Inc., and Health Options, Inc., case no. 04-CA-3122 • Plaintiff seeks declaratory judgment with regards to the interpretation of Florida Statute §641.513(5). • Case is currently in the summary judgment stage; where both parties have filed Motions for Partial Summary Judgment, and are awaiting a hearing on said motions. B. Adventist Health System/ Sunbelt, Inc., a/k/a Florida Hospital v. Blue Cross and Blue Shield of Florida, Inc., and Health Options, Inc., case no. 2008-CA-011145-O • Plaintiff seeks damages for violation of §641.513(5), Breach of Third Party Beneficiary Contract, Unjust Enrichment, and Quantum Meruit. • Defendants recently filed a Notice of Removal to federal court claiming that Plaintiff’s claims are preempted by ERISA and the Medicare Act. Update on Florida Court Cases involving UCR and other payment issues: (cont’d) C. North Brevard County Hospital District, d/b/a Parrish Medical Center v. Health Options, Inc., case no. 05-2007-CA-006323 • Plaintiff seeks damages for violation of §641.513(5), Breach of Third Party Beneficiary Contract, Unjust Enrichment, and Quantum Meruit. • In July 2008, the 18th Circuit Court issued Order on Plaintiff’s Motion for Partial Summary Judgment granting Plaintiff’s Motion as to §641.513(5)(a) holding that “provider charges” under section (a) means the amount charged by Plaintiff, provider, for services rendered; and denied Plaintiff’s Motion as to §641.513(5)(b), holding that the trier of fact could consider different factors, including amounts billed and received. Update on Florida Court Cases involving UCR and other payment issues: (cont’d) D. Baker County Medical Services, d/b/a Ed Fraser Memorial Hospital v. Aetna Health Management, LLC and Humana medical Plan, Inc., case no. 02- 2006-CA-0061 • Plaintiff seeks declaratory judgment with regards to the interpretation of Florida Statute §641.513(5). • 8th Circuit Court entered a Final Judgment where it held that §641.513(5) is clear and unambiguous; §641.513(5)(a)meant provider’s full-billed charges; and to determine the interpretation of §641.513(5)(b), the trier of fact could look at different factors including payments received from different types of payors. • Plaintiff appealed; parties currently awaiting oral arguments. Update on Landmark Cases A. Ingenix B. Health Net Settlement C. Davekos Case D. AMA vs. United Ingenix, Inc. A. A health care information company and wholly-owned subsidiary of UnitedHealth Group. B. The Ingenix database is used by large health insurers to determine reimbursement rates for out-of-network providers. C. In February 2008, the New York Attorney General Andrew M. Cuomo announced that it intends to file suit against Ingenix, Inc., its parent UnitedHealth Group, and three UnitedHealth Group subsidiaries. See Cuomo Announces Industry-Wide Investigation into Health Insurers’ Fraudulent Reimbursement Scheme located at www.oag.state.ny.us/media_center/2008/feb/feb13a_08.html. D. Based on its investigation, the Attorney General alleged that two United insurers dramatically under-reimbursed the providers for out-of-network medical expenses by using Ingenix data to compute ―reasonable and customary‖ rates for out-of-network providers that were remarkably lower than the actual cost of typical medical expenses thereby resulting in higher out-of-pocket costs for the members Michael Davekos, P.C. v. Liberty Mut. Ins. Co. 2008 Mass. App. Div. LEXIS 12 (Jan. 24, 2008) A. Michael Davekos, a chiropractor, sued Liberty Mutual Insurance Company to recover personal injury protection payments for medical treatment provided to an individual who sustained injuries in a car accident while riding as a passenger in a car insured by Liberty. B. The issue at trial was whether the amounts Davekos charged for the initial examination and manual therapy services were fair and reasonable. C. Over Davekos’ objection, the trial court allowed Ingenix to admit Ingenix data, summaries and graphs purporting to show the billing patterns in Davekos’ geographical area for initial examinations and manual therapy charges at the time of his treatment of the patient. D. The appellate court vacated judgment for Liberty and remanded for a new trial finding that that the Ingenix data, graphs and summaries were not admissible and that the ―Ingenix raw data itself...lacks the requisite indicia of reliability to be admissible.‖ Health Net Case A. Issue: Health Net’s reimbursement of out-of- network claims submitted by members of point-of- service plans. B. Several class action cases brought against Health Net challenging Health Net’s policies for determining the usual, customary and reasonable charge (UCR) used to calculate the amount of a member’s out-of- network claim that Health Net would reimburse. C. Health Net relied on Ingenix databases. D. Seven Years of litigation. Health Net Settlement A. On July 25, 2008 the U.S. District Court for the District of New Jersey entered an Order approving a settlement. B. Health Net will pay $215 million as follows: • $40 million prove-up fund for Class Members who were balanced billed by their out-of-network providers at a rate lower than the provider’s billed charge. • $160 million cash fund from which all Class Members are entitled to receive a pro rate reimbursement for claims subject to an erroneous out-of-network determination. • $15 million paid to the New Jersey Department of Banking and Insurance to be used in the discretion of that state agency to reimburse members of the New Jersey small employer plan class of member. Health Net Settlement A. Health Net will cease using the Ingenix database for determining UCR charges for out-of-network services or supplies as soon after the effective date of the settlement as possible, except where required by law or approved by regulators, or where specifically requested by a plan sponsor. B. Health Net will cease using the UCR method for determining payments for out- of-network claims. C. The new methodology that Health Net develops to replace the Ingenix database and UCR will be fully disclosed in Health Net’s plans. D. Health Net must implement business practice changes until it can implement its new methodology including, but not limited to, the following: • Determine its reimbursement to out-of-network providers using the current Ingenix database plus 14.5% (up to the billed charge). • Institute a special appeals procedure for those members who still have large outstanding balances even after the 14.5% add-on. • Establish a “cost estimator process” so that members can obtain accurate UCR amounts in advance. • Comply with the terms of its pre-authorizations and advance UCR determinations. • Negotiate with the out-of-network provider in advance of non-emergency surgeries and if Health Net and the out-of-network provider reach a consensual fee arrangement, the subscriber will not be financially liable for any amount over the applicable coinsurance and deductible amounts. AMA v. United Healthcare Corp. 2008 U.S. Dist. LEXIS 67592 (S.D.N.Y. Aug. 22, 2008) A. In the Year 2000, Plaintiffs (members of certain health plans, out-of-network providers, and medical associations) filed a lawsuit against several Defendants including, among others, United Healthcare Insurance Company, United Healthcare Corporation, and Ingenix, Inc., challenging the Defendants’ practices in relation to decisions involving the UCR rates paid by Defendants for out-of-network medical services in connection with certain health care plans. B. On July 10, 2007 the Plaintiffs were permitted to file a fourth amended complaint which asserted additional claims against the United Defendants for antitrust and RICO violations based upon Defendants’ alleged scheme to under-reimburse beneficiaries and medical care providers by manipulating UCR data. C. The Defendants moved to dismiss Plaintiffs’ RICO claims, antitrust claims and ERISA claims (e.g., ERISA claims for unpaid benefits and failure to conduct a ―full and fair‖ review of claim decisions as required by ERISA). D. The Court dismissed Plaintiff’s ERISA claims and some of Plaintiffs’ RICO claims. The Court allowed Plaintiffs’ antitrust claims and certain RICO claims. E. The case is still on-going. 2. Reducing or Waiving Patient Responsibility Reducing or Waiving Patient Responsibility Potentially Applicable Laws A. Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) B. OIG Exclusion Authority Under 42 U.S.C. § 1320a-7b(b)(6)(A) and Federal False Claims Act (31 U.S.C. § 3729) C. Federal Beneficiary Anti-Kickback Statute (42 U.S.C. § 1320a- 7a(a)(5); 42 C.F.R. § 1003.102(b)(13)) D. Florida Anti-Kickback Statutes • Section 456.054, Florida Statutes [Health Care Providers] • Section 458.331(1)(i), Florida Statutes [Medical Practice Act] • Section 459.015(1)(j) [Osteopathic Medicine] • Section 395.0185, Florida Statutes [Hospitals] E. Florida Patient Brokering Act (F.S. § 817.505) Federal Anti-Kickback Statute 42 U.S.C. § 1320a-7b(b) The Federal Anti-Kickback Statute generally prohibits anyone from giving or receiving anything of value in exchange for referrals of business payable by a Federal health care program, such as Medicare or Medicaid. Federal Anti-Kickback Statute Safe Harbors A. Safe Harbor related to Inpatient Hospital Services B. Safe Harbor for reduced cost-sharing amounts offered by health plans Federal Anti-Kickback Statute Inpatient Hospital Services Safe Harbor 42 C.F.R. § 1001.952(k) A hospital may waive coinsurance and deductible amounts for inpatient hospital services for which Medicare pays under the prospective payment system if the hospital meets the following three conditions: • The hospital cannot claim the waived amount as bad dept or otherwise shift the burden to the Medicare or Medicaid programs, other payers, or individuals; • The waiver must be made without regard to the reason for admission, length of stay, or diagnostic related group; and • The waiver may not be part of a price reduction agreement between the hospital and a third-party payor (other than a Medicare SELECT plan). Federal Anti-Kickback Statute Safe Harbor for Reduced Cost-Sharing Amounts Offered by Health Plans 42 C.F.R. § 1001.952(l) The reduction of some or all of an enrollee's obligation to pay the health plan or a contract health care provider for increased coverage, cost-sharing amounts (such as coinsurance, deductible, or copayment amounts), or premium amounts is permissible, as long as the health plan complies with all of the standards applicable to it under the Safe Harbor. • Two categories of health plans under the Safe Harbor: risk-based and cost-based. • Generally, the key is that the same increased coverage, reduced cost-sharing amounts or reduced premium amounts must be offered to all Medicare or State health care program enrollees covered by the contract unless otherwise approved by CMS or by a State health care program. OIG Exclusion Authority 42 U.S.C. § 1320a-7(b)(6)(A) A. This law permits, but does not require, the OIG to exclude from participation in the Federal health care programs any provider or supplier that submits bills or requests for payment to Medicare or Medicaid for amounts that are substantially more than the provider’s or supplier’s usual charges. B. The OIG has stated that: A provider, practitioner or supplier who routinely waives Medicare copayments or deductibles is misstating its actual charge. For example, if a supplier claims that its charge for a piece of equipment is $100, but routinely waives the copayment, the actual charge is $80. Medicare should be paying 80% (or $64), rather than 80 percent of $100 (or $80). As a result of the supplier’s misrepresentation, the Medicare program is paying $16.00 more than it should for this item. See OIG Special Fraud Alert: Routine Waiver of Copayments or Deductibles Under Medicare Part B, 59 Fed. Reg. 65372, 65374 (Dec. 19, 1994). C. The OIG has also stated that, in certain circumstances, the routine waiver of Medicare coinsurance and deductible amounts can implicate the False Claims Act, 31 U.S.C. § 3729. See OIG publication entitled Hospital Discounts Offered to Patients Who Cannot Afford to Pay Their Hospital Bills (Feb. 2, 2004) D. When calculating ―usual charges‖, individuals and entities do not need to consider free or substantially reduced charges to: (i) uninsured patients; or (ii) underinsured patients who are self-paying patients for the items or services furnished. See OIG Addendum to Hospital Discounts to Patients Who Cannot Afford to Pay their Hospital Bills (Feb. 2, 2004). The Federal Beneficiary Anti-Kickback Statute 42 U.S.C. § 1320a-7a(a)(5) A. The Beneficiary Anti-Kickback Statute prohibits a person from offering or transferring remuneration to any individual eligible for benefits under Medicare or a State health care program that the person knows or should know is likely to influence such individual to order or to receive from a particular provider, practitioner or supplier any item or service for which payment may be made, in whole or in part, under Medicare or a State health care program. B. The prohibition against inducements does not apply to uninsured patients so long as the waiver is not linked in any manner to the generation of business payable by a Federal health care program. See OIG publication entitled Hospital Discounts Offered to Patients Who Cannot Afford to Pay Their Hospital Bills (Feb. 2, 2004); The Centers for Medicare and Medicaid Services publication Questions on Charges For the Uninsured (Feb. 17, 2004). C. Any waiver that fits within a safe harbor to the Federal Anti-Kickback Statute is protected from prosecution under the Beneficiary Anti- Kickback Statute (see e.g., the safe harbor for in-patient hospital services on slide #23). 42 U.S.C. § 1320a-7a(i)(6)(B); OIG publication entitled Hospital Discounts Offered to Patients Who Cannot Afford to Pay Their Hospital Bills (Feb. 2, 2004) The Federal Beneficiary Anti-Kickback Statute ―Nominal Value‖ A. Items of ―nominal‖ value are not prohibited by the statute. B. The OIG interprets ―nominal value‖ to be gifts or services (other than cash or cash equivalents) that have a retail value of no more than $10.00 individually, and no more than $50.00 in the aggregate annually per patient. 65 FR 24400, 24407 (final rule April 26, 2000); OIG Special Advisory Bulletin, Offering Gifts and Other Inducements to Beneficiaries (August 2002). The Federal Beneficiary Anti-Kickback Statute Financial Hardship Exception Providers, practitioners and suppliers may forgive a Medicare coinsurance or deductible amount in consideration of a particular patient’s financial hardship so long as: • The waiver is not offered as part of any advertisement or solicitation; • The party offering the waiver does not routinely waive coinsurance or deductible amounts; and • The party waives the coinsurance and deductible amounts after determining in good faith that the individual is in financial need or reasonable collection efforts have failed. 42 U.S.C. § 1320a-7a(i)6)(A); see also OIG Special Fraud Alert: Routine Waiver of Copayments or Deductibles Under Medicare Part B, 59 Fed. Reg. 65372, 65374 (Dec. 19, 1994). ―Financial Need‖ A good faith determination may vary depending on the individual patient’s circumstances and various relevant factors may be considered such as: • The local cost of living. • A patient’s income, assets and expenses. • A patient’s family size. • The scope and extent of a patient’s medical bills. See OIG publication entitled Hospital Discounts Offered to Patients Who Cannot Afford to Pay Their Hospital Bills (Feb. 2, 2004) Florida Statutes The various Florida Statutes prohibiting kickbacks may apply to the reduction and/or waiver of patient cost sharing amounts. Florida Anti-Kickback Statute Section 456.054, Florida Statutes (1) As used in this section, the term "kickback" means a remuneration or payment, by or on behalf of a provider of health care services or items, to any person as an incentive or inducement to refer patients for past or future services or items, when the payment is not tax deductible as an ordinary and necessary expense. (2) It is unlawful for any health care provider or any provider of health care services to offer, pay, solicit, or receive a kickback, directly or indirectly, overtly or covertly, in cash or in kind, for referring or soliciting patients. (3) Violations of this section shall be considered patient brokering and shall be punishable as provided in s. 817.505. Section 458.331(1)(i), Florida Statutes [Medical Practice Act] The following acts constitute grounds for denial of a license or disciplinary action:….Paying or receiving any commission, bonus, kickback, or rebate, or engaging in any split-fee arrangement in any form whatsoever with a physician, organization, agency, or person, either directly or indirectly, for patients referred to providers of health care goods and services, including, but not limited to, hospitals, nursing homes, clinical laboratories, ambulatory surgical centers, or pharmacies. The provisions of this paragraph shall not be construed to prevent a physician from receiving a fee for professional consultation services. Section 459.015(1)(j), Florida Statutes Osteopathic Medicine The following acts constitute grounds for denial of a license or disciplinary action…(j) Paying or receiving any commission, bonus, kickback, or rebate, or engaging in any split-fee arrangement in any form whatsoever with a physician, organization, agency, person, partnership, firm, corporation, or other business entity, for patients referred to providers of health care goods and services, including, but not limited to, hospitals, nursing homes, clinical laboratories, ambulatory surgical centers, or pharmacies. The provisions of this paragraph shall not be construed to prevent an osteopathic physician from receiving a fee for professional consultation services. Section 395.0185, Florida Statutes Hospitals A. It is unlawful for any person to pay or receive any commission, bonus, kickback, or rebate or engage in any split-fee arrangement, in any form whatsoever, with any physician, surgeon, organization, or person, either directly or indirectly, for patients referred to a ―licensed facility.‖ B. "Licensed facility" means a hospital, ambulatory surgical center, or mobile surgical facility licensed in accordance with Chapter 395, Florida Statutes. Florida Patient Brokering Act Section 817.505, Florida Statutes A. It is unlawful for any person, including any health care provider or health care facility, to: • (a) Offer or pay any commission, bonus, rebate, kickback, or bribe, directly or indirectly, in cash or in kind, or engage in any split-fee arrangement, in any form whatsoever, to induce the referral of patients or patronage to or from a health care provider or health care facility; • (b) Solicit or receive any commission, bonus, rebate, kickback, or bribe, directly or indirectly, in cash or in kind, or engage in any split-fee arrangement, in any form whatsoever, in return for referring patients or patronage to or from a health care provider or health care facility; • (c) Solicit or receive any commission, bonus, rebate, kickback, or bribe, directly or indirectly, in cash or in kind, or engage in any split-fee arrangement, in any form whatsoever, in return for the acceptance or acknowledgement of treatment from a health care provider or health care facility; or • (d) Aid, abet, advise, or otherwise participate in the conduct prohibited under paragraph (a), paragraph (b), or paragraph (c). B. Among others, the Florida Patient Broker Act does not apply to: ―Any discount, payment, waiver of payment, or payment practice not prohibited by 42 U.S.C. s. 1320a-7b(b) [the Federal Anti-Kickback Statute] or regulations promulgated thereunder.‖ In Re: Petition for Declaratory Statement Paul J. Befanis, M.D. (Final Order dated August 27, 2007) A. Petitioner, an Ophthalmologist who performs laser vision correction or other elective opthalmological procedures, inquired from the Florida Board of Medicine whether his participation in a marketing program proposed by Modern Solutions would violate Section 458.331(1)(i), Florida Statutes. B. Under the proposed marketing program know as the ―Patient Charity Program‖, Petitioner would give $10.00 to a patient’s favorite 501(c)(3) charity when: • the patient gives his or her friends and family information regarding the patient’s lasik surgery; and/or • the patient refers a potential patient to Petitioner and the referred patient receives lasik surgery. C. The Board of Medicine found that by participating in either aspect of the ―Patient Charity Program‖ the Petitioner would be inducing or creating an incentive for patients to refer others to Petitioner’s practice for the purposes of undergoing laser correction or other opthalmological procedures. D. The Board of Medicine determined that such payments constitute prohibited rebates and/or kickbacks, and therefore, are precluded by Sections 456.054 and 458.331(1)(i), Florida Statutes. II. Balance Billing Balance Billing HMO A. Subsection 641.3155(8), Florida Statutes B. Section 641.3154, Florida Statutes Subsection 641.3155(8), Florida Statutes A provider or any representative of a provider, regardless of whether the provider is under contract with the HMO, may not collect or attempt to collect money from, maintain any action at law against, or report to a credit agency a subscriber for payment of covered services for which the HMO contested or denied the provider's claim. This prohibition applies during the pendency of any claim for payment made by the provider to the HMO for payment of the services or internal dispute resolution process to determine whether the HMO is liable for the services. For a claim, this pendency applies from the date the claim or a portion of the claim is denied to the date of the completion of the HMO’s internal dispute resolution process, not to exceed 60 days. This subsection does not prohibit collection by the provider of copayments, coinsurance, or deductible amounts due the provider. Section 641.3154, Florida Statutes If an HMO is liable for services rendered to a subscriber by a provider, regardless of whether a contract exists between the HMO and the provider, the HMO is liable for payment of fees to the provider and the subscriber is not liable for payment of fees to the provider. Section 641.3154, Florida Statutes A provider or any representative of a provider, regardless of whether the provider is under contract with the HMO, may not collect or attempt to collect money from, maintain any action at law against, or report to a credit agency a subscriber of an HMO for payment of services for which the HMO is liable, if the provider in good faith knows or should know that the HMO is liable. This prohibition applies during the pendency of any claim for payment made by the provider to the HMO for payment of the services and any legal proceedings or dispute resolution process to determine whether the HMO is liable for the services if the provider is informed that such proceedings are taking place. When Can A Provider Balance Bill an HMO Member? A Provider cannot balance bill an HMO member if the Provider knows or should know that the HMO is liable for the services rendered to the member. Section 641.3154, Florida Statutes When is the HMO liable? An HMO is liable for services rendered to an eligible subscriber by a provider if the provider follows the HMO’s authorization procedures and receives authorization for a covered service for an eligible subscriber, unless the provider provided information to the HMO with the willful intention to misinform the HMO. Section 641.3154, Florida Statutes When is the HMO liable? It is presumed that a provider does not know and should not know that an HMO is liable unless: • The provider is informed by the HMO that it accepts liability; • A court of competent jurisdiction determines that the HMO is liable; • The OIR or AHCA makes a final determination that the HMO is required to pay for such services subsequent to a recommendation made by the Subscriber Assistance Panel pursuant to s. 408.7056; or • (d) AHCA issues a final order that the organization is required to pay for such services subsequent to a recommendation made by a resolution organization pursuant to s. 408.7057. A Conservative Approach With Respect to HMO Members A. Do not balance bill if the HMO has authorized the services. B. Do not balance bill if one of the conditions of (a) through (d) of Section 641.3154 is satisfied. Balance Billing Indemnity, PPO, EPO Subsection 627.6131(9), Florida Statutes • A provider or any representative of a provider, regardless of whether the provider is under contract with the health insurer, may not collect or attempt to collect money from, maintain any action at law against, or report to a credit agency an insured for payment of covered services for which the health insurer contested or denied the provider's claim. This prohibition applies during the pendency of any claim for payment made by the provider to the health insurer for payment of the services or internal dispute resolution process to determine whether the health insurer is liable for the services. For a claim, this pendency applies from the date the claim or a portion of the claim is denied to the date of the completion of the health insurer's internal dispute resolution process, not to exceed 60 days. This subsection does not prohibit the collection by the provider of copayments, coinsurance, or deductible amounts due the provider. When Can A Provider Balance Bill a Member of an indemnity insurer, PPO, EPO A. A Provider cannot balance bill a member during the time period prescribed by Subsection 627.6131(9), Florida Statutes. B. After the time period prescribed in the statute has elapsed, the Provider is generally permitted to bill the member for the outstanding balance in accordance with Subsection 627.6131(9). III. ERISA: Providers and their Managed Care Relationships What state laws apply to the provider’s relationship with the managed care payor A. The following state laws may apply: • Marketing Laws • Prompt Pay Laws - In re: Managed Care Litigation, 298 F. Supp. 2d 1259 (S.D. Fla. 2003). • Private Managed Care Contract Cases - Sheridan Healthcorp, Inc., v. Neighborhood Health Partnership, Inc., 459 F. Supp. 2d 1269 (S.D. Fla. 2006); Boca Raton Community Hospital, Inc. v. Great-West Healthcare of Florida, 2008 U.S. Dist. LEXIS 20760 (S.D. Fla. 2008). • Third Party Care Providers’ state law claims - Lordmann Enter. V. Equicor, Inc., 32 F. 3d 1529 (11th Cir. 1994); Rocky Mountain Holdings, Inc. v. BCBS of Florida, Inc., 2008 U.S. Dist. LEXIS 65732 (M.D. Fla. 2008); Variety Children’s Hospital, Inc. v. Applied Benefits Research, Inc., 942 F. Supp. 562 (S.D. Fla. 1996). • Independent State Statutory Rights - Rocky Mountain Holdings, Inc. v. BCBS of Florida, Inc., 2008 U.S. Dist. LEXIS 65732 (M.D. Fla. 2008); Medical and Chirurgical Faculty of the State of Md. v. Aetna U.S. Healthcare, Inc., 221 F. Supp. 2d 618 (D.Md. 2002). B. Impact of assignment • Alleging claims in its independent status as 3rd party provider v. assignee. When a provider alleges claims as an assignee, the defendant may argue that ERISA preempts those claims since the assignment may provide the provider with standing to sue under ERISA. What prompt pay requirements are placed on ERISA plans? A. Relevant ERISA provision: 29 C.F.R. §2560.503-1 B. If a plan is governed by ERISA, to determine which prompt pay requirements apply, two issues should be analyzed: • Case law indicates that state prompt pay laws typically are not preempted by ERISA where a medical provider files a claim in an independent capacity as opposed to as an assignee of the rights of the beneficiary. • The Department of Labor (“DOL”) takes a more aggressive stance stating that if a medical provider files a claim against the insurer, but still has a recourse against the beneficiary for unpaid benefits, then ERISA will remain in place to protect the beneficiary from balance billing. See www.dol.gov/ebsa/faqs/faq _claims_proc_reg.html. Under the DOL’s position, if the medical provider does not have a recourse against the beneficiary, then ERISA would not preempt the medical provider’s state prompt pay claim against the insurer. Id. Thus two issues become important: i. The type of plan, e.g., HMO, PPO, Indemnity; ii. The applicable Balance Billing Law. For example, in Florida balance billing is prohibited when the HMO is liable. Therefore, even under the DOL’s aggressive stance, ERISA should not preempt state prompt pay law under Chapter 641, Florida Statutes. Review of Pertinent Cases Involving ERISA Rocky Mountain Holdings, LLC and CJ Critical Care Transportation Systems of Florida, Inc. v. Blue Cross and Blue Shield of Florida, Inc. and Health Options, Inc., case no. 2008-CA-0006636-O • Defendants attempted to remove based on ERISA and FEHBA. • In August 2008, US District Court (Middle District) granted Plaintiff’s Motion to Remand finding ERISA did not preempt. • The Court found that the claims were brought under Fla. Stat. §641.513(5) which operates independently of the terms of the plan; assignment was irrelevant because it was not relevant to the claims. • The Court further found that this case was not a refusal to pay benefits under an ERISA plan, but rather was a dispute over proper reimbursement under §641.513(5), thus the relief sought was not akin to relief available under 29 USC §1102(a). • Court found for the Plaintiff in its Motion for Remand to state court that Plaintiff lacked standing to sue under ERISA and therefore ERISA did not preempt. Review of Pertinent Cases Involving ERISA (cont’d) Boca Raton Community Hospital, Inc. v. Great-West Healthcare of Florida f/k/a One Health Plan of Florida, Inc., case no. 06-80750-CIV-Hurley • Defendant argues that Plaintiff’s state law claims are preempted by ERISA. • U.S. District Court (Southern District) disagrees holding that state law claims by providers against insurers have too remote an effect on the ERISA plan to be preempted. • The Court further held that Plaintiff’s claims have an indirect effect on the relationship between the ERISA entities. • The Court also stated that because providers are not parties under an ERISA plan, they do not have an independent, direct private right of action under the statutory scheme as an ERISA participant. • Based on these findings, Plaintiff’s claims were not preempted. • Note: the Court reached this decision acknowledging that it was doing so even though Plaintiff asserted a claim as assignee for patients’ benefits. Review of Pertinent Cases Involving ERISA (cont’d) Metropolitan Life Insurance Co. v. Glenn, 128 S. Ct. 2343 (2008) • This case does not discuss the issue of payment or reimbursement. • This case pertains to a denial of benefits. • The real issue was the dual role of one of the parties, the insurer, as: i. Administrator of the plan/ processing of claims ii. Entity making benefit determinations • Because MetLife was both administrator and insurer, (i.e. it determined eligibility of benefits and made payments for a benefit) the actions of the trustee could be subject to higher scrutiny by creating a conflict of interest. The court agreed and subjected MetLife to the highest standard of review, conflict of interest review. IV. Bankruptcies/Acquisitions of New Plans Health Plan Insolvencies: What Happens When Health Plans Get Sick? A. Solvency is the governing principle in business: an organization that does not bring in enough money to meet its obligations is insolvent B. This principal is codified in the Federal Bankruptcy Code and state corporate laws which attempt to balance two competing interests when a company becomes insolvent: • protecting creditors by distributing assets of the debtor; and • protecting the debtor by providing a chance to regain solvency if possible and, if not, to liquidate Federal Bankruptcy Code Exception for Insurance Companies A. Insolvency can cause great hardship to customers. Therefore, the desire to protect consumers outweighs other policy considerations. B. As a result, the Federal Bankruptcy Code provides a limited exception which allows State Insurance Commissioners to handle insurance company insolvency. C. Until lately, few have been concerned with the details of insurer solvency other than insurers, insurance commissioners and their respective advisors. D. However, HMO insolvency is real. (See Florida regulators to take control of MD Medicare Choice, http://orlando.bizjournals.com/orlando/othercities/southflorida/stories/2008/0 9/29/dail 14.html, 9/30/2008 (16,000 members in 23 Florida counties) Addressing the Risk of Insolvency In addressing the risk posed by HMO insolvency, Providers must be fully cognizant of: • laws and regulations governing solvency of HMOs; • available contractual protections; and • HMO fiscal health. Laws and regulations governing insolvent HMOs A. State regulation of HMO solvency takes numerous forms, including required deposits with state regulatory agencies, capitalization requirements, Assistance Programs and Administrative Supervision. B. However, the focus of these regulations is protecting Enrollees rather than Providers. Deposits with the State A. Under Florida law, HMOs are required to deposit funds with the Department of Insurance as a condition of doing business in Florida. Florida Statutes, Section 641.285. B. Further, if the Department determines ―that the financial condition of a health maintenance organization has deteriorated to the point that the policyholders’ or subscribers’ best interest are not being preserved‖ an additional deposit may be required. Liquidation, Rehabilitation, Reorganization and Conservation Florida statutes provide that a delinquency proceeding under the Florida Health Maintenance Organization Consumer Assistance Plan or supervision by the Department pursuant to Sections 624.80-624.87 is the sole means of ―liquidating, reorganizing, rehabilitating or conserving an insolvent HMO.‖ Administrative Supervision under Sections 624.80-624.87 A. If the Department determines that an insurer: • is in unsound condition; • engages in methods or practices which render the continuance of its business hazardous to the public or to its insureds; or • has exceeded its powers granted under its certificate of authority B. it may issue an order placing the insurer in administrative supervision. Administrative Supervision Under administrative supervision, the insurer is required to file a plan to correct the conditions set forth in the notice of administrative supervision and will be granted a specified time period, not to exceed 120 days, to correct all conditions set forth in the notice. If the insurer does not timely file a plan, the Department may specify the requirements of a plan and the insurer may be subject to suspension or revocation. The insurer will be released from administrative supervision upon remedy of the grounds for imposition of such supervision. Broad Powers Include: A. Forcing the insurer to avail itself of ―all reasonably available reinsurance‖ B. Forcing corrective action C. Initiating judicial procedures to place an insurer in conservation, rehabilitation, liquidation, or delinquency proceedings. Prohibited Acts An insurer under administrative supervision may not, without prior permission: • dispose of assets • withdraw funds from bank accounts • lend or invest its funds • transfer its property • incur any debt, obligation or liability • merge or consolidate with another company • enter into any new reinsurance contract • terminate any insurance policy Confidentiality A. All ―orders, notices, correspondence, reports, records , and other information… relating to the supervision of any insurer are confidential.‖ B. Such confidentiality does not apply to receivership proceedings and expires one year after conclusion of the administrative supervision. Florida Health Maintenance Organization Consumer Assistance Plan A. The FLHMOCAP, in accordance with Chapter 631, Florida statutes, is charged with arranging payments for services under subscriber contracts from the date of insolvency for up to six additional months. B. In addition, the FLHMOCAP works with the Florida Department of Financial Services to help former subscribers of the insolvent HMO find health care coverage on an ongoing basis. C. Florida law provides FLHMOCAP with very broad powers: • Guarantee, reinsure, assume, or provide coverage for subscriber contracts of the insolvent HMO; • Cover all services that would have been covered by the subscribers' contracts with the insolvent HMO; • Defend any claim filed contrary to balance billing provisions against a subscriber of an insolvent HMO asserted by a health care provider for services covered by the HMO contract; • Levy and collect assessments from HMOs. Other Florida Laws Affecting Insolvent HMOs A. Florida laws contain a number of additional provisions that can work against a Provider in an insolvency situation. B. HMO members are not liable to any provider of health care services for any services covered by the HMO, even in the event of insolvency. C. Additionally, health care providers and their representatives are prohibited from attempting to collect payment from the HMO members for such services. See §§ 641.3154 and 641.3155(9), Florida Statutes; 42 C.F.R. §422.504(g); Section XIII.E. Member Payment Liability Protection of the form Medicaid Prepaid Health Plan Model Contract located at http:// www.fdhc.state.fl.us/MCHQ/Managed_Health _ Care/MHMO/med_prov.shtml Medicaid HMO Contracts Under the Medicaid HMO’s contract with AHCA, the HMO cannot hold members liable for the following: • For debts of the Health Plan, in the event of the HMO’s insolvency. • For payment of Covered Services provided by the HMO if the HMO has not received payment from AHCA for the Covered Services, or if the provider, under contract or other arrangement with the HMO, fails to receive payment from AHCA or the HMO. See Section XIII.E. Member Payment Liability Protection of the form Medicaid Prepaid Health Plan Model Contract located at http:// www.fdhc.state.fl.us/MCHQ/Managed_Health_ Care/MHMO/med_prov.shtml Medicare HMOs A. Medicare HMO Provider Agreements must contain hold harmless and continuation of care provisions. B. Specifically Medicare HMOs must: C. Ensure that all contractual or other written arrangements with providers prohibit the organization's providers from holding any beneficiary enrollee liable for payment of any such fees; and D. Provide for continuation of enrollee health care benefits-- • For all enrollees, for the duration of the contract period for which CMS payments have been made; and • For enrollees who are hospitalized on the date its contract with CMS terminates, or, in the event of an insolvency, through discharge. See 42 C.F.R. 422.504(g). Available Contractual Protections A. A systematic approach to contracting can provide an opportunity to address the risk of loss in case of insolvency. B. Particularly in light of statutory requirements that limit the contractual protections available. C. Security Deposits and/or Letters of Credit can be an effective method in addressing insolvency risk. Security Deposit A. A Security Deposit, a security account is established for an amount based on the estimated value of the claims to be made by the provider to the HMO during a certain period of time. B. It is important that the contractual provision provide for periodic recalculation during the term of the contract to ensure that the deposit is sufficient to cover the claims likely to be incurred during the designated period. C. If the Provider is forced to terminate the agreement because of unpaid claims, the contractual provision should allow the provider to access these funds. Letter of Credit A. The LOC should be irrevocable and should not expire without reasonable notice from the issuer. B. The LOC should also be ―clean‖: a demand for payment should be all that is required for access to the funds by the Provider. C. The LOC should also be unconditional and not contingent on the bank’s successful placement of a lien or security interest on the assets of the HMO. Notice Provisions and Access to Financial Information A. A strong notice provision could be negotiated which allows the Provider to receive all information necessary for it to make prudent decisions regarding its relationship with the HMO. For example, a notice provision could be crafted to provide notice well in advance of any insolvency. B. Another method of minimizing the risk of insolvency is to allow the Provider access to financial information that allows the Provider to assess the financial health of the HMO. Assessing the Financial Health of HMOs A. Providers should learn as much as they can about the HMO, particularly its financial history, stability and membership retention rates. This information is available for publicly traded companies in the form of audited financials and securities filings. B. Many other sources of information are available for both publicly traded and privately held HMOs, including: • regulatory filings, including financial reports and licensing applications; and • Industry reports such as www.weissratings.com (which as of 10/11/08 does not grade any Florida HMOs as A+ (the organization’s highest rating) but lists three Florida HMOs on its Weakest HMO List. Provider Goal: Ensuring Choice of Contract Pursuant to Merger or Acquisition A. The Provider should insert a clause that: • Enables the Provider to choose which Provider Agreement they will be reimbursed under; or • Enables the Provider to maintain both contracts in place independently, under circumstances where appropriate B. Sample language: See example clause one under tab IV.6 in Binder. V. Capitation/Shifting of Risk What Florida laws govern a health plan passing risk to a provider? A. Some Florida history. B. Fiscal Intermediary Services Organizations (FISO) (F.S. § 641.316) • A FISO is a person or entity that performs fiduciary or fiscal intermediary services to health care professionals who contract with HMOs other than a hospital, a licensed insurer, a TPA, a prepaid limited health service organization, an HMO, or a physician group practice as defined under the Florida Patient Self-Referral Act of 1992. • Must be registered with the OIR. C. Third Party Administrators (TPA) (F.S. §§ 626.88- 626.894) • A TPA: “solicits or effects coverage of, collects charges or premiums from, or adjusts or settles claims on residents of the [State of Florida]…” F.S. § 626.88. • Must obtain a Certificate of Authority from the OIR. What Federal laws govern a health plan passing risk to a provider through the payment of capitation? A. Medicare Advantage Program • The Medicare Advantage Organization (“MAO”) assumes full financial risk on a prospective basis for the provision of health care services. (42 CFR §§ 1395w-25(b)). • The MAO may make such arrangements with physicians or other health care professionals, health care institutions, or any combination of such individuals or institutions to assume all or part of the financial risk on a prospective basis for the provision of basis health services by the physicians or other health professionals or through the institutions. (42 CFR §§ 1395w-25(b)(4)). VI. Third Party Payor Access to the Managed Care Contract Provider Goal: Prohibiting Undisclosed Agreements with Preferred Provider Organizations (―PPOs‖) – ―Silent PPOs‖ A. The Provider should insert language into the Agreement that: • Specifically prohibits the use of Silent PPOs; • Grants the Provider the ability to audit any third parties accessing the Provider’s services under the Agreement; • Prohibits the disclosure of its rates to third parties not specifically authorized to access the rates pursuant to the Agreement; and • Allows for a reduction or negation in the discount for agreeing to allow certain PPOs to access the Provider’s reimbursement rates. B. Sample language: See example clause two under tab VI.1 in Binder. Provider Goal: Prohibiting Payor ―Shopping‖ for the Lowest Rate of Reimbursement – ―PPO Stacking‖ A. The Provider should insert a clause into the Agreement that: • Provides that in cases where the Provider is a member of a PPO that is not a party to the agreement, the greater of the agreement rate with the Payor or the PPO rate will apply; and • Permits the Provider to audit reimbursement rates for PPO Stacking. B. Sample language: See example clause three under tab VI.2 in Binder. New Law On Leasing, Renting or Granting Access to a Participating Provider Section 627.64731, Florida Statutes A. Generally, the law provides that a contracting entity may not sell, lease, rent, or otherwise grant access to the health care services of a participating provider under a health care contract unless expressly authorized by the health care contract. The health care contract must specifically provide that it applies to network rental arrangements and state that one purpose of the contract is selling, renting, or giving the contracting entity rights to services of the participating provider, including other preferred provider organizations. At the time a health care contract is entered into with a participating provider, the contracting entity shall, to the extent possible, identify any third party to which the contracting entity has granted access to the health care services of the participating provider. B. ―Participating provider‖ means a physician licensed under chapter 458 (medical doctor), chapter 459 (osteopathic physician), chapter 460 (chiropractic medicine), chapter 461 (podiatric medicine), chapter 466 (dentist), or a physician group practice that has a health care contract with a contracting entity and is entitled to reimbursement for health care services rendered to an enrollee under the health care contract and includes both preferred providers as defined in Section 627.6471 and exclusive providers as defined in 627.6472. It does not include a hospital. C. The new law applies to claims payments made on or after November 1, 2008. VII. Limited Benefit Plans (such as Cover Florida) Limited Benefit Plans A. Limited Benefit Plans reduce premiums by providing ―limited benefits‖- enrollee responsible for all noncovered services. B. Limited Benefit Plans often have high deductibles or other cost-sharing charges in an effort to reduce premiums and are aimed at the growing number of uninsured. C. Florida currently has approximately 3.7 million uninsured residents — 24 percent of all residents under age 65, with almost two-thirds of those lacking health coverage at incomes below 200 percent of the poverty line. (See Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on U.S. Census Bureau data). Protecting the Provider A. Most providers have limited experience dealing with Limited Benefit Plans and their enrollees. B. When dealing with Limited Benefit Plans, information is the key. C. It is imperative that the Provider educate itself and its personnel concerning covered services and preapproval protocols. D. The key to these plans is what is covered and what is not covered. E. Communication with patients concerning their coverage and their individual financial obligations is critical. F. Often, enrollees will only hear what they want to hear about what is covered. G. As a result, it is critical to communicate effectively and then document what has been communicated. Other Contractual Protections A. Attempt to negotiate: • Letter of credit/deposit • Notice provision and audit rights Cover Florida A. Cover Florida was signed into law by Governor Crist on May 21, 2008. B. Insurers that participate in Cover Florida must offer a choice of at least two different plans. Some plans may not cover hospital or emergency room care, although insurers must offer one option that does include at least some coverage for these services. C. Insurers can keep costs down by putting limits on the number of services they offer and capping the amount they pay for benefits. D. While insurers cannot turn people away based on their health status or financial status, they can exclude coverage for pre-existing conditions. (importantly, no maximum time period for exclusion of coverage for pre-existing conditions is specified). E. Policies will be available to people between the ages of 19 and 64 who have been uninsured for at least six months. Balance Billing and Direct Contracting A. Unclear whether there will be any limitations on Providers contracting directly with patients for noncovered services and/or billing patients directly for uncovered portions of services. B. Regulators have indicated that details regarding such issues may be examined as part of the implementation process of accepting plans proposed by insurers. The Health Flex Experience A. Health Flex was an earlier Limited Benefit Plan which has had very low take-up rate. B. Six years after establishment of the program, insurers are currently offering only five Health Flex plans, and the plans are available in just three of Florida’s 67 counties. According to Health Flex’s 2007 annual report, a total of 2,280 people were enrolled in the five plans at the end of the year; all but 50 of them were in three plans that individual government entities are subsidizing, and one of those subsidized plans is shutting down because the city has withdrawn its funding. See Health Flex Plan Program: Annual Report, Agency for Health Care Administration, January 2008. VIII. Other Can the obligations set forth in Florida Statutes § 641.3155 (Prompt Payment Statute), be modified by agreement of the parties? No. § 641.3155(9), Fla. Stat., provides that: • The provisions of this section may not be waived, voided, or nullified by contract. Amendment 7 and Payor Requests A. Under Amendment 7 and Supreme Court case law: ―patient‖ access to medical staff peer review information. B. Definition of ―patient‖ – former, current and future. C. What about a power of attorney from patients to the health plan?
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