JosephZumpano by 67P19u

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									    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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