Reply for the Denial of Medical Insurance Claims

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					           Halting Overpayment Recovery Efforts!
Have you ever appealed an overpayment and requested recouped monies be reissued in
seven (7) days or legal action, only to have the plan respond by saying, they have a
“PROCESS” in which they will issue a written determination in forty five (45) days?

Overpayment recoupment and refund request disputes are extremely popular today for
both health-care providers and health-care plan payers as well as TPA or benefits
recovery industry.

There has been a great deal of confusion as to what Law and regulation are the governing
standards to comply or to follow, in the course of overpayment recoupment and in
response to an overpayment refund request in the managed care market. More
dangerously, due to the lack of understanding and guidance from any authorities at the
federal and state levels, health-care providers simply ignore such requests from the
payers of health-care plans and their recovery agents.

As a result, most insurance companies, health-care plan payers and managed care TPA's
simply withhold or deduct such "overpayment" from subsequent benefit
reimbursements, asserting that overpayment is non-disputed and that the provider
PPO/HMO agreement provision has authorized the withholding of such non-disputed
overpayment.

Some providers refuse to refund genuine overpayment, duplicate payment and
reimbursement that the claimant is legally ineligible for, arguing that insurance
companies have failed to reimburse other legitimate claims for the amount that is more
than the overpayment requested from the insurance company.

Others providers across the nation are refusing to refund legitimate "overpayment" by
arguing that they are the "innocent third parties" even for legitimate "overpayment" and
ignoring to challenge, by appealing, the alleged overpayment that may have been
incorrectly claimed by the plan as it might be retrospective claim denial but
overpayment, which may foreclose any appeal rights the claimant or provider may have
to these "denial-overpayment-no-appeal-then-overpayment" claims.

At an increasingly alarming rate, TPA's or plans simply claim any retrospective claim
denials as overpayments and demand from providers for unconditional refund or make
recoupment from future claim payment deductions without affording appeal process as
provided by applicable federal or state laws.

This practice illustrates the failed “process” with many plans today. Recently, I spoke
with an Attorney for PacifiCare who tried to insist that our client (a large hospital chain)
had failed to exhaust the “process” for provider dispute resolution after a claim was not
paid by a contracted entity (cap hospital).
This is a common problem for many providers. Health plans refusing to pay for covered
and/or authorized/verified services that were the responsibility of the medical group,
IPA or contracted entity. Quick note, in addition to Health and Safety Code 1371 and
1371.37(g) which hold health plans ultimately liable for the prompt processing and
payment of claims, H&S Section 1349 states:

       It is unlawful for any person to engage in business as a plan in this
       state or to receive advance or periodic consideration in
       connection with a plan from or on behalf of persons in
       this state unless such person has first secured from the
       director a license, then in effect, as a plan or unless such person
       is exempted by the provisions of Section 1343 or a rule adopted
       thereunder. A person licensed pursuant to this chapter need not
       be licensed pursuant to the Insurance Code to operate a health
       care service plan or specialized health care service plan unless the
       plan is operated by an insurer, in which case the insurer shall also
       be licensed by the Insurance Commissioner.

Contracted entities are licensed Knox Keene Plans, yet to the extent that they receive
capitation payments for providing or arranging for the provision of health care services
to subscribers or enrollees of health care service plans, they are fully within the
definition of ‘health care service plans’ under Health & Safety Code §1345(f), and
therefore, required to be licensed under the Knox-Keene Act, which under their current
capitation agreement with health plans is not possible.

In other words, regardless of any waivers or extensions in provider contracts, payers
remain liable to reimburse providers for uncontested claims within the statutory period.
Civil Code §3513 unequivocally precludes contractual waiver of statutory provisions
designed to benefit the public, such as Health & Safety Code §1371.

Furthermore, 28 CCR § 1300.71 adds:

(e)    Contracts for Claims Payment.
       A plan may contract with a claims processing organization for
       ministerial claims processing services or contract with
       capitated providers that pay claims, (“plan’s capitated
       provider”) subject to the following conditions:
       (1)     The plan’s contract with a claims processing organization or a
       capitated provider shall obligate the claims processing organization or the
       capitated provider to accept and adjudicate claims for health care services
       provided to plan enrollees in accordance with the provisions of sections
       1371, 1371.1, 1371.2, 1371.22, 1371.35, 1371.36, 1371.37, 1371.38, 1371.4, and
       1371.8 of the Health and Safety Code and sections 1300.71, 1300.71.38,
       1300.71.4, and 1300.77.4 of title 28.
        (6)    The plan’s contract with a claims processing organization or the
       capitated provider shall include provisions authorizing the plan to
       assume responsibility for the processing and timely
       reimbursement of provider claims in the event that the claims
       processing organization or the capitated provider fails to timely
       and accurately reimburse its claims (including the payment of
       interest and penalties). (7) The plan’s contract with the capitated
       provider shall include provisions authorizing a plan to assume
       responsibility for the administration of the capitated provider’s
       dispute resolution mechanism(s) and for the timely resolution
       of provider disputes in the event that the capitated provider
       fails to timely resolve its provider disputes including the
       issuance of a written decision.
        (8)    The plan’s contract with a claims processing
       organization or a capitated provider shall not relieve the plan
       of its obligations to comply with sections 1371, 1371.1, 1371.2,
       1371.22, 137l.35, 1371.36, 1371.37, 1371.4, and 1371.8 of the
       Health and Safety Code and sections 1300.71, 1300.71.38,
       1300.71.4, and 1300.77.4 of title 28.

To aggravate the seriousness of the PacifiCare violation, this claim was over six (6)
months old, during which time our client had appealed back and forth with the health
plan and financially strapped capped facility. Yet, their Attorney alleged that somehow
the provider had failed to exhaust the “PROCESS.”

What about the “PROCESS” to adjudicate claims timely pursuant to state and federal
law? Or the “PROCESS” to ensure Knox Keene obligations are met when non-
compliance by a contracted entity is indicated. There is a “PROCESS” that the
Medicare+Choice program has for organizations that don’t comply with the prompt
payment provision in 42 CFR 422 or misuse federal funds received for a beneficiary.

It’s amazing how this failed “PROCESS” is never addressed! Needless to say, I never
heard from him again.

That word PROCESS derives from the Middle English proces, from Middle French, from
Latin processus, from procedure. It means to PROGRESS, ADVANCE <in the
process of time>; something going on: PROCEEDING. It is a natural phenomenon
marked by gradual changes that lead toward a particular result <the process of growth>;
a series of actions or operations conducing to an end.

The process (in sec. 1371 and 1371.35) intended by Congress and lawmakers was to
establish procedures for the timely submission, processing and payment of claims that
would foster progress and advancement in the healthcare delivery system and lead
toward a desired result, in favor of coverage for the insured.

(See Monteith v. Community Mutual-Blue Cross/Blue Shield, 1994 WL 183642 (Ohio
App. 10 Dist., May 10, 1994) (emphasizing that an insurance company cannot leave an
uninsured under the delusion that his policy remains in force and then inform him to
the contrary after he has suffered the loss against which he sought to indemnify
himself).

Contrary to what plans want you to believe. There is a process for asserting requests for
overpayments. First of all, they must adhere to Health and Safety Code § 1371, 1371.1,
1371.35 notice requirements. Secondly, 28 CCR § 1300.71 (d) mandates:

       (3)     If a plan or a plan’s capitated provider determines that it has
       overpaid a claim, it shall notify the provider in writing through a separate
       notice clearly identifying the claim, the name of the patient, the date of
       service and including a clear explanation of the basis upon which the plan
       or the plan’s capitated provider believes the amount paid on the claim was
       in excess of the amount due, including interest and penalties on the claim.
       (4)     If the provider contests the plan’s or the plan’s capitated provider’s
       notice of reimbursement of the overpayment of a claim, the provider,
       within 30 working days of the receipt of the notice of overpayment of a
       claim, shall send written notice to the plan or the plan’s capitated
       provider stating the basis upon which the provider believes that the claim
       was not over paid. The plan or the plan’s capitated provider shall
       receive and process the contested notice of overpayment of a
       claim as a provider dispute pursuant to Section 1300.71.38 of
       title 28.
       (5)     If the provider does not contest the plan’s or the plan’s capitated
       provider’s notice of reimbursement of the overpayment of a claim, the
       provider shall reimburse the plan or the plan’s capitated provider within
       30 working days of the receipt by the provider of the notice of
       overpayment of a claim.
       (6) A plan or a plan’s capitated provider may only offset an
       uncontested notice of reimbursement of the overpayment of a
       claim against a provider’s current claim submission when: (i)
       the provider fails to reimburse the plan or the plan’s capitated provider
       within the timeframe of section (5) above and (ii) the provider has
       entered into a written contract specifically authorizing the plan
       or the plan’s capitated provider to offset an uncontested notice
       of overpayment of a claim from the contracted provider’s
       current claim submissions. In the event that an overpayment of a
       claim or claims is offset against a provider’s current claim or claims
       pursuant to this section, the plan or the plan’s capitated provider shall
       provide the provider a detailed written explanation identifying
       the specific overpayment or payments that have been offset
       against the specific current claim or claims.

So then, plans can only offset overpayments that are uncontested and have been
authorized by a written agreement. That means, if you contest the claim in
writing, within 30 working days, they cannot offset on future claims to be
paid, even if you have agreed upon it in your contract.

For indemnity carriers, consider 10 CCR §2695.7(m):

       No insurer shall make a payment to a provider, pursuant to a policy
       provision to pay medical benefits, and thereafter seek recovery or set-
       off from the insured on the basis that the amount was excessive
       and/or the services were unnecessary, except in the event of a proven
       false or fraudulent claim, subject to the provisions of Section
       10123.145 of the California Insurance Code.

For more appeal tactics with refunds and overpayments, contact the Stop
the Abuse Headquarters to bring this dynamic public policy course to your
facility!

				
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