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Medicare and commercial health insurers are moving from the traditional fee-for service reimbursement model to “value-based payment.”

It’s coming. Both Medicare and commercial health insurers are moving from the traditional fee-for service reimbursement model to “value-based payment.” How will this fundamental change impact reimbursement to physicians, other providers, practice groups, and hospitals?

The answer, I suspect, will depend on how “value” is measured. Take a simple example. When a physician provides diabetic counseling to her patients it may well result in less need for expensive services in the future surrounding diabetes complications. The health insurer, as a result, saves money by not having to pay those claims. But how do we measure the absence of claims? And if we cannot, how can we measure “value” on an individual basis for insurance reimbursement purposes if we are using value-based payment?

The same issue arises if we think of “value” from the point of view of a set of procedures. Under fee-for-service reimbursement, insurers criticize providers for prescribing what they believe are “needless” services, because they are paid by the service. Purportedly “value-based” payment would base reimbursement not on the number of services rendered and on the total value of whatever services are rendered. All well and good, but what exactly is “value” in this context? The patient recovering? Recovering faster than average? Reimbursement to the provider cheaper than previously?

Since patients come in an infinite number of shapes, sizes, ages, medical conditions, and other variables, what possible algorithm can we develop to calculate “value” for reimbursement purposes? And if there is a bad outcome, is that the absence of value?

It seems to me the answer may be to rewrite the contracts between providers and insurers to capture precisely what must be measured by a value-based payment structure. For in-network providers, then, reimbursement levels must be commensurate with the value of the medical services performed. “Value” is a matter of negotiation and contract. Failure to reimburse results in breach of contract.

Can A Health Insurer Receive a Vaccine that Confers Lifelong Immunity from Antitrust Liability?

Imagine the following scenario: You are a medical provider and decide to sue WellPoint (now Anthem) for antitrust conspiracy violations stemming from usual, customary and reasonable (UCR) reimbursement levels or exclusive territorial allocations, or both, either individually or as part of a class of similarly situated providers.  But WellPoint argues that you can’t, because the settlement of another class action many years ago (and where the settlement agreement long expired) released those antitrust claims and – here’s the kicker – all antitrust claims you may have against WellPoint in perpetuity.  And this even though you didn’t have – and couldn’t have had – the same antitrust claims then as you have now and therefore couldn’t have brought them then.  Nor did you ever receive a class settlement notice that specified that your antitrust claims against WellPoint would be released forever.

Sounds unfair?  Sounds like an abuse of the class action procedure?  That precise issue is the subject of an extraordinary petition to the Supreme Court of the United States. In it, the Medical Association of Georgia, the California Medical Association, the Connecticut Medical Society, and three physicians ask the Supreme Court to reverse the Eleventh Circuit’s ruling that the antitrust claims are “new, overt acts within an ongoing conspiracy, rather than new claims in and of themselves.”

But that makes no sense, both factually and legally.  Factually, it wasn’t entirely an ongoing conspiracy; it was in part a new conspiracy based on new misconduct.  Legally, the Supreme Court long held that you cannot release antitrust conspiracy claims in perpetuity; to do so represents a violation of the antitrust laws because it gives a defendant antitrust immunity (which is what WellPoint is seeking for itself).  So even if it were an ongoing conspiracy it doesn’t matter.

But that’s what the Eleventh Circuit did, and if it is not vacated by the Supreme Court the decision will have drastic consequences not only in this case but in the future.  All class action settlements against health insurers will ostensibly release antitrust (and possibly other claims) forever.  So if there’s a settlement, say, in 2015 and you have antitrust damages in 2037 you’re out of luck.  You couldn’t have sued this year for your 2037 injury but it doesn’t matter – WellPoint (and if the case is upheld other insurers) get an antitrust vaccine that confers lifelong immunity.

Here’s the passage from the petition:
The significance of the Eleventh Circuit’s decision is not limited to this case.  Rather is strips nearly one million physicians of their federal rights to challenge the continuing anticompetitive practices of many of the nation’s largest health insurers in perpetuity, as many of those insurers have entered into settlements substantially similar to WellPoint’s. . . . Finally, the decision opens the door to a new abuse of the class action, in which absent class members find that they have given up the right to challenge ongoing conspiracies forever, without receiving compensation or notice that they are doing so.

You can read the petition here, WellPoint’s brief in opposition here, and the brief in reply here.
(Axelrod & Dean LLP Co-Authored the briefs on behalf of Petitioners.)

Reimbursement of Emergency Room Services and “Triage” Fees

An old health care insurance scheme you would think would have been done away with by now has resurfaced, particularly in the context of Medicaid reimbursements.  Imagine the following scenario: a patient comes into a hospital’s emergency room complaining of chest pains.  This person is seen immediately by emergency physicians to rule out a myocardial infarction or other serious emergency condition.  It turns out that, fortunately, it was not a heart attack and the person is later released.

Further imagine the presenting patient had Medicaid, not commercial insurance.  In many states, affiliates of the same commercial health care insurers act as managed care organizations (MCOs) to administer Medicaid benefits on behalf of states.  They receive capitated payments – a fixed per insured per month fee – which may result in substantial financial incentives to under-reimburse hospitals and other providers so they can receive as much of the capitated fee for themselves.

Years ago, the old health care insurance scheme was to base emergency room reimbursement on the ultimate diagnosis and not on the initial emergency presenting symptoms – despite the substantial set of procedures necessary to rule out the emergency.  Therefore, if a patient arrived with chest pains and the ultimate diagnosis was something of a non-emergent nature, the hospital ER would not be reimbursed for any of the work required to rule out, in our case, a heart attack or other problem.

To fix this problem, courts established and eventually states codified in statutes what is called the “prudent layperson standard.”  Under this objective standard, the basis used to determine up front whether an emergency medical condition exists is when a prudent layperson (who possesses an average knowledge of health and medicine) determines that a medical condition manifests itself by acute symptoms of such severity that the absence of immediate medical attention would be expected to result in placing the health of the patient in serious jeopardy.  The standard looks to the presenting symptoms – in our hypothetical, chest pains – not what might be the ultimate diagnosis.

The “prudent layperson standard” became a requirement in commercial insurance plans and was codified in the Affordable Care Act as well.  But somehow hospital emergency rooms have been facing this serious issue once again, when MCOs who administer Medicaid reimbursements refuse to follow the prudent layperson standard and pay a small “triage” fee instead.

In many parts of the country, emergency rooms treat a substantial number of Medicaid patients.  While it may be true that some of these patients use the emergency room as their primary care source for non-emergency issues, many present with true emergency conditions.  That’s why the prudent layperson standard was established.

What should hospitals do to challenge this practice?

  1. Medicaid has a detailed administrative appeals process.  Make use of it.
  1. Each appeal must be drafted carefully and with great detail, claim by claim.
  1. Should the appeal be denied, you have further options, including litigation.

 

Fighting Back Against Repayment Demands and Recoupments

Health insurers often pay providers directly who have assignments from their patients and then determine months later that it paid incorrectly and demand the money back.  Sometimes this demand is accompanied by accusations of fraud and abuse on the part of the provider.  When the provider doesn’t pay, the insurer recoups the money from current payments and offsets from future payments.  In sum, all payments from the insurer stop until the full amount is paid off.

Most of the time, the provider and her staff, overwhelmed by the accusations and financial demands, either agrees to pay the money back up front, gets offset, or enters into negotiations with the insurer.

What rarely happens, though, is appealing the health insurer’s repayment demand in the first place.  In 2011, for example, only 2.25% of all of United Healthcare’s repayment determinations were appealed.

Why is that?  Well, providers didn’t think they had legal rights to challenge recoupments, and insurers took the position that providers (as compared to their patients, as plan members) had no legal rights at all.   In most cases insurers did not even give information to providers about the existence of an appeal.  Instead, they usually sent a letter stating the amount of the recoupment, and a deadline to pay.

All that should change as a series of court decisions have now made it clear that repayment determinations and recoupments fall under ERISA, which governs most commercial employer plans.  This means, for providers who are out of network, a repayment demand and recoupment are actually denials of benefits, and they have the right to notice, the right to an appeal, and the right to full and fair review of the appeal.

Are there limitations to this critical decision?  For example, say an insurer determined that the provider never provided the service to the patient in the first place, but billed for it. Ostensibly that’s fraud, right, and fraud arises under state law, not ERISA.  In Premier Health Center, P.C. v. UnitedHealth Group (D. N.J. Aug. 28, 2014), the court differentiated an insurer’s claim against a provider for fraud (which might arise under state law, not ERISA) and the procedure an insurer uses to recoup payments based on what it believes to be fraudulent activity (which does arise under ERISA).  That is, an insurer “must allow the provider the opportunity to challenge that determination in accordance with ERISA procedure, lest the determination be accepted at face value.”

And there it is.  Every accusation of fraud and abuse by an insurer was not simply an accusation but an unchallengeable, non-appealable statement of fact.  Now the tide has turned in the providers’ favor.

What is the takeaway from all this?  What should providers do when health insurers send them a repayment demand and seek to recoup payments?

  1. You do not need to pay the demanded amount upfront or over time.  Under ERISA, you have substantial appellate rights. You should make use of them.
  1. You need to determine for the payments at issue with respect to each of your patients’ plans whether you are in network or out of network with the health insurer.
  1.  Even if you are in network you may have contractual appellate rights that you should utilize.
  1. You must insist that the insurer gives you the reason for the repayment demand upfront.  Remember, a repayment demand is a denial, just like any other denial you have received.
  1. You must draft all appeals very carefully and fully.  Boilerplate appeals will receive boilerplate rejections.
  1. Should your appeals be rejected anyway, you have options to consider, including mediation, arbitration, and litigation.