Legal Update on Reimbursement Laws

1. Legal Update on Reimbursement Laws Renee M. Jordan, Esq. Bacen & Jordan, P.A. 2901 Stirling Road Suite 206 Fort Lauderdale, FL 33312 (954) 961-5544 (800) 499-7840 rjordan@bacenjordan.com

2. 2009 Legislative Updates • 627.638 Direct payment for hospital, medical services.— • (2) Whenever, in any health insurance claim form, an insured specifically authorizes payment of benefits directly to any recognized hospital, licensed ambulance provider, physician, or dentist, or other person who provided the services in accordance with the provisions of the policy, the insurer shall make such payment to the designated provider of such services. The insurance contract may not prohibit, and claims forms must provide an option for, the payment of benefits directly to a licensed hospital, licensed ambulance provider, physician, or dentist, or other person who provided the services in accordance with the provisions of the policy for care provided pursuant to s. 395.1041 or part III of chapter 401. The insurer may require written attestation of assignment of benefits. (July 1, 2009)

3. Prompt Payment Statute -The statutory terms are binding and override contract terms: “The provisions of this section may not be waived, voided or nullified by contract.” **Also applies to PPOs

4. Prompt Payment Defines a claim for an institutional provider as a paper or electronic billing instrument submitted to the HMO’s designated location that consists of the UB‑92 data set, or its successor, with entries stated as mandatory by the National Uniform Billing committee. (Requests for additional documentation = prepayment audit)

5. Prompt Payment All claims for payment or over payment, whether electronic or non‑electronic, must be mailed or electronically transferred to the primary HMO within 6 months after discharge for inpatient or date of service for outpatient, and 6 months after the provider has been given the correct name and address of the patient’s HMO. Claims to the Secondary must be filed within 90 days after a final determination by the primary. The claim is considered submitted on the date it’s electronically transferred or mailed.

6. Prompt Payment Within 20 (40) days of receipt of a claim the HMO must pay, deny or contest the claim. A contested claim must include an itemized list of additional information or documents the insurer can reasonably determine are necessary to process the claim.

7. Prompt Payment Provider must submit additional information/documents within 35 days after receipt of the notification. Claim must be paid or denied within 90 (120) days after receipt of claim. Failure to pay or deny within 120 (140) days creates an uncontestable obligation to pay the claim.

8. Prompt Payment • A permissible error ratio of 5 percent is established for health maintenance organizations' claims payment violations of paragraphs (3)(a), (b), (c), and (e) and (4)(a), (b), (c), and (e). If the error ratio of a particular insurer does not exceed the permissible error ratio of 5 percent for an audit period, no fine shall be assessed for the noted claims violations for the audit period. The error ratio shall be determined by dividing the number of claims with violations found on a statistically valid sample of claims for the audit period by the total number of claims in the sample. If the error ratio exceeds the permissible error ratio of 5 percent, a fine may be assessed according to s. 624.4211 for those claims payment violations which exceed the error ratio. Notwithstanding the provisions of this section, the office may fine a health maintenance organization for claims payment violations of paragraphs (3)(e) and (4)(e) which create an uncontestable obligation to pay the claim. The office shall not fine organizations for violations which the office determines were due to circumstances beyond the organization's control.

9. HMO Case Law • Foundation Health v Westside EKG, 944 So.2d 188 (Fla. 2006) – Supreme Court of Florida held that a provider can bring a cause of action against HMO for failure to comply with the prompt payment provisions of the HMO act.

10. HMO Case Law • Merkle v. Health Options, 940 So.2d 1190 (4th DCA 2006) – ER provider sued Health Options, Aetna, Vista and NHP under F.S. 641.513(5) (ER access statute). • Court held that provider has a private cause of action for violation of 641.513(5). • “641.513(5) clearly imposes a duty on HMOs to reimburse non-participating providers according to the statute’s dictates, not based on Medicare reimbursement rates.”

11. Prompt Payment • 641.3154  Organization liability; provider billing prohibited.-- • (1)  If a health maintenance organization is liable for services rendered to a subscriber by a provider, regardless of whether a contract exists between the organization and the provider, the organization is liable for payment of fees to the provider and the subscriber is not liable for payment of fees to the provider. • (2)  For purposes of this section, a health maintenance organization is liable for services rendered to an eligible subscriber by a provider if the provider follows the health maintenance organization's authorization procedures and receives authorization for a covered service for an eligible subscriber, unless the provider provided information to the health maintenance organization with the willful intention to misinform the health maintenance organization. • (3)  The liability of an organization for payment of fees for services is not affected by any contract the organization has with a third party for the functions of authorizing, processing, or paying claims.

12. Prompt Payment • 4)  A provider or any representative of a provider, regardless of whether the provider is under contract with the health maintenance organization, 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 organization for payment of services for which the organization is liable, if the provider in good faith knows or should know that the organization is liable. This prohibition applies during the pendency of any claim for payment made by the provider to the organization for payment of the services and any legal proceedings or dispute resolution process to determine whether the organization is liable for the services if the provider is informed that such proceedings are taking place. It is presumed that a provider does not know and should not know that an organization is liable unless: • (a)  The provider is informed by the organization that it accepts liability; • (b)  A court of competent jurisdiction determines that the organization is liable; • (c)  The office or agency makes a final determination that the organization is required to pay for such services subsequent to a recommendation made by the Subscriber Assistance Panel pursuant to s. 408.7056; or • (d)  The agency 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.

13. Prompt Payment • A provider or any representative of a provider, regardless of whether the provider is under contract with the health maintenance organization, 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 health maintenance organization 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 maintenance organization for payment of the services or internal dispute resolution process to determine whether the health maintenance organization 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 maintenance organization'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.

14. Preemption – Federal vs. State Law • Typically, ERISA preempts state laws. • However, there is no preemption if the state law: • Seeks to regulate insurance • Does not conflict with an ERISA law • Does not give a claimant more benefits then the ERISA law provides • 29 CFR 2560.503-1(K)(1) – Nothing in this section shall be construed to supersede any State law that regulates insurance, except to the extent that such law prevents the application of this section (claim procedure).

15. Preemption – Federal vs. State Law • Baylor University Med Ctr v. Arkansas Blue Cross Blue Shield, 331 F.Supp.2d 502 (N.D. Tex 2004) - Texas’s prompt payment law was not preempted by ERISA. • “ERISA does not preempt generally applicable state laws that impact ERISA plans only tenuously, remotely, or peripherally.” • “The court will not, in the name of ERISA, insulate an insurer from liability against a third-party health care provider seeking to enforce its rights under a state statute that requires prompt payment of claims.” • Baylor’s breach of contract claim was also upheld as not preempted by ERISA.

16. Prompt Payment - Refunds HMO may not retroactively deny a claim because of subscriber ineligibility more than ONE year after the date of payment of the claim. • Refund requests may go back 30 months from date of payment for reasons other than eligibility. • The health maintenance organization may not reduce payment to the provider for other services unless the provider agrees to the reduction in writing or fails to respond to the health maintenance organization's overpayment claim as required by this paragraph. • **Physicians = 12 months

17. Prompt Payment - Refunds • A provider must pay, deny or contest a claim for overpayment within 40 days after receipt of the claim. • A provider must contest or deny the claim, in writing, within 35 days and provide specific reasons for contesting or denying the claim – as well as identify additional information for contested claims. The payor has 35 days to provider the requested information. Once the provider receives the additional information, they have 45 days to pay or deny. • Provider has 120 days to pay or deny contested claims, and failure to pay or deny within 140 days creates an uncontestable obligation to pay.

18. Refund Law • Common law “Innocent Third Party Creditor Exception” = At the time of rendering services the Hospital became a third party creditor and received the insurance payment in good faith, and thus no refund is required. • Equity dictates that the party that created the situation occasioning the loss be the party that sustains the loss.

19. Refund Law • Federated Mutual Ins v. Good Samaritan Hospital, 214 N.W.2d 493 (Neb. 1974) – Hospital insurer, which overpaid hospital, could not recover from hospital the difference between the policy coverage and patient’s bill where overpayment was due solely to insurer’s mistake and lack of care, hospital made no misrepresentation to induce payment, and hospital acted in good faith in receiving overpayment.

20. ERISA Refund Requests • ERISA does not address refund issues. • Use State laws – If prompt payments laws are not preempted then refund laws may not be preempted.

21. ERISA Refund Request • National Benefits Administrators v. Mississippi Methodist Hospital, 748 F.Supp. 459 (S.D. Miss. 1990) – Plan administrator could not maintain ERISA action against provider to recover payments made in error. Congress did not authorize courts to develop or allow causes of action or remedies not expressly provided for by Act. • The insurer, possessing the policy and the knowledge of its terms, made the mistake and, as between it and the hospital, it must bear the loss.

22. Authorizations • 641.3156 - (1)  A health maintenance organization must pay any hospital-service or referral-service claim for treatment for an eligible subscriber which was authorized by a provider empowered by contract with the health maintenance organization to authorize or direct the patient's utilization of health care services and which was also authorized in accordance with the health maintenance organization's current and communicated procedures, unless the provider provided information to the health maintenance organization with the willful intention to misinform the health maintenance organization. • (2)  A claim for treatment may not be denied if a provider follows the health maintenance organization's authorization procedures and receives authorization for a covered service for an eligible subscriber, unless the provider provided information to the health maintenance organization with the willful intention to misinform the health maintenance organization. • (3)  Emergency services are subject to the provisions of s. 641.513 and are not subject to the provisions of this section.

23. Authorizations / Promissory Estoppel • Humana v. CAC-Ramsay, 714 So.2d 1025 (3rd DCA 1997) – HMO that erroneously verified coverage was liable on promise to reimburse skilled nursing facility for care after contract had expired; when facility telephoned to verify coverage, HMO orally authorized admission and signed agreement providing for per diem rate. • Subscriber is entitled to rely on superior knowledge of HMO and cannot be faulted for HMO’s error in verifying coverage.

24. Underpayments / UCR • Goble v Frohman, 848 So.2d 406 (Fla. 2d DCA 2003) and Hillsborough County Hosp. Auth v Fernandez, 664 So.2d 1071 (Fla. 2d DCA 1995) – Evidence of a contractual discounts received by managed care providers is insufficient, standing alone, to prove that nondiscounted medical bills were unreasonable.

25. Underpayments / UCR • Harrison v Aetna, 925 F.Supp. 744 (M.D.FL 1996) – A plan that requires only reasonable charges be paid, but makes no reference to a predetermined rate in the definition of “charges”, requires analysis of the provider’s rate and not the substitution of another rate that the administrator finds more favorable. Aetna relied on a compilation of rates which it stated were UCR in the area but produced no evidence as to whether the compilation actually results in charges that reflect the prevailing charges in Central Florida.

26. Underpayments / UCR • Get a copy of the policy • Definition of “reasonable charges” • Formula, calculations and methodology • Medicare rate+, AWP, Prevailing Healthcare Charges System (PHCS), Ingenix • ERISA - 29 U.S.C. 1024(b)(4) – Administrator is required to furnish participant or beneficiary a copy of the plan description upon written request.

27. Supreme Court Declines to hear “Usual and Customary Charges” • Baker County Medical Services v. Aetna and Humana – The 1st DCA held that the term “usual and customary provider charges”, pursuant to F.S. 641.513(5), may include the amount billed and amount accepted by providers from other payors (except Medicare and Medicaid).

28. Workers’ Compensation

29. Workers’ Compensation • Coverage required for 4 or more employees. • Excludes independent contractors = self pay. • Construction – 1 or more employee • Independent contractor or subcontractor in the construction industry **Out of state carriers paying Florida fee rates – Look for jurisdiction

30. Workers’ Compensation • Claims to be paid within 45 days • Carrier has 120 days to adjust, disallow or deny a claim • Interest in the amount of 12% per year shall be added to all balances not timely paid.

31. Workers’ Compensation • A Provider can file a complaint of non-payment with the Division of Workers’ Compensation, Office of Medical Services by submitting: • A legible copy of the accurately completed medical bill; • An itemized Billing Statement (Hospital Bill); • An accurately completed DFS-F5-DWC-25 for each date of service (physician encounter); • Proof of submission or mailing of the medical bill to the insurer; and • A call log or any communication between the health care provider and the carrier regarding payment of the outstanding charges for medical service(s) or treatment. • Via fax (850) 922-4475 • workers.compmedservice@myflorida.com • 200 East Gaines St., Tallahassee, FL 32399-4232.

32. Workers’ Compensation • The Dept shall impose penalties for late payments or disallowances or denials of provider’s bills that are below a minimum 95% timely performance standard. The carrier shall pay to the W/C Administration Trust Fund a penalty of : • $25 for each bill below the 95% timely standard but meeting a 90% timely standard. • $50 for each bill below 90% timely standard.

33. Workers’ Compensation • Any carrier that engages in a pattern or practice of arbitrarily or unreasonably disallowing or reducing payments to providers may be subject to one or more of the following penalties: • Repayment of the appropriate amount. • An administrative fine – not to exceed $5k per instance of improperly disallowing or reducing payment. • Award of provider’s cost, including attorneys’ fees

34. Workers’ Compensation • On-site Audit: • Medical record review to determine the medical necessity of hospital services pursuant to this section may be done either concurrently, during the hospital stay, or retrospectively, after discharge. However, a retrospective review shall not toll the 45 day time period established to pay, disallow, or deny the hospital bill pursuant to s.440.20(2)(b).

35. Workers’ Compensation • When a carrier denies, disallows or adjusts a payment the carrier shall remit a minimum partial payment as follows: • IP: the applicable per diem rate for each IP day for which the hospital obtained pre-certification, and for which there is no dispute as to the medical necessity. • OP & IP Stop Loss: The greater of the applicable per diem rate for each IP day for which the hospital obtained pre-certification, and for which there is no dispute as to the medical necessity, plus any itemized charges that are not denied, disallowed or adjusted; and the applicable reimbursement for each itemized charge not denied, disallowed or adjusted. • Upon receipt of the partial payment the hospital may elect to contest the disallowance or adjustment.

36. Worker’s Compensation • Reconsiderations must be made within 60 days – but doesn’t waive the timely filing limits for a Request for Resolution of a Disputed Reimbursement. Carrier shall respond within 60 days. • File a Petition for Resolution of Disputed Reimbursement within 30 days. • Carrier has 10 days to respond. Failure to timely respond = waiver of objection to petition. • 21 days to file ALJ hearing to challenge the outcome of the Petition.

37. Disputed Reimbursement Resolution • The petition must be accompanied by all documents and records that support the allegations of the petition, including: • All bills and resubmitted bills with attachments. • EOBR • All relevant correspondence between the carrier and provider. • Notations of phone calls regarding authorization. • Any pertinent or required health care records or reports or carrier medical opinions. • Failure to include such documentation results in a Notice of Deficiency (10 days to reply). • The carrier must submit to the agency within 10 days after receipt of the petition all documentation substantiating their disallowance or adjustment. Failure to submit documents timely constitutes a waiver of all objections to the petition. • Within 60 days after receipt of all documents, the agency must provide a written determination as to the proper reimbursement amount and provide for reconsideration through physicians and peer review before an appeal to the First District Court of Appeal. • If the agency finds an improper disallowance or adjustment the carrier shall reimburse the provider within 30 days.

38. PIP Law

39. PIP Law • PIP – No Fault covers you in your vehicle, in another vehicle or as a pedestrian. It also covers others in your vehicle or as pedestrians, as well as, family members in your household. • Auto insurance • Make & model of car • Accident date & location • Auto insurance of family members in household • Info on person that owns the car • Attorney info • BI, UM and Commercial insurance require fault

40. PIP Balance billing • 627.736 (5) If an insurer limits payment as authorized, the provider may not bill or attempt to collect fromthe insured any amount in excess of such limits, except for amounts that are not covered by the insured’s PIP coverage due to the coinsurance amount or maximum policy limits.

41. PIP Balance Billing • PIP Fee Schedule applies only to PIP payors. • Balance billing is only against the insured. • Applies only to amounts not covered by the insured’s PIP coverage due to coinsurance or maximum policy limits.

42. PIP Balance Billing • Example: • Inpatient Services = $100k • Paid at 200% of Medicare or $40,000. • PIP pays $5,000 max benefits. • Bill Secondary or File Lien for $95,000 • Bill the Pt $95,000 because benefits were maxed.

43. PIP Balance Billing • Example: • ER Services = $8,000. • Paid at 75% or $6,000. • 80% paid by PIP and 20% paid by Pt. • PIP pays $4,800 ($6,000 x 80%). • Bill Secondary or File Lien for $3,200 ($8,000 less $4,800) • Or bill pt for $1,200 ($6,000 x 20%)

44. Self Pay

45. SPOUSAL & PARENTAL RESPONSIBILITY • A spouse is not financially responsible for the medical expenses of their spouse unless they sign a guaranty. • Parents are always responsible for the medical expenses of their children regardless of divorce decrees.

46. SPOUSAL & PARENTAL RESPONSIBILITY • Emancipation: • The right of the minor to collect and control his/her own wages and labor. • Military does not equal emancipation • A minor having a child does not equal emancipation

47. SPOUSAL & PARENTAL RESPONSIBILITIES • Insurance Coverage for Newborns: • Insurance and HMO statutes require coverage for newborns (including a covered family member who has a baby - 18 months). • Adopted children are covered from the moment of placement in the residence or from the moment of birth if a written adoption agreement was entered into prior to the birth. • Birthday rule: the parent with the earlier birthday (excluding year) is primary

48. APPLICATION OF FUNDS AND CREDIT BALANCES • Where a payment is made without specific instructions from the debtor as to the application of the funds, the creditor may apply the funds in whatever manner it desires. • In absence of an agreement to the contrary, the courts allow payment to first discharge the oldest debts. • Suggestion: Add this language to your Conditions for Admission.

49. CAN COPAYS BE WAIVED? • The upfront waiver(pre-provision of services agreement) of a patient’s copay, co-insurance, or deductible without regard to the patient’s financial ability to pay may be considered a false claim under the Florida Insurance Code which is subject to civil fines and criminal conviction. • Said waivers must be disclosed on the claim form to the insurer to avoid filing a false claim.

50. GUARANTY & ASSIGNMENT OF BENEFITS • Actual guaranty? • If patient refuses to sign they are still liable • Notice of interest on past due accounts and the percentage to be charged • Notice of cost and attorneys fees to be charged on past due accounts