Payor Reimbursement Dispute Resolution and Litigation Update

1. Payor Reimbursement Dispute Resolution and Litigation Update: In-Network and Out-of-Network Strategies and Best Practices Presenters:Anthony La Rocco, PartnerJoshua SKORA, Partner Stacey Hyman, Associate

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3. OVERVIEW:TYPES OF COMMERCIAL PLANS

4. Self-funded employer sponsored plans under the Employee Retirement Income Security Act of 1974 (“ERISA”) Plans where the employer assumes the risk for paying health claims as opposed to purchasing an insurance policy from an insurance carrier, where the insurer assumes the risk. Fully-funded Premiums are paid to the insurance carrier, who assumes the risk of payment on the policy Premiums are most commonly paid by an employer. Medicare Advantage Medicare Advantage plans are an alternative to Original Medicare, Part A and Part B. Instead of having Medicare benefits administered through the government-run program, beneficiaries can choose to get their coverage through a Medicare Advantage plan, available through private insurance companies that contract with Medicare. Types of plans

5. Medicaid Managed Care Plans (“MCO”): Many states have moved to an MCO model to administer the Medicaid benefit. Similar to Medicare Advantage, but many states divide the state and competitively award contracts by region. Types of Plans (Cont’d)

6. COMMERCIAL PAYER ISSUES UNDER ERISA

7. ERISA law – federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans Fiduciary considerations – persons or entities that exercise discretionary control or authority over plan management or plan assets, anyone with discretionary authority or responsibility for the administration of a plan While the named fiduciary under ERISA self-funded plans is generally the plan, insurers may also be a fiduciary. Function over form Must act solely in the interest of the plan beneficiaries introduction

8. Frequently, commercially-insured patients are covered by employee benefit plans subject to ERISA • ERISA contains a broad preemption clause that displaces state law causes of action relating to ERISA plans • For out-of-network healthcare providers, ERISA often provides the primary legal basis for recovery of unpaid or underpaid claims ROLE OF ERISA IN REIMBURSEMENT DISPUTES

9. Provider claims under ERISA may include: • Claims for benefits due under the terms of the ERISA plans • Claims for appropriate equitable relief to remedy breaches of ERISA fiduciary duties and other fiduciary obligations ROLE OF ERISA IN REIMBURSEMENT DISPUTES (CONT’D)

10. ASSIGNMENTS OF BENEFITS

11. Non-participating providers have no independent legal right to payment from the insurer • They must be assigned their patients’ rights to benefits under relevant health insurance plans or policies • Without a valid assignment, the non-participating provider has no legal standing to sue the health insurer for payment under ERISA Why are assignments important?

12. Assignments are also important for participating providers • Often a legal prerequisite to submitting a claim even under the participation agreement • Exception – competitive bidding for DME contracts under Medicare Fee-for-Service plans • Participation status may change • Providers may not be participating with all insurers • Assignments may provide an alternative basis for recovery • Secondary payors may also require assignment of benefits Do participating providers need assignments?

13. Purpose is to allow the provider to get payment directly from the insurance company and provide for standing if a later claims dispute between the provider and insurer arises • What rights are encompassed by a valid assignment? • All of the patient’s rights under the plan • A simple direction of payment is likely insufficient SCOPE OF THE ASSIGNMENT

14. Likely Insufficient “I authorize insurance payments to be made to [PROVIDER] for services provided at [PROVIDER’S FACILITY].” • Simply authorizes payments to be made; does not give the provider any rights to payment • Likely will be found insufficient to confer legal standing Examples

15. Better "I authorize [PROVIDER] to appeal to my insurance company on my behalf.... I hereby assign to [PROVIDER] all payments for medical services rendered to myself or my dependents.” • Upheld in North Jersey Brain & Spine Center v. Aetna, Inc., 801 F.3d 369 (3d Cir. 2015) • Gives the provider at least the right to sue for payment under ERISA Section 502(a) Examples

16. Better (but still not perfect) “CONSENT/ASSIGNMENT OF BENEFITS. I voluntarily consent to the collection and testing of my specimen, and all future testing, performed by [the Laboratories] or [their] affiliated laboratories unless I give written notice that I have revoked my consent. I authorize my insurance company to pay and mail directly to [the Laboratories] or [their] affiliated laboratories all medical benefits for payment of services rendered. I also authorize [the Laboratories] or [their] affiliated laboratories to endorse any checks received on my behalf for payment of services provided. I hereby irrevocably assign to [the Laboratories] or [their] affiliated laboratories all benefits under any policy of insurance, indemnity agreement, or any collateral source as defined by statute for services provided. This assignment includes all rights to collect benefits directly from my insurance company and all rights to proceed against my insurance company in any action, including legal suit, if for any reason my insurance company fails to make payment of benefits due. This assignment also includes all rights to recover attorney's fees and costs for such action brought by the provider as my assignee.” • Upheld in Biohealth Medical Laboratory, Inc. v. Cigna Health & Life Ins. Co., (11th Cir. 2017) • Court found that assignment permitted claims against fully - insured plans • The language at least arguably applied to self-funded plans; further discovery into the meaning of the language was necessary Examples

17. Assignment should be broad enough to cover all conceivable rights and claims the provider could bring under the plan • Right to appeal • Right to request plan documents • Claim for benefits • Claims for equitable relief/breaches of fiduciary duties • No one-size-fits-all approach • Case law on assignments is constantly evolving; consult with counsel SUMMARY

18. Typically, patient will execute at or before the time that services are provided • Typically executed together with other intake forms, such as a consent for treatment and privacy policies/releases • If not obtained prior to the services, courts will generally permit assignments to be assigned after treatment, at least absent a showing of prejudice to the insurer When is the assignment executed?

19. Some plans contain an anti-assignment clause that prohibits assignment of benefits • Example (complete prohibition): “The benefits of the Contract or Certificate are personal to the Subscriber and are not assignable by the Subscriber in whole or in part to a Non-Member hospital or provider, or to any other person or entity.” • Example (assignment only if consent): “You may not assign your Benefits under the Plan to a non-Network provider without our consent.” VALIDITY OF THE ASSIGNMENT

20. Most courts hold that an unambiguous anti-assignment clause is enforceable and can invalidate a patient’s assignment • American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield, 890 F.3d 445(3d Cir. 2018) • Anti-assignment clause is not the end of the matter • Considerations include ambiguity in the clause, the scope of the clause, course of dealing, waiver, or estoppel arguments, among others ANTI-ASSIGNMENT CLAUSES

21. Waiver of anti-assignment clause • Requires a clear, unequivocal and decisive act • Routine processing of claims and payments not enough • Regular course of conduct beyond direct reimbursement needed (e.g., regular interaction) • Power of Attorney • American Orthopedic case: anti-assignment clauses do not prevent patients from granting a power of attorney to the health care provider • Power of attorney needs to comply with state law formalities (typically needs to be witnessed and notarized) ANTI-ASSIGNMENT CLAUSES (cont'd)

22. EXHAUSTION OF REMEDIES

23. Under ERISA, plan beneficiaries must exhaust all plan remedies before they are permitted to file suit for unpaid benefits • Exhaustion means pursuing all available appeals remedies under the ERISA plan What is exhaustion?

24. Under ERISA notice manner and content requirements, administrator of plan must provide: • Written notice within 90 days stating the specific reasons for the adverse determination in a manner calculated to be understood by the claimant • The notice must include references to specific Plan provisions relied upon by the insurer • Description of the plan's review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action 29 CFR 2650.503-1(g) What claims review procedures must be provided?

25. For group health plans: • Reference to any internal rule, guideline, protocol, or other similar criterion if relied upon as a basis for the adverse determination • If the adverse benefit determination is based on a medical necessity, an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant's medical circumstances, or a statement that such explanation will be provided free of charge upon request 29 CFR 2650.503-1(g) What claims review procedures must be provided (CONT’D)?

26. Under ERISA appeals notice requirements, administrator of plan must provide: • Right to request access to and copies of documents, records, and other information relevant to the claims determination • Claimants must be given at least 180 days following receipt of a notification of an adverse benefit determination within which to appeal the determination 29 CFR 2650.503-1(h) What claims review procedures must be provided (CONT’D)?

27. An insurer’s failure to substantially comply with ERISA notice and appeal procedures excuses claimants from the exhaustion requirement in most jurisdictions. 29 CFR 2650.503-1(f) What claims review procedures must be provided (CONT’D)?

28. Statute of Limitations Consideration: Parties to a contract (plan/plan participant) may limit a statute of limitations period as long as it is not unreasonable “Substantial compliance” requires a statement of the claimant's right to bring a civil action under section 502(a) of the Act following an adverse benefit determination The Sixth and Third Circuits require anycontractually limited time for judicial be included in the adverse benefit determination letter to satisfy substantial compliance requirement. Mirza v. Ins. Administrator of Am., 800 F.3d 120, 137-138 (3d Cir. 2015) and Moyer v. Metro. Life Ins. Co., 762 F.3d 503, 506 (6th Cir. 2014). Strong defense to motion to dismiss based on time barred claims. What claims review procedures must be provided (CONT’D)?

29. Challenge – non-participating providers typically do not have plans • Carefully review denial letters • Follow instructions to pursue next level in the claims processing • Comply with time limits specified in denial letters • Explain why you think the payer got it wrong • Pay attention to denial letters specifying time limits to bring suit How do providers EXHAUST?

30. Courts recognize a limited exception to the obligation to exhaust remedies • Courts may excuse exhaustion when: • Resort to administrative remedies would be futile or the remedy inadequate; or • Claimant is denied meaningful access to administrative review • Difficult standard to meet EXCEPTION - FUTILITY

31. Exhaustion required under Medicare Act District Court did not have jurisdiction against Medicare Advantage Organization in Sarene Serv’s, Inc. v. Empire Blue Cross Blue Shield, no. 17-cv-5276, 2019 WL 402858(E.D.N.Y. Jan. 29, 2019), where nursing agency failed to exhaust administrative remedies under the Medicare Act. MedicareAdvantage Exhaustion:

32. Medicare Advantage appeals are available if the plan refuses to pay for, fails to allow, or stops a service that you think should be covered or provided. Level 1: Medicare Advantage plan must provide written appellate process instructions. Level 1 appeal is called a request for reconsideration. Request for reconsideration deadline is within 60 days of being notified by Medicare Advantage plan of its initial decision Response time – 30 days for request for service or 60 days for request for payment; expedited requests available under limited circumstances Level 2: Request for reconsideration automatically sent to Level 2 review if: Plan does not meet the response deadline Plan does not decide in your favor Sent to Independent Review Entity (Maximus) Medicare AdVantage Appeals

33. Level 3: If disagree with Maximus decision and meet claims dollar minimum, may request a hearing before an Administrative Law Judge (“ALJ”). 2019 dollar minimum is $160 Level 4: If disagree with ALJ’s decision, may request that the Medicare Appeals Council (“MAC”) review the ALJ’s decision Level 5: If disagree with MAC decision at level 4 review, may file for judicial review in Federal Court Must also meet dollar minimum. 2019 dollar minimum is $1,630 Medicare AdVantageAppeals (cont’d)

34. Most courts consider recoupment demands to be adverse benefit determinations • A minority of courts hold that there is no adverse benefits determination until the provider repays the money • Providers must be given the same appeal and other procedural rights as denials of benefits under ERISA • Providers should make sure to appeal any disputed recoupment demands RECOUPMENT DEMANDS

35. Circuit Split: Eighth Circuit: recently held in Peterson v. UnitedHealth Group, Inc., No. 17-cv-1744, 2019 WL 190929 (8th Cir. Jan. 15, 2019), that UnitedHealth Group’s (“United”) plan construction was unreasonable because the United Plans do not “explicitly authorize” cross-plan offsetting. Fifth Circuit: Peterson conflicts with holding of Quality Infusion care, Inc. v. Health Care Service Corp., 628 F.3d 725 (5th Cir. 2010), whereby the Court held that cross-plan offsetting is allowed where no plan provision expressly authorizes offsets from benefit payments involving other plans. United has moved for certiorariasking the Supreme Court of the United States to weigh in on the issue. Application is pending. Cross-Plan Offsets

36. Peterson Considerations: Amicus brief submitted to the Eighth Circuit by Department of Labor expressly contended that cross-plan offsetting violates ERISA because it enriches insurers to the detriment of plan participants. Eight Circuit holding: that implying ambiguity from plan silence would violate ERISA’s requirement that every employee benefit plan be established and maintained pursuant to a written instrument. Eight Circuit stopped just short of ruling on whether United’s cross-plan offsets violate ERISA, “‘discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and . . . For the exclusive purpose of . . . providing benefits to participants and their beneficiaries ….” (citing 29 U.S.C. § 1104(a)(1) (emphasis added)). Peterson, 2019 WL 190929, at * 5. Cross-Plan Offsets (Cont’d)

37. Insurers are increasingly using extrapolation to demand multi-million dollar recoupments for commercial and Medicare Advantage claims. Will apply extrapolation to entire claims universe for a provider after an audit of a small sample size to purportedly justify a recoupment to the insurer. Example: Insurer determines based on an audit of 50 claims that documentation was allegedly insufficient to support medical necessity. Demands recoupment of $10,000. Based on audit of 50 claims, extrapolates across every claim ever submitted by provider and demands $15 million. Recoupments – extrapolation

38. Provider must appeal recoupment demand and address use of improper extrapolation methods: Commercial Plans: Demand that insurer provide support that it used a statistical sampling for the extrapolation method and that the insurer provide the scientific basis or calculation as to the statistical sampling method actually used. Also point out that the extrapolation denies the insurer’s ERISA procedural rights on claims not actually reviewed by insurer on the population of claims to which the extrapolation was applied. Coverage and benefits vary under each ERISA plan based on coverage and benefits. Insurer bears the burden to show that each individual claim for which it seeks recoupment was incorrectly paid. Assert all procedural and substantive rights under ERISA. Recoupments – extrapolation (Cont’d)

39. Medicare Advantage Plans: Chapter 21 of the Centers for Medicare and Medicaid Services Managed Care Manual permits extrapolation of audit findings: Extrapolation must be based on statistically valid methods that comply with generally accepted auditing standards to the full universe of claims. Insurer required to provide the scientific basis or calculation as applied to a statistical sample. All Plans: Consider hiring a statistician to refute the payor’s statistical analysis Recoupments – extrapolation (Cont’d)

40. NEGOTIATING WITH COMMERCIAL PAYERS: BEST PRACTICES, AND WHAT TO AVOID

41. Common In-Network Contract Issues: Early termination and transition of care post-termination clauses Arbitration Delayed payments Underpayments Recoupments Claims disputes PAYER ConTRACT NEGOTIATIONS

42. Avoid: Full waiver of insurer liability and indemnification clauses for both fully funded and Administrative Services Only (“ASO”) ERISA plans; Audit limitations provisions in ASO contracts – avoid limitations on period of audit or claims sample size. Requirement that audit be performed onsite at insurer and/or that Plan must incur cost of audit. Recoupment run-off clause whereby insurer may keep recouped Plan funds after a certain time period. Incentivizes insurer to wait until expiration of the clause to offset recouped amounts so that insurer avoids returning funds to a self-funded ERISA plan. Consult with legal counsel before executing final contract. PAYER ConTRACT NEGOTIATIONS

43. Ensure you have valid assignments; exhaust available remedies for each claim. • Correspond with the insurer in written format regarding the issue(s). Utilize formal minutes and attendance records during meetings, work sessions and conferences. Designate a specific scribe for all events. • Provide that all written communications with insurer be for “settlement discussion only.” • Delivery and read receipts should accompany e-mails. • Establish a document library with secure retention during static periods to preserve all information, including but not limited to, letters, notices, e-mails, minutes, contracts, and account receivable balances and transactions. PAYER DISPUTE NEGOTIATIONS – BEST PRACTICES

44. If a pre-litigation claims sample is requested by the insurer, provide a small predetermined sampling of high dollar, clean claims only (usually 5-10 examples) to demonstrate the relevant issue(s). • Collaborate with other providers within your area experiencing the same or similar issues with a specific insurer. • Validate the potential claim: • contractually • by regulation and code • by value (gross and net) PAYER DISPUTE NEGOTIATIONS – BEST PRACTICES (CONT’D)

45. Perform an internal macro-level gap analysis of operations and technology. Assess your key personnel which present the issue(s) as they may be later vetted or deposed by the insurer. • Determine your message and theme. Develop a multi-tiered communication plan that is clear, concise, and consistent for internal personnel, civic base, employers, patients and governmental support. • Prior to engaging the insurer or providing public commentary, designate a lead speaker. Conduct rehearsals prior to engaging the insurer. Carefully evaluate public commentary to avoid unnecessary issues and potential civil actions. • Establish and utilize an escrow account for financial transactions related to the claims during the dispute period; this will include insurer retractions and refunds. PAYER DISPUTE NEGOTIATIONS – BEST PRACTICES (CONT’D)

46. Increase cash on hand or secure a line of credit to equate the insurer’s average annual payment amount. • Adhere to professional advisement when agreed upon. Utilize professional services once engaged. • Model account receivables for the expected reimbursement according to the contractual methodologies to ensure accurate calculation of the claim(s) amount(s) to avoid subsequent counter- dispute(s). • Reconcile reimbursement of non-contracted plans, services and products of the insurer to similar contracted payors including Medicare. PAYER DISPUTE NEGOTIATIONS – BEST PRACTICES (CONT’D)

47. Avoid providing arguable claims. Poorly supported claims could demonstrate internal deficiencies to the insurer and decrease the value of the case. • Avoid discussions regarding reimbursement rates or special provisions. • Avoid overstating the dispute both by insurers’ actions and/or actual monetary value of the issue itself. • Avoid inconsistent and/or incomplete data extractions. Reporting based on unstable data elements could result in adverse admissions or statements. • Misinterpretations and assumptions will cultivate internal non-conformance and reduce the value of external support. PAYER DISPUTE NEGOTIATIONS – avoidances

48. Exercise caution when insurer offers to pay for disputed claims; unless advised by your legal representative. • Be prepared for an extended period for resolution. Resolution may extend beyond a year. • Be careful not to disclose privileged information or materials. PAYER DISPUTE NEGOTIATIONS – avoidances (cont’d)