Editor's note: This article first appeared in the RACMonitor.
Many physicians and other healthcare practitioners need to go "in-network" with managed care organizations because these network agreements drive patients into their office. These practitioners typically enter into managed care participation provider agreements with the health insurers for the privilege of becoming an "in-network" provider. The benefits of being in-network include the following:
- Patients are referred to the practice by virtue of their inclusion on PPO and HMO networks;
- Medical claims checks are issued to the practice directly, not to patients; and
- Claim denials are reduced.
The major disadvantage of becoming an "in-network" provider is that the healthcare practitioner is forced to accept very low reimbursement rates for their medical services, and there is virtually no give and take on the contract terms. Providers essentially sign the contract as is, without any revisions. Consequently, the contract provisions are typically one-sided, favoring the health insurer.
As a result, more and more healthcare practitioners are deciding to go "out-of-network." This means the healthcare practitioner chooses to forego participation in health insurer PPO and HMO networks, and no managed care contracts are executed. The obvious benefit of being an out-of-network provider is that reimbursement rates typically are higher than that of in-network providers.
The disadvantages of being out-of-network are that the frequency of denied claims increases and the practice received no referrals from HMO and PPO networks. In addition, many health insurers refuse to accept assignment of benefits (AOB) between patients and the practice.
An AOB is a form through which a patient agrees to assign a claim benefit or payment to the practice, meaning that claim checks are sent to the practice and not to the insured member. When an insurer rejects an AOB, it results in claim checks being sent directly to the practice's patients. Many insurers policy forms contain a provision that all AOB to out-of- network practioners are rejected. This essentially forces a provider to chase their patients for claim checks that rightfully belong to the practice. Many patients cash the claim checks, especially in a slow economy, and then outright refuse to return the funds to the practice. The practice is then faced with instituting debt collection actions, which could result in a public relations disaster. As a result, many practices simply decide to write off of the debt, which has a detrimental impact on revenue.
Many physician advocates have questioned whether the failure to recognize the validity of a patient AOB is really nothing more than an attempt by a health insurer to punish a practice for daring to go out-of-network (:"you don’t want to go in-network and accept our unreasonably low fee schedule? No problem, we'll just send your claim checks to the patients, and good luck collecting from your patients.") Health insurers counter that it is a simple contract issue, asserting that they cannot accept a patient AOB because they simply do not have privity of contract with the provider. The only privity of contract that exists is with their own members, hence the reason the AOB is rejected and checks are sent to members and not to the practice directly.
New York: Case in point
In any event, by way of background, then-New York State Attorney General Andrew Cuomo, early in 2008, conducted an investigation into what he viewed as under-reimbursement of out-of-network claims by most insurers in New York. Mr. Cuomo investigated what he referred to as "industry-wide," typical, customary and reasonable underpayments that affected consumers in New York State and nationwide. At the conclusion of his investigation, Mr. Cuomo described out-of-network reimbursement by certain health insurers as a scheme to defraud consumers by manipulating reimbursement rates for out-of-pocket medical expenses.
Specifically, in a press release former Atty. Gen. Cuomo stated that the "scheme by health insurers (is) to defraud consumers by manipulating reimbursement rates" by using a "defective and manipulated database [Ingenix]." He further stated that most major health insurance companies used this database with full knowledge that it is artificially and intentionally well below reasonable and customary reimbursement rates.
Moreover, Mr. Cuomo’s investigation found that by distorting the "reasonable and customary" rates, insurers were "able to keep their reimbursements artificially low and force patients to absorb a higher share of the costs." He stated that "getting insurance companies to keep their promises and cover medical costs can be hard enough as it is, but when insurers create convoluted and dishonest systems for determining the rate of reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need."
At the conclusion of his investigation in Jan. 2009, former Atty. Gen. Cuomo published a document referred to as "Code Blue," which concluded that insurance payers in New York State and nationwide were under-reimbursing consumers and providers in out-of-network situations due to a flawed database, Ingenix, which was used to calculate such payments. He found an inherent conflict of interest involving the Ingenix database in that it was owned by an insurer, United Healthcare, and created by the insurance industry, which was motivated to under-reimburse claims. Mr. Cuomo concluded that a reliance on the Ingenix database contributed to a lack of transparency that made it impossible for patients and their families to obtain key information on costs they would have to bear personally in seeking out-of-network services. In subsequent months, Mr. Cuomo spearheaded multi-million dollar settlements with most of the major insurance companies, with those funds to be applied to a replacement database to calculate out-of-network payments more consistent with actual prevailing rates and reasonable and customary standards.
At the same time that Mr. Cuomo's investigation was ongoing, U.S. Sen. John Rockefeller, the chairman of the Senate Commerce, Science and Transportation Committee, solicited information from 18 insurance companies (representing about 33 percent of the health insurance market in the United States) about whether their companies used the Ingenix database. With the exception of one company, all of the respondent insurance firms stated that either they or at least one of their affiliates or subsidiaries used Ingenix data to calculate reimbursements for out-of-network healthcare or dental services. The report found flaws in the out-of-network reimbursement system for those health insurers that used the Ingenix database that inhibited them from calculating "reasonable and customary" reimbursement rates for providers and consumers across the nation. The report essentially made the same conclusions as Mr. Cuomo made in his Code Blue Report. Rockefeller’s committee report was published on June 24, 2009 and is available at http://www.omhc.com/download/Ingenix_Congressional_Report.pdf.
In Jan. 2009, the American Medical Association announced a settlement of its massive class-action federal lawsuit against United Healthcare for $350 million. The lawsuit alleged that UHC under-reimbursed thousands of consumers nationwide.
As part of Mr. Cuomo's settlements with the various insurers, a non-profit organization called FAIR Health was established to work with leading academic researchers to create an enhanced database utilizing a fair and open methodology for collecting and analyzing healthcare provider charges nationwide. The data was to be made available to the public to assist consumers with researching charges for medical and dental services in advance of making a decision to go out-of-network. The new consumer website is now available at www.fairhealthconsumer.org. The tools and data developed by FAIR should produce realistic and more competitive out-of-network reimbursement rates, however, most insurers are not yet using these databases to calculate out-of-network medical claims reimbursement.
Under Mr. Cuomo's settlement, health insurers could continue to use Ingenix and other similarly flawed databases until FAIR was completely up and running, which it is not. Other health insurers are changing their policy forms to remove "reasonable and customary" language and replace it with fee reimbursement schedules for calculation of out-of-network claims based on a percentage of Medicare rates — which, in most experts' opinions, are unreasonably low.
Lessons learned
What does this all mean? It means that healthcare providers and practices can obtain increased reimbursement for their paid out-of-network claims by appealing all out-of-network paid claims. At time of receipt of an insurer's EOB, a written appeal should be prepared to the appeal address listed in the EOB citing the precedents created by the following:
- The former New York Attorney General’s investigation and settlements (cite the Code Blue Report);
- Sen. Rockefeller’s investigation and report findings;
- The UHC AMA settlement; and
- The various class actions that have emerged since the UHC AMA settlement.
These precedents can and should be used to establish that your out-of-network claims are being under-reimbursed and that an increased payment is warranted. It is truly a unique concept to appeal paid claims, as healthcare providers generally are used to appealing only denials. However, practitioners should appeal all out-of-network paid medical claims, without exception. You will be surprised by the results.
Many payors such as Empire Blue Cross, United Healthcare, United Healthcare Empire Plan, Aetna, Cigna and many more will pay additional reimbursement on plans that reimburse based on "reasonable and customary" fees. My clients frequently receive 80 to 100 percent of charges after appeal.
When dealing with out-of-network claims, the following are a few helpful tips that can assist you in receiving fair, reasonable and quicker payments:
- Provide patients with instructional information explaining the following: You are an out-of-network provider; What it means to be an out-of-network provider; Advising that checks will be sent to the patient because insurers do not accept AOB; What to do with checks received (where to send them, how to endorse them, etc.); Providing contact information for billing staff (or a billing company representative) who can answer questions about out-of-network claims and payments; and Advising patients not to be alarmed by large patient responsibilities on EOBs (this is to be expected, so assure them that all paid claims will be appealed multiple times and that you expect appeals to be successful and patient responsibilities to be reduced.)
- Get e-mail addresses and cell phone numbers of patients (patients often will respond better to e-mails and text messages than to traditional phone calls).
- Get patient AOB and authorizations to discuss patient medical information and to file appeals and lawsuits against health insurers on their behalf if necessary.
- Provide patients copies of all filed appeals and encourage them to contact the health insurer for status of appeals (patients should be advised that successful appeals will reduce patient responsibility, thus motivating them to push payers to resolve appeals quickly).
- Utilize state department of insurance and state attorney generals’ complaint procedures (i.e. the New York State Attorney General’s Health Bureau has a department dedicated to complaints involving out-of-network claims).
You can and will receive additional reimbursement on your out-of-network claims. Remember, appeal all paid claims, be organized, track payments by payers and remain diligent. These claims are like found money, and can increase a practice’s revenue and bottom line.
Good luck.
Thomas J. Force, Esq., is the founder, president and chairman of the board of The Patriot Group, www.patriotcompli.com, a full service revenue recovery company that provides billing, collections,and follow-up services as well as assistance with managed care appeals, managed care contracting, credentialing and compliance. Mr. Force is nationally recognized as an expert in revenue collection techniques, managed care contracting and appeal strategies.
Many physicians and other healthcare practitioners need to go "in-network" with managed care organizations because these network agreements drive patients into their office. These practitioners typically enter into managed care participation provider agreements with the health insurers for the privilege of becoming an "in-network" provider. The benefits of being in-network include the following:
- Patients are referred to the practice by virtue of their inclusion on PPO and HMO networks;
- Medical claims checks are issued to the practice directly, not to patients; and
- Claim denials are reduced.
The major disadvantage of becoming an "in-network" provider is that the healthcare practitioner is forced to accept very low reimbursement rates for their medical services, and there is virtually no give and take on the contract terms. Providers essentially sign the contract as is, without any revisions. Consequently, the contract provisions are typically one-sided, favoring the health insurer.
As a result, more and more healthcare practitioners are deciding to go "out-of-network." This means the healthcare practitioner chooses to forego participation in health insurer PPO and HMO networks, and no managed care contracts are executed. The obvious benefit of being an out-of-network provider is that reimbursement rates typically are higher than that of in-network providers.
The disadvantages of being out-of-network are that the frequency of denied claims increases and the practice received no referrals from HMO and PPO networks. In addition, many health insurers refuse to accept assignment of benefits (AOB) between patients and the practice.
An AOB is a form through which a patient agrees to assign a claim benefit or payment to the practice, meaning that claim checks are sent to the practice and not to the insured member. When an insurer rejects an AOB, it results in claim checks being sent directly to the practice's patients. Many insurers policy forms contain a provision that all AOB to out-of- network practioners are rejected. This essentially forces a provider to chase their patients for claim checks that rightfully belong to the practice. Many patients cash the claim checks, especially in a slow economy, and then outright refuse to return the funds to the practice. The practice is then faced with instituting debt collection actions, which could result in a public relations disaster. As a result, many practices simply decide to write off of the debt, which has a detrimental impact on revenue.
Many physician advocates have questioned whether the failure to recognize the validity of a patient AOB is really nothing more than an attempt by a health insurer to punish a practice for daring to go out-of-network (:"you don’t want to go in-network and accept our unreasonably low fee schedule? No problem, we'll just send your claim checks to the patients, and good luck collecting from your patients.") Health insurers counter that it is a simple contract issue, asserting that they cannot accept a patient AOB because they simply do not have privity of contract with the provider. The only privity of contract that exists is with their own members, hence the reason the AOB is rejected and checks are sent to members and not to the practice directly.
New York: Case in point
In any event, by way of background, then-New York State Attorney General Andrew Cuomo, early in 2008, conducted an investigation into what he viewed as under-reimbursement of out-of-network claims by most insurers in New York. Mr. Cuomo investigated what he referred to as "industry-wide," typical, customary and reasonable underpayments that affected consumers in New York State and nationwide. At the conclusion of his investigation, Mr. Cuomo described out-of-network reimbursement by certain health insurers as a scheme to defraud consumers by manipulating reimbursement rates for out-of-pocket medical expenses.
Specifically, in a press release former Atty. Gen. Cuomo stated that the "scheme by health insurers (is) to defraud consumers by manipulating reimbursement rates" by using a "defective and manipulated database [Ingenix]." He further stated that most major health insurance companies used this database with full knowledge that it is artificially and intentionally well below reasonable and customary reimbursement rates.
Moreover, Mr. Cuomo’s investigation found that by distorting the "reasonable and customary" rates, insurers were "able to keep their reimbursements artificially low and force patients to absorb a higher share of the costs." He stated that "getting insurance companies to keep their promises and cover medical costs can be hard enough as it is, but when insurers create convoluted and dishonest systems for determining the rate of reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need."
At the conclusion of his investigation in Jan. 2009, former Atty. Gen. Cuomo published a document referred to as "Code Blue," which concluded that insurance payers in New York State and nationwide were under-reimbursing consumers and providers in out-of-network situations due to a flawed database, Ingenix, which was used to calculate such payments. He found an inherent conflict of interest involving the Ingenix database in that it was owned by an insurer, United Healthcare, and created by the insurance industry, which was motivated to under-reimburse claims. Mr. Cuomo concluded that a reliance on the Ingenix database contributed to a lack of transparency that made it impossible for patients and their families to obtain key information on costs they would have to bear personally in seeking out-of-network services. In subsequent months, Mr. Cuomo spearheaded multi-million dollar settlements with most of the major insurance companies, with those funds to be applied to a replacement database to calculate out-of-network payments more consistent with actual prevailing rates and reasonable and customary standards.
At the same time that Mr. Cuomo's investigation was ongoing, U.S. Sen. John Rockefeller, the chairman of the Senate Commerce, Science and Transportation Committee, solicited information from 18 insurance companies (representing about 33 percent of the health insurance market in the United States) about whether their companies used the Ingenix database. With the exception of one company, all of the respondent insurance firms stated that either they or at least one of their affiliates or subsidiaries used Ingenix data to calculate reimbursements for out-of-network healthcare or dental services. The report found flaws in the out-of-network reimbursement system for those health insurers that used the Ingenix database that inhibited them from calculating "reasonable and customary" reimbursement rates for providers and consumers across the nation. The report essentially made the same conclusions as Mr. Cuomo made in his Code Blue Report. Rockefeller’s committee report was published on June 24, 2009 and is available at http://www.omhc.com/download/Ingenix_Congressional_Report.pdf.
In Jan. 2009, the American Medical Association announced a settlement of its massive class-action federal lawsuit against United Healthcare for $350 million. The lawsuit alleged that UHC under-reimbursed thousands of consumers nationwide.
As part of Mr. Cuomo's settlements with the various insurers, a non-profit organization called FAIR Health was established to work with leading academic researchers to create an enhanced database utilizing a fair and open methodology for collecting and analyzing healthcare provider charges nationwide. The data was to be made available to the public to assist consumers with researching charges for medical and dental services in advance of making a decision to go out-of-network. The new consumer website is now available at www.fairhealthconsumer.org. The tools and data developed by FAIR should produce realistic and more competitive out-of-network reimbursement rates, however, most insurers are not yet using these databases to calculate out-of-network medical claims reimbursement.
Under Mr. Cuomo's settlement, health insurers could continue to use Ingenix and other similarly flawed databases until FAIR was completely up and running, which it is not. Other health insurers are changing their policy forms to remove "reasonable and customary" language and replace it with fee reimbursement schedules for calculation of out-of-network claims based on a percentage of Medicare rates — which, in most experts' opinions, are unreasonably low.
Lessons learned
What does this all mean? It means that healthcare providers and practices can obtain increased reimbursement for their paid out-of-network claims by appealing all out-of-network paid claims. At time of receipt of an insurer's EOB, a written appeal should be prepared to the appeal address listed in the EOB citing the precedents created by the following:
- The former New York Attorney General’s investigation and settlements (cite the Code Blue Report);
- Sen. Rockefeller’s investigation and report findings;
- The UHC AMA settlement; and
- The various class actions that have emerged since the UHC AMA settlement.
These precedents can and should be used to establish that your out-of-network claims are being under-reimbursed and that an increased payment is warranted. It is truly a unique concept to appeal paid claims, as healthcare providers generally are used to appealing only denials. However, practitioners should appeal all out-of-network paid medical claims, without exception. You will be surprised by the results.
Many payors such as Empire Blue Cross, United Healthcare, United Healthcare Empire Plan, Aetna, Cigna and many more will pay additional reimbursement on plans that reimburse based on "reasonable and customary" fees. My clients frequently receive 80 to 100 percent of charges after appeal.
When dealing with out-of-network claims, the following are a few helpful tips that can assist you in receiving fair, reasonable and quicker payments:
- Provide patients with instructional information explaining the following: You are an out-of-network provider; What it means to be an out-of-network provider; Advising that checks will be sent to the patient because insurers do not accept AOB; What to do with checks received (where to send them, how to endorse them, etc.); Providing contact information for billing staff (or a billing company representative) who can answer questions about out-of-network claims and payments; and Advising patients not to be alarmed by large patient responsibilities on EOBs (this is to be expected, so assure them that all paid claims will be appealed multiple times and that you expect appeals to be successful and patient responsibilities to be reduced.)
- Get e-mail addresses and cell phone numbers of patients (patients often will respond better to e-mails and text messages than to traditional phone calls).
- Get patient AOB and authorizations to discuss patient medical information and to file appeals and lawsuits against health insurers on their behalf if necessary.
- Provide patients copies of all filed appeals and encourage them to contact the health insurer for status of appeals (patients should be advised that successful appeals will reduce patient responsibility, thus motivating them to push payers to resolve appeals quickly).
- Utilize state department of insurance and state attorney generals’ complaint procedures (i.e. the New York State Attorney General’s Health Bureau has a department dedicated to complaints involving out-of-network claims).
You can and will receive additional reimbursement on your out-of-network claims. Remember, appeal all paid claims, be organized, track payments by payers and remain diligent. These claims are like found money, and can increase a practice’s revenue and bottom line.
Good luck.
Thomas J. Force, Esq., is the founder, president and chairman of the board of The Patriot Group, www.patriotcompli.com, a full service revenue recovery company that provides billing, collections,and follow-up services as well as assistance with managed care appeals, managed care contracting, credentialing and compliance. Mr. Force is nationally recognized as an expert in revenue collection techniques, managed care contracting and appeal strategies.