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
• [phone] [phone]
• rjordan_at_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 HMOs 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 patients 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
  its 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 statutes 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) -
  Texass 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.
• Baylors 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 patients bill where overpayment was
  due solely to insurers 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 HMOs
  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 providers 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 [phone]
• workers.compmedservice_at_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 providers 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 providers 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
Workers Compensation

• Reconsiderations must be made within 60 days
  but doesnt 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 from the insured any amount in excess
  of such limits, except for amounts that are not
  covered by the insureds 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
  insureds 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 patients copay, co-insurance, or
  deductible without regard to the patients
  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

51
How long to collect?

• Statute of Limitations
• 4 years on a non-written agreement
• 5 years on a written agreement
• A payment tolls the time and starts it running
  again
• Written acknowledgement of a debt tolls the time
  and starts it running again
• SOL is a defense only

52
PAYMENTS

• Accord and Satisfaction
• Payment in full on a disputed debt
• Exceptions
• An organization proves that before the check was
  tendered, it sent a statement that all
  communications concerning disputed debts,
  including an instrument tendered as full
  satisfaction of a debt are to be sent to a
  designated person, office or place, and the check
  was not received by the designated person, office
  or place.
• Repay the money within 90 days after payment of
  the instrument. An Organization is not allowed
  to repay the money if it sent a statement as
  noted above.

53
PAYMENTS

• Bad Checks
• Judgment will include 3x the amount of the check,
  costs, atty fees, bank fees, interest.
• Must send a statutory demand letter via cert
  mail You are hereby notified that a check
  numbered ____ in the face amount of ___ issued
  by you on ___, drawn upon (name of bank), and
  payable to ____, has been dishonored. Pursuant
  to Florida law, you have 30 days from receipt of
  this notice to tender payment in cash of the full
  amount of the check plus a service charge of 25,
  if the face value does not

54
PAYMENTS

• Bad checks
• (Cont.) exceed 50, 30, if the face value
  exceeds 50 but does not exceed 300, 40 if the
  face value exceeds 300, or 5 percent of the face
  amount of the check whichever is greater, the
  total amount due being ____. Unless this amount
  is paid in full within the 30 day period, the
  holder of the check or instrument may file a
  civil action against you for three times the
  amount of the check, but in no case less than
  50, in addition to the payment of the check plus
  any court costs, reasonable attorney fees, and
  any bank fees incurred by the payee in taking
  action.

55
PROBATE

• Estate must give actual notice to all known
  creditors.
• 30 days to file Statement of Claim from receipt
  of notice.
• 90 days to file Statement of Claim from first
  Notice of Publication.
• Amendment of Claims must be authorized by the
  Court.
• Petition for Payment after 5 months from
  Publication
• 2 year SOL from date of death

56
PROBATE

• Objection to claim must be filed 30 days after
  Statement of Claim filed or 4 months after
  Publication.
• Creditor must file independent action within 30
  days from receipt of Objection
• Class 4 vs. 8 if reasonable medical and hospital
  expenses of the last 60 days of the last illness
  of the decedent.

57
GUARDIANSHIP/TRUST

• Guardian of person person authorized to give
  medical consent for patient.
• Guardian of property person is custodian of the
  patients property
• Trust assets are administered through a trust
  instrument by a trustee.

58
BANKRUPTCY

• Chapter 7 asset or no asset liquidation
• Chapter 13 individual wage earner repayment plan
• Chapter 11 corporate repayment plan
• File a proof of claim and look for the schedule
  of repayment
• Attend the Creditors meeting only if fraud is
  involved