Archive for January, 2010
One of the most misguided and financial suicidal concept in healthcare reimbursement is that health care providers are historically and fundamentally as well as legally taught and convinced that any and all denials or reductions of your claims with or through managed care entity are a PPO discount, a consensual compromise or defeat, instead of ERISA benefits denial, in whole or in part, based on relevant plan benefits provisions governed under ERISA, the federal as a public policy, even though every managed care contract, managed care network medical policy, managed care provider manuals have specifically and unambiguously disclaimed and instructed that provider contracts are for provider voluntary reduction from the total amount that each members benefit plan has already approved as benefits reimbursement, specifically based on each individual patient/member benefits plan provisions, Summary Plan Description (SPD), governed by federal law ERISA, for any ERISA regulated employer sponsored health benefits plan in private sector.
ERISA is a federal law, governing ERISA plans, health insurance/benefits through employment in private sectors. The simplest way to understand and identify an ERISA plan is if your patient obtained health insurance from employment in private sector, from both self-insured and fully insured (through purchase of insurance) benefits plans.
SPD (Summary Plan Description) is ERISA version of insurance policy, SPD controls insurance/benefits coverage, limitation, and conditions for reimbursement. Each individual patient eligibility, qualification, coverage, limitation, and circumstances for disqualification are specifically determined by the terms and conditions of each individual plan SPD. Any managed care contract, PPO, POS, EPO, P4P and HMO, may not be intended, or shall not be construed, to supercede, alter or limit the rights or remedies otherwise available to any Person under § 502(a) of ERISA or to supercede in any respect the claims procedures of § 503 of ERISA.
Managed care contract between healthcare providers and manage care entities or organizations, or even directly with ERISA plans or insurers, are legally a third-party business contract, independently and separately from an ERISA plan. A managed care contract is primarily used to solicit or offer provider discount in exchange of wholesale referral (network access) and prompt reimbursement.
Any claim denials or delays for plan coverage, limitation, medical necessity, UCR, network provider access, coordination of benefits, pre-existing condition, eligibility determination, anything about money and rights for any participant and beneficiary, except for pure PPO discount, are governed by ERISA, as a public policy, and determined based on each individual benefits plan provisions, however if all of the above are not in dispute, or moot, but there is a pure PPO or managed care discount, that would be a provider PPO dispute, determined by each individual manage care contract, governed by specific individual state laws where contract was entered and choice of law was agreed by parties of such contract.
Therefore, any PPO discount or dispute is not triggered unless or until ERISA benefits questions or disputes are resolved or moot.
As a national insanity or stupidity in US health care crisis, managed care contracting has been used to hijack, interfere, substitute, replace and discount or deceit the compliance and enforcement of ERISA, a federal law as public policy.
Editor’s Note: ERISA pre-empts all PPO contracts much to the displeasure of medical care providers. See entire article here – http://erisaclaim.com/ERISA_or_PPO.htm
Our readers may find this interesting. Below is a sample hospital contract rate page send to us by a major hospital chain. We have reviewed numerous PPO hospital contracts in the past several years, from multiple payers, and can tell our readers that all of them look almost exactly like the one posted below. Just fill in the blanks.
|SAMPLE HOSPITAL SCHEDULE|
|4||Vaginal Delivery||1-2 days||FF|
|5||Vaginal Delivery with Sterlization and/or D&C||1-2 days||FF|
|6||C-Section Delivery||1-3 days||FF|
|7||C-Section Delivery with Sterilization and/or D&C||1-3 days||FF|
|8||Additional Day(s) Mother Only||PD|
|BC = Billed Charges|
|FF = Fixed Fee|
|PT = Per Treatment|
|PD = Per Diem|
|SAMPLE HOSPITAL FOOTNOTES|
|These footnotes are an integral part of the rate sheets|
|Service||Description||MS-DRG(s)||Rev Code(s)||ICD-9 / CPT Code(s)|
|1||Medical/Surgical||100, 101, 110, 111, 112, 113, 114, 116, 117, 120, 121, 122, 123, 124, 126, 127, 130, 131, 132, 133, 134, 136, 137, 140, 141, 142, 143, 144, 146, 147, 150, 151, 152, 153, 154, 156, 157, 160, 164, 167, 169|
|2||ICU/CCU/NICU/PICU/TELE||(MICU, SICU, NICU, CICU) This rate applies to all days baby is in NICU.||172-174, 200-204, 206, 209-213, 214, 219|
|3||Obstetrics||If baby is admitted to NICU during specified length of stay, NICU rate will be paid in addition to case rate. OB case rates reflect pricing for the obstetrical service of delivering. Hence, payment of full amount of case rate will be made regardless of the status of the newborn.|
|4||Vaginal Delivery||768, 774, 775|
|5||Vaginal delivery with sterilization and/or D & C||767|
|6||C-Section Delivery||765, 766|
|7||C-Section delivery with sterilization and or D & C||765, 766||ICD-9 codes 66.2 – 66.4|
|8||Additional Day(s) Mother Only||This rate applies if Mother’s stay exceeds the case rate day criteria.|
|9||Normal Newborn||This rate is paid in addition to the Obstetric case rate.||170, 171, 179|
|10||Carve Outs/Pass-Throughs||Implants/Medical Devices and Pharmaceutical Drugs as defined below are reimbursed as an add-on to ALL services unless noted otherwise.|
|11||Implants/Medical Devices||Hospital will be paid for covered implants, medical devices, prosthetics, pacemakers, seed implants and stent(s), as an add-on to ALL services herein when billed with revenue codes 274, 275, 276, 278 and 279 identified on submitted UB forms at the specified BC percentage. No invoice is required.||274, 275, 276, 278 and 279|
|12||Pharmaceutical Drugs||Hospital will be paid for covered pharmaceutical drugs, as an add-on for ALL services herein when billed with revenue codes 252 or 636 identified on submitted UB forms at the specified BC percentage. No invoice is required.||252, 636|
|13||Catastrophic||For any case where total hospital charges are greater than the rate sheet threshold, reimbursement will be at the rate sheet specified percentage of BC effective from the first billed dollar for the entire case. Gross charges associated with Revenue codes 274, 275, 276, 278, 279, 252 and 636 as defined in the implant and pharmaceutical drug reimbursement sections are included in the Catastrophic Threshold calculation and shall be paid at the applicable Catastrophic Payment percentage of BC.|
|14||Threshold||The minimum amount of gross billed charges that qualifies a case for payment under the catastrophic clause.|
|15||Payment Basis||The percent of reimbursement applied to the total billed charges qualified by the threshold.|
|16||OUTPATIENT||Outpatient includes all services provided by hospital billed as outpatient. Implants/Medical Devices and Pharmaceutical Drugs as defined below are reimbursed as an add-on to ALL services. The Outpatient service categories below are additive unless noted otherwise.|
|17||All Outpatient||All services performed during the stay.|
Editor’s Note: In our opinion, self-funded employer groups should negotiate directly with hospitals with the intent of paying a fair and reasonable rate agreed to by both parties. However, from the payer’s perspective, the following items need to be addressed: (1). Right to audit must be included (2). Outliers must be removed (3). Discounts off imaginary and inflated numbers must be removed entirely and (4). Contract must be publishable.
Massachusetts insurance companies pay some hospitals and doctors twice as much money as others for essentially the same patient care, according to a preliminary report by Attorney General Martha Coakley.
It points to the market clout of the best-paid providers as a main driver of the state’s spiraling health care costs
The yearlong investigation, set to be released today, found no evidence that the higher pay was a reward for better quality work or for treating sicker patients. In fact, eight of the 10 best-paid hospitals in one insurer’s network were community hospitals, which tend to have less complicated cases than teaching hospitals and do not bear the extra cost of training future physicians.
Coakley’s staff found that payments were most closely tied to market leverage, with the largest hospitals and physician groups, those with brand-name recognition, and those that are geographically isolated able to demand the most money.
“Everybody knows that there is dysfunction in the system, and nobody is happy with it,’’ Coakley said in an interview yesterday. “These rising costs are unsustainable. If we don’t do something about it, the only thing we’ll be able to afford is health care. No one will have money for food or housing.’’
The report did not identify insurers and providers by name, and Coakley declined to release the names of the highest-paid, saying she wanted to lay out systemwide problems, not blame individual organizations. More detailed information may come to light during Patrick administration hearings on how to control medical costs, scheduled to begin March 16.
A 2008 Globe Spotlight Team series focused on the Boston market found that hospitals such as Massachusetts General Hospital and Brigham and Women’s Hospital typically are paid 15 percent to 60 percent more for essentially the same work as other hospitals, even though the quality is not superior.
Coakley’s statewide investigation found that the payment gap was wider than the Globe determined. The report shows that a small group of about 10 hospitals statewide command significantly higher payments than the other 55, ranging from 10 to 100 percent more than their competitors for similar work.
While academic medical centers are widely thought to be the most costly, the report noted that one major teaching hospital that treats some of the state’s sickest patients was paid less than dozens of others with healthier patients.
The investigation also discovered that hospitals that treat large numbers of poor patients, who can be more expensive to care for, are as a group paid 10 percent to 25 percent less than average by commercial insurers.
The report, the result of legislation that directed Coakley to investigate why medical costs are rising so rapidly, is based on tens of thousands of contracts and other documents subpoenaed from insurers and providers and depositions from more than 30 key health care executives.
The attorney general concluded by raising concerns about some of the solutions being discussed to control health costs.
Last year, a state commission, with the backing of some key legislators and Patrick administration officials, proposed radical changes to the way providers are paid, with the goal of slowing the rise in the use of medical services. They urged scrapping the current fee-for-service system and paying providers a per-patient annual fee, called a global payment, to cover all of a patient’s medical care.
But Coakley’s investigators found that Massachusetts health care costs, which are growing by 7.5 percent annually, are mostly the result of rising prices, not patients getting more imaging tests, surgery, and other procedures. For one major insurer, provider price increases accounted for 80 percent of the total growth in medical expenses between 2006 and 2009.
A “shift to global payments may not control costs,’’ the attorney general concluded, “and may result in unintended consequences if it fails to address the dynamics and distortions of the current marketplace.’’
Coakley said in an interview that she supports payment reform, but that a switch to global payments should be accompanied by other measures, such as lessening price differences among providers and discouraging contract provisions that promote disparities.
Dr. JudyAnn Bigby, secretary of Health and Human Services, said switching to global payments could help control price increases if it is done right. One option is to have an oversight authority set parameters for the prices paid to providers.
“Everyone agrees there needs to be some sort of mechanism for addressing the disparities in the market right now,’’ Bigby said.
Officials at Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, acknowledged that insurers pay some hospitals and physician groups far more than others, mostly because they have to. Andrew Dreyfus, executive vice president for health care services, said hospitals in high demand or serving geographically isolated populations can hold out for higher payments.
“We need to change it,’’ said Dreyfus, who had not seen the report. “The deeper question is how do you do that? We think that the most promising way to moderate hospital costs is to improve care and then to guide our members’’ to the ones that do it most cost-effectively, he said.
A spokesman for Metrowest Medical Center in Framingham and Saint Vincent Hospital in Worcester said the two community hospitals have struggled for years with lower payments for the same quality services as nearby teaching hospitals.
“The fact that some hospitals are reportedly being reimbursed twice as much for services of comparable quality is outrageous,’’ said Dennis Irish, spokesman for the owner of the two hospitals, Vanguard Health Systems. “Not only is this grossly unfair to our hospitals and doctors, but it significantly drives up the cost of care.’’
Officials at Partners HealthCare, the parent organization of Mass. General and the Brigham, said they welcome Coakley’s report, though had yet to see it.
“We hope that this report helps to guide a meaningful discussion of the many factors contributing to the issue of cost increases both here and across the country,’’ said Partners spokesman Rich Copp.
One of our clients whose self-funded health plan is currently payng hospitals on a cost-plus basis, had an initial contact with a local hospital yesterday to discuss a possible agreement regarding hospital reimbursment methodology both sides could agree to. The hospital administrator started the conversation by saying that he was familiar with what the employer was doing and thought that cost-plus reimbursement methodology our client was employing was “illegal.”
We passed that comment on to our auditing firm and below is their response:
“We had a file yesterday where a patient went to xxxxx xxxxxxx for a highly specialized retina procedure. In the hospital for three days and the bill was $ 18,000 , including the OR. My guess was that most of the NJ and TX hospitals would charge more in the area of 35 to 50 K . We paid xxxx xxxxxxxx $ 12,000 based on audit and they accepted without a fight. xxxxx xxxxxxx , like other Maryland hospitals , hospital may not develop outrageous chargemasters because of regulation. ”
“So , xxxxx xxxxxxx , arguably one of the finest hospitals in the world has no problem with our process and accepts the payment. These other guys ( that couldn’t hold a candle to xxxxx xxxxxxx ) charge ficticous amounts and then threaten patients and employers when they don’t get their way. If that is “ illegal “ , then we need to change the laws. But we are not doing anything illegal in performing reasonable fiduciary duties on behalf of a Plan. I look forward to speaking with Mr. xxxxxxx and it sounds like Barbara gave him a good walk through. These are all positive developments : transparency , maybe competition between providers in the near future . Can you imagine ?”
Editor’s Note: This particular hospital administrator needs professional counseling. We have a bevy of attorneys lathering at the bit to address the legality of cost-plus with anyone who is stupid enough to spout off like an uneducated moron. We have redacted the name of the hospital herein since we do not want “flavor” future discussions with this particular hospital system.
Paying hospitals on a cost-plus basis makes sense to many, except hospitals.
With more and more employers in Texas embracing the concept of cost-plus claim payment methodology, and the ability to channel millions of health care dollars, hospitals are coming to the negotiating table. Sitting across from one another, employers and hospitals are finally talking to each other. Money, it seems, drives behaviour.
Missing from the room are greedy health care intermediaries whose value is now openingly questioned by many.
In meeting with once arrogant and obnoxious hospital administrators, we find that most are pretty good guys after all. We are encouraged.
The following email was received this morning from a source with impeccable credentials:
Everyone knows that hospitals lose money on Medicare patients. To make up for the losses hospitals shift costs to private payers, as much as 400-800% higher. Medicare revenue typically account for 60% or more of a hospitals cash flow on average.
But do hospitals really lose money on Medicare patients? Insiders tell us no. In fact, each hospital’s Medicare reimbursement rates are based, to a large degree, on a cost-plus approach. Hospitals must file with CMS and attest to their costs.
If hospitals are not required to accept Medicare patients, and if it is true that hospitals lose money on Medicare patients, why do they continue to accept them?
A hospital administrator summed it up this way: “Hospitals do not lose money on Medicare, they make a profit. Any hospital administrator whose hospital loses money on 60% of their revenue will not be employed very long by the Board of Directors.”
Editor’s Note: The American Medical Association disputes the theory that hospitals make money on Medicare patients (see http://www.aha.org/aha/content/2005/pdf/05fragilehosps.pdf). However, go to www.ahd.com and do a little research in your spare time. There is an answer out there somewhere to the question – Do Hospitals Lose Money on Medicare Patients? Some say “Yes” and some say “No”. Who is telling the truth?
In Iowa, a new scheme is underway to soak the feds for more Medicaid money. Here’s how the trick works: Hospitals asked to be taxed by the state. (Right now, most states hospitals are nonprofits and therefore exempt from most taxation.) This generates $40 million in “provider assessment” fees. The state plows the money back into Medicaid, triggering federal matching spending on that cash. (The feds pay about two-thirds of Medicaid.) That money goes right back to the hospitals in exchange for services provided to Medicaid patients. It’s a kind of Do-It-Yourself multiplier effect!
The Iowa Hospital Association, which backs the idea, says the state also would benefit from the arrangement. The association estimates that after the hospitals reap their reward, the state could wind up with about $65 million.
Everybody wins. Except, well, everybody—since this whole runaround is just a way of reshuffling the money of federal taxpayers and dealing it out to hospitals and state governments.
Editor’s Note: Source – www.reason.com, written by Kathern Mangu-Ward, January 8, 2010
Today, during a flight to Houston, one of our operatives, Miss Molly Mulebriar, sat next to a fellow from San Diego whose profession is PPO network development. Mulebriar could not wait to call our office upon landing, breathlessly telling us of all that she had gleaned from this most interesting conversation.
Once Mulebriar memorializes the conversation, we will publish it here for our readers. Isn’t it amazing what perfect strangers will tell you on airplanes?