http://www.globalexcelusa.com/pdfs/Gaming_The_System.pdf

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.

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.

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.  

Until now.

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?