Transcript Out of Network: Exclusion of Providers Based Upon Referral

Out of Network:
Exclusion of Providers
Based Upon Referral
Patterns and Network
Adequacy
2012 Texas Health Law Conference
Susan Feigin Harris
[email protected]
713.646.1307
601622735
The Out-of-Network Payment Issue:
Where the Rubber Meets the Road
• Issues:
o Providers that adopt an “out-of-network” strategy
o Providers with ownership interest refer to the entity,
which is also out of network
o Providers that discount beneficiary copayments and
deductibles – patient financial obligations
o Health plans that push back – refuse to contract with
providers; attempt to shut providers out of the market
• Questions:
o What are the payment obligations of health plans out of
network?
o What are the legal parameters under which these issues
should be evaluated?
2
Health Plan Policies
• Provide out-of-network benefits to
beneficiaries
• May advertise on websites re: PPO or POS
o “Advantages of a PPO include the flexibility of
seeking care with an out-of-network provider if
so desired . . .”
o “In a POS, you have greater freedom to see outof-network providers than with an HMO . . .”
3
Out-of-Network Payment
• Health plans may or may not pay “usual and
customary” rates
• The term “usual and customary rate” is not
well-defined in state or federal law and is
subject to market forces
• Health plans have responded over the years
to lack of definition and have developed their
own application – % of Medicare
4
Out-of-Network Payment Common
Characteristics
• Varies widely among payors based on plan
benefits
• Denials for “allowable amounts” as
determined by the health plan and employer
• Subsequent recoupment of payment or
overpayment requests
• Scare tactics used to pressure physicians
who refer out of network and patients who
see OON providers
5
Provider Behaviors Out of
Network / Market Response
• Providers offer discounts to patients to
provide “seamless” benefits when referred to
OON facility – discounts to the patient
copayment and deductible amounts
• Is this legal?
• What actions must providers take to ensure
legality when discounting OON?
• What actions have payors taken in
response?
6
Discounts vs. Waivers to Patient
Financial Obligations
• Legal considerations
o Relief of the patient financial obligations
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Medicare Civil Monetary Penalty Statute
OIG concerns
Letters from TDSHS and TDI
Texas 1993 AG opinion
Texas Penal Code
o Pricing
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
Illegal pricing prohibition (Tex. Ins. Code § 552.003)
Advertising restrictions (Tex. Admin. Code § 164.3
(11-12))
7
Medicare Civil Monetary Penalty
Statute
• Any person who offers or transfers
remuneration to any Medicare or Medicaid
beneficiary “likely to influence such individual
to order or receive . . .”
• “Remuneration” = includes waiver of
coinsurance and deductible amounts and
transfers of items or services for free or other
than fair market value.
42 USC § 1320a-7a(a)(5); 42 USC § 1320a-7a(i)(6)
8
Waiver of Copayments
• Safe harbor protection afforded if:
o Not offered as a part of an advertisement or
solicitation
o Person doesn’t routinely waive
o Waiver is made following a good faith determination
of financial need
o Waiver is made without regard to diagnosis or
length of stay
o No bad debt claimed
• This applies to Medicare / Medicaid patients,
but also Texas anti-solicitation provisions
42 USC § 1320a-7a(i)(6)
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Waiver vs. Discount of Patient
Financial Obligations
• Texas state law considerations
o
o
o
o
o
o
o
Illegal pricing prohibition
Criminal penalty
Common law fraud
Health facility regulations
Actions by regulatory agencies
Occupations Code provisions
Case law
10
Texas Insurance Code
§1204.055
• Assignment of Benefit
• Contractual Responsibility for Deductibles
and Copayments
“the payment of benefits under an assignment does
not relieve the covered person of a contractual
obligation to pay a deductible or copayment. A
physician or other health care provider may not waive
a deductible or copayment by the acceptance of
assignment.”
11
Texas Insurance Code § 552.003
• Illegal pricing prohibition
o
o
o
Prohibits a person from “knowingly or intentionally charging
two different prices for providing the same product or service,
and the higher price charged is based on the fact that an
insurer will pay all or part of the price of the product or
services”
The penalty for violating this provision is classified as a Class
B misdemeanor and a “fraudulent insurance act” under the
Texas Insurance Code
Not applicable when provided to indigent or uninsured
individual who otherwise qualifies for financial indigency
policy
12
Usual and Customary /
Out of Network
• Texas Attorney General Opinion DM-215 (April
13, 1993)
o Section 4(c) of Article 21.24.1 “…operates only to
clarify that acceptance of assignment does not
relieve a health care provider of any obligations
incumbent on him to bill for or collect a co-payment
or deductible amount.”
o Cautions that a healthcare provider would be ill
advised to represent to a client or prospective client
that a deductible or copayment will be waived in
order to induce that individual to use the healthcare
provider’s services
13
Usual and Customary /
Out of Network
• Texas illegal remuneration statute
o Prohibits any remuneration paid between parties for
securing or soliciting patients or patronage for or
from a person licensed, certified, or registered by a
state healthcare regulatory agency
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Class A misdemeanor and constitutes grounds for
disciplinary action by the state healthcare regulatory
agency that has issued the license, certification, or
registration
Both sides of the transaction are subject to civil penalties
of not more than $10,000 for each day of violation and
each act of violation
Tex. Occ. Code §102.001(a) & §102.010(a)
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Usual and Customary /
Out of Network
• Texas Penal Code
o A person will be found to have committed insurance
fraud

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If a person, with intent to defraud or deceive an insurer causes
to be prepared or presents to an insurer in support of a claim for
payment under a health or property and casualty insurance
policy a statement that the person knows contains false or
misleading information concerning a matter that is material to
the claim, and the matter affects a person’s right to payment or
the amount of a payment to which a person is entitled; or
Solicits, offers, pays or receives a benefit in connection with the
furnishing of healthcare goods or services for which a claim for
payment is submitted under a health or property and casualty
insurance policy
o Penalties

Range from a Class C misdemeanor to a first degree felony
Tex. Penal Code Ann. §35.02(a)-(c)
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Usual and Customary /
Out of Network
• Hospital audits of billing
o “A hospital, treatment facility, mental health facility, or
health care professional may not submit to a patient or a
third party payor a bill for a treatment that the hospital,
facility, or professional knows was not provided or knows
was improper, unreasonable, or medically or clinically
unnecessary.”
o “If the appropriate licensing agency receives a complaint
alleging a violation…the agency may audit the billings
and patient records of the hospital, treatment facility,
mental health facility or health care professional.”
o Violations are subject to disciplinary action, including
licensure denial, revocation, suspension, or nonrenewal.
Tex. Health & Safety Code §311.0025
16
Usual and Customary /
Out of Network
• Texas common law fraud elements
o A material misrepresentation,
o Which, when made, was known by the speaker
to be false,
o Which was made with the intent that it be relied
and acted upon, and
o Which was relied upon to the detriment of the
party relying on it.
See, e.g., DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990); Eagle
Properties, Ltd. v. Scharbauer, 807 S.W.2d 714 (Tex. 1990).
17
Usual and Customary /
Out of Network
• Advertisement restrictions
o Prohibits physicians from publishing any
advertisement that: (11) “represents that health
care insurance deductibles or co-payments may
be waived or are not applicable to health care
services to be provided if the deductibles or copayments are required;” or (12) “represents that
the benefits of a health benefit plan will be
accepted as full payment when deductibles or
co-payments are required.”
22 TAC §164.3(11)-(12) (2012)
18
TDSHS / TDI 2005 Letters
• TDSHS (Feb. 15, 2005)
o Advised that providers should not be waiving
patient copayment and deductible
responsibilities to attract patients to the
noncontracted provider or facility. TDSHS
warned that “enforcement action may be taken
including administrative penalties, suspension,
denial, or revocation of the hospital’s license.”
o Cited Ins. Code Art. 21-24-1
o Hospitals may be cited for violations of 25 TAC §
133.121(a)(1)(F)
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TDSHS / TDI Letters 2005
• Texas Department of Insurance (Dec. 9, 2005)
o
o
o
o
Cited “inquiries” that suggest noncontracted providers are
waiving applicable patient financial obligations to attract
patients to out-of-network facility
Warned that “waiver of patient responsibility for any
applicable cost-sharing obligations under an insurance policy
may create several problematic issues for the health care
provider”
Cited application of the Insurance Code § 21.24 (recodified as
1204.055) regarding waiver of copayments and deductibles
when accepting assignment
Cited AG opinion DM-215; 22 TAC § 164.3 that prohibits
advertising of waivers; and warned of allegations of fraud and
violations of Texas Occupations Code § 101.203 and Texas
Health & Safety Code § 311.0025 for provider’s failure to
disclose waiver
20
Aetna v. Humble Surgical
Hospital, LLC
• Allegations include:
o breach by physicians of existing specialist
provider agreements with Aetna by referring
Aetna patients for certain procedures to the
surgical hospital outside of the Aetna network, in
which those physicians had a financial
investment interest
o that to induce patients to use the out-of-network
facility, patients were promised that their out-ofpocket costs would not be any different than if
they received the service at an in-network facility
Aetna vs. Ifeolumipo O. Sofola, M.D., Navin Subramanian M.D. and Humble Surgical Hospital LLC (case#: 201173949/Court 152), Harris County, Texas
21
Aetna v. Humble Surgical
Hospital, LLC
o breach of Specialist Physician Agreement provision
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o
o
o
o
agreement as a specialist to “render services to Members
only at Participating Hospitals or other Providers, or those
inpatient extended care, and ancillary service facilities
which have otherwise been approved in advance by
Aetna”
also, agreement to hold members harmless
failure to disclose the physician’s financial interest
failure to disclose the discounts
tortious interference of contract
common law fraud and conspiracy to overcharge
beneficiaries
22
Aetna v. Humble Surgical
Hospital, LLC
•
•
Harris County state court case dismissed 4/17/12; filed in
U.S. District Court for the Southern District of Texas, Civil
Action No. 4:12-ev-1206
Additional violations:
o
o
Texas Occupations Code § 101.203 (which prohibits a professional
from violating § 311.0025 of the Health and Safety Code – “A
hospital, treatment facility, mental health facility, or health care
professional may not submit to a patient or a third part payor a bill
for a treatment that the hospital, facility, or professional knows was
not provided or knows was improper, unreasonable, or medically or
clinically unnecessary.”
Texas Occupations Code § 102.006 – failure to disclose at the time
of referral the physician’s affiliation with the facility and that the
physician could receive remuneration as a result of the referral
23
Aetna v. Humble Surgical
Hospital, LLC
• Texas Occupations Code § 105.002
o Knowingly presenting (or causing to be presented) a
false or fraudulent claim for the payment of a loss
under an insurance policy. The presentation of
reports and billing statements seeking payment at
fees far higher than reasonable charges for the
same services in the relevant market
• Texas Insurance Code § 552.003
o By seeking inflated reimbursement from Aetna for
treatment and services rendered to members simply
because the particular patient had medical coverage
through Aetna
24
Aetna v. Humble Surgical
Hospital, LLC
• Claims for Relief
o
o
o
o
o
Common law fraud
Money had and received
Unjust enrichment
Injunctive relief
Declaratory action
25
Aetna’s Actions Span Several
States
• Aetna has been aggressively
suing doctors and surgery
centers that the doctors
partly own in California,
Texas, New York and New
Jersey for allegedly
overbilling insured patients
who go outside the
company’s network
26
Aetna Life Ins. Co. v. Bay Area
Surgical Management, LLC
• Aetna suit against Bay Area Surgical
Management, several affiliated physicians
and surgery centers in northern California
o Accusations include:
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Overcharging Aetna $20 million in two years
Illegally waiving their fees to induce patient choice
Charging $66,100 for a bunion procedure when the
average in-network fee was $3,677
Failing to inform patients of physician ownership in
out-of-network facilities
No. 112CV217943, Superior Ct. of California, Santa Clara (Feb. 2, 2012)
27
California Medical Assn. v. Aetna
Health of California, Inc.
• California Medical Assn. and 50+ physicians
sue Aetna
o Underpaying out-of-network physicians
o Refusing to authorize some out-of-network
services
o Terminating the contracts of doctors referring to
out-of-network providers
o Seek restitution, injunction against Aetna and
reinstatement of provider agreements Aetna
terminated in retaliation for referral to OON
facilities or providers
No. BC487670 Superior Ct. of California, Los Angeles (July 3, 2012)
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California Medical Assn. v. Aetna
Health of California, Inc.
• Charges against Aetna
o Unfair business practices

Attempts to control, direct and participate in the selection
of health facilities by PPO members
o False advertising

Making false statements about member’s rights to OON
benefits
o Breach of contract

With patients and physicians
o Illegal retaliation
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For terminating participating physician contracts and
retaliation
o Interference with prospective economic advantage
29
Aetna Wars With California
Physicians!
• Aetna refusing to negotiate or contract with
any physician to join Aetna’s provider
network if the physician is a member of CMA
• Physicians who are named plaintiffs in the
lawsuit, as well as those who have no direct
involvement, are now being faced with
termination from the Aetna network
30
CMA Cease and Desist Letter
31
Typical Contract Language That Forms
Basis for Health Plan Actions
• Referral by primary care physician
o Physician shall render services to Members only
at Participating Hospitals or other Providers, or
those inpatient, extended care, and ancillary
service facilities which have otherwise been
approved in advance by Company.
32
Sample Contract Language
• Utilization management
o
Company utilizes systems of utilization review / quality
improvement / peer review to promote adherence to accepted
medical treatment standards and to encourage Participating
Physicians to minimize unnecessary medical costs consistent
with sound medical judgment. To further this end, Physician
agrees, consistent with sound medical judgment:…(d) to
utilize Participating Physicians to the fullest extent
possible, consistent with sound medical judgment…Except
when a Member requires Emergency Services, Physician
agrees to comply with any applicable precertification and/or
referral requirements under the Member’s Plan prior to the
provision of Physician Services.
33
Sample Contract Language
• Referrals
o To the extent required by the terms of the applicable
Plan, Participating Group Physicians who are Primary
Care Physicians shall refer or admit Members only to
Participating Providers for Covered Services, and
shall furnish such Participating Providers with complete
information on treatment procedures and diagnostic
tests performed prior to such referral or admission. In
addition, to the extent possible, Participating Group
Physicians shall refer Members with out-of-network
benefits to participating Providers.
34
Sample Response to Pressure
From Health Plans
35
Physician-Patient Relationship
• Interference with Relationship Between
Patient and Physician or Health Care
Provider Prohibited - Tex. Ins. Code §
1301.067
o An insurer may not in any way penalize,
terminate the participation of, or refuse to
compensate for covered services a physician or
healthcare provider for discussing or
communicating with a current, prospective, or
former patient, or a person designated by a
patient, pursuant to this section.
36
Blue Cross Blue Shield
• 2009 Agreement with Texas Attorney General
o Resolved investigation into Blue Cross’ handling
of out-of-network referrals
o State investigators alleged Blue Cross
threatened to terminate physicians solely on the
basis of referring their patients for medically
needed treatments from qualified specialists that
were outside the Blue Cross provider network
37
Blue Cross Blue Shield
• 2009 Agreement with Texas Attorney General
o “It is not appropriate to interfere with the protected
doctor-patient relationship by terminating a doctor solely
for making good faith out-of-network referrals for
necessary care.” – Attorney General Abbott
o Under Texas law, insurance providers cannot interfere
with patients’ right to receive medical advice from their
doctors. That legally protected advice includes
treatment options, healthcare-related recommendations
and physician referrals. Doctors have a right – and a
duty – to inform patients about treatment options without
interference from health insurance providers.
38
Blue Cross Blue Shield
• Assurance of Voluntary Compliance
o “BCBS agrees it will not take, or threaten, any
adverse action against a Texas physician based
solely on that physician communicating with a
patient about medically necessary treatment
options or referring a patient for medically
necessary care outside the limited BCBS
network. Nothing in this section shall prevent
BCBS from taking any action that is otherwise
permitted by law.”
39
Misrepresentation Regarding Policy or
Insurer – Tex. Ins. Code § 541.051
• It is an unfair method of competition or an
unfair or deceptive act or practice in the
business of insurance to:
o (1) make, issue, or circulate or cause to be
made, issued, or circulated an estimate,
illustration, circular, or statement
misrepresenting with respect to a policy issued
or to be issued:… (B) the benefits or advantages
promised by the policy
40
Legislation –
S.B. 521 / H.B. 1393 – 82(R)-2011
• Prohibits an HMO from:
o
o
o
o
Prohibiting, by contract, a provider from providing a patient
with information regarding the availability of out-of-network
facilities for the treatment of a patient’s medical condition
Terminating or threatening to terminate an insured’s
participation in a preferred provider benefit plan solely
because the insured uses an out-of-network provider
Prohibiting a healthcare provider participating in a preferred
provider benefit plan from communicating with a patient about
the availability of out-of-network providers
Terminating or penalizing a healthcare provider participating
in a preferred provider plan solely because the provider’s
patient uses an out-of-network provider
41
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