As dollars became scarcer in the 1990s, health insurance companies increasingly employed “post-claims underwriting” as a basis for denying claims or rescinding policies. Some relief is expected from the Affordable Care Act's elimination of “pre-existing conditions” as a basis for denial of claims.
But the reform law does not put an end to denials based upon medical necessity, or a refusal to pay because the service or DME is “experimental.” Equally alarming is the practice of “pay-then-pull-back” recoupment audits, which can devastate the finances of providers of all sizes. Now, providers are fighting back.
In Tri3 Enterprises v. Aetna, the U.S. Department of Labor (DOL) has filed a November 30, 2012, amicus brief in the Third Circuit Court of Appeals in the appeal of a New Jersey federal district court ruling against a provider who filed a federal case against Aetna. In cases where only a provider agreement governs, (the policy is not an employee benefit) it is easier for insurers to cease payments and demand overpayment refunds, because such actions are often sanctioned by state anti-fraud laws. But when an ERISA plan also exists, (the plan is an employee benefit) adopting such an aggressive stance might not be so simple. In this case, Aetna authorized and paid Tri3 for non-segmented pneumatic compressors, i.e., medical devices, but then retroactively sought to recoup the payments after and audit by the ominously named Special Investigations Unit (SIU) determined the equipment to be “experimental.”
Aetna allegedly refused to treat its decision as a “claims denial” and refused to provide the procedural protections accorded under ERISA and its regulations to such decisions. Tri3 argues that under authority of ERISA, the DOL adopted rules protecting both insured individuals as well as providers who have accepted assignment of the claim from the insured. Tri3 claims in addition to the fact that the medical devices had been previously approved in other cases, and approved for payment in the instant case, it has a right to challenge the reversal and demand for recoupment under ERISA’s administrative claims review process. The trial court disagreed, dismissing the case for failure to state a claim ruling, “it is clear from the complaint that the central issue of the dispute is Aetna's allegation that Tri3 had misrepresented to Aetna the nature of the medical device that had been supplied to insureds.” The DOL has filed a brief on appeal favoring the provider’s position and arguing for a reversal of the trial court. The outcome will likely hinge upon whether the Third Circuit views Aetna’s action as an attempt to recover from fraud and abuse, (i.e., Tri3 misrepresented the nature or use of the devices) or whether the matter is more accurately characterized as a coverage dispute which might fall within ERISA appeals process.
As to slow payments, medical providers are using technology to fight back in a different way: enlisting the aid of former foes in the plaintiff’s bar to go after carriers who delay payments for covered treatment. Texas powerhouse lawyer Mikal Watts of Watts Guerra Craft LLP says his firm has “built up a solid docket of over 500 medical providers, representing hospitals, large doctor groups, and pharmacies seeking to enforce Texas’ Medical Provider Prompt Pay laws.” According to Watts, “the problem in the past for medical providers is that there was no efficient way to enforce prompt pay laws for small claims.” Watts uses sophisticated computer models from medically knowledgeable data analysis companies to identify patterns and initiate legal proceedings on a cost-effective contingency fee basis. “In total, we have identified hundreds of millions of dollars due our clients,” says Watts.
Historically, ERISA had been an impediment for individuals whose claims have been denied. ERISA preempts state law remedies, including an award of attorney’s fees to the successful party. Most employees could not afford to pay out of pocket for an attorney to pursue the claim under their group plan. Watts points out that Texas, and many other states, carefully drafted “slow pay” statutes with an eye toward avoiding ERISA’s limiting provisions.
As with any legal issue, you should consult an experienced health attorney if you have specific questions about your rights under assignment of benefits agreements or “slow pay” laws in your state or jurisdiction.