BLUE CROSS AND BLUE SHIELD ASSOCIATION 44 th Annual Lawyers Conference Emerging Trends In Non- Participating Provider Litigation Friday, May 14, 2010 Cavender C. Kimble and Leigh Anne Hodge BALCH & BINGHAM LLP 1901 Sixth Avenue North, Suite 1500 Birmingham, AL 35203 Phone: (205) 251-8100
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BLUE CROSS AND BLUE SHIELD ASSOCIATION44th Annual Lawyers Conference
Emerging Trends In Non-Participating Provider Litigation
Friday, May 14, 2010Cavender C. Kimble and Leigh Anne HodgeBALCH & BINGHAM LLP1901 Sixth Avenue North, Suite 1500Birmingham, AL 35203Phone: (205) 251-8100
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EMERGING TRENDS INNON-PARTICIPATING
PROVIDERPAYMENT DISPUTES
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• Economic Woes
• Decreasing Provider Reimbursement
• Consumerism
Litigation Drivers
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Current Themes in Provider Payment Disputes
• Out-of-Network Reimbursement
• Balance Billing
• Assignment of Benefits
• Third Party Vendor Billing
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OUT-OF-NETWORK REIMBURSEMENT
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Billed Chargesvs.
UCR or Allowed Amount
OUT-OF-NETWORK REIMBURSEMENT
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• Quantum Meruit
• Unjust Enrichment
• Third-Party Beneficiary
• ERISA Benefits (Third-Party Beneficiary)
• Unfair and Deceptive Trade Practices
OUT-OF-NETWORK REIMBURSEMENT
Provider Theories
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• What amount is “Reasonable?”
• “Reasonableness” is Benchmark.
OUT-OF-NETWORK REIMBURSEMENT
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THE INGENIX SAGA
OUT-OF-NETWORK REIMBURSEMENT
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• February 2008 – New York State AG Andrew Cuomo launched
investigation
• June 18, 2009 – Completion of Settlement Agreements– Assurances of Discontinuance signed by
UnitedHealth and other payors
OUT-OF-NETWORK REIMBURSEMENT
Chronology
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• Ingenix is a “scheme by health insurers to defraud customers by manipulating reimbursement rates.”
• “By distorting the ‘reasonable and customary’ rate, . . . insurers were able to keep their reimbursements artificially low and force patients to absorb a higher share of the costs.”
OUT-OF-NETWORK REIMBURSEMENT
Cuomo Sound Bites
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• The Consumer Reimbursement System is Code Blue– http://www.aapmr.org/zdocs/hpl/NYAttryGen
Rpt011309.pdf
OUT-OF-NETWORK REIMBURSEMENT
Products of Ingenix Investigations
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• $100 million paid by insurance companies executing Assurances
OUT-OF-NETWORK REIMBURSEMENT
Products of Ingenix Investigation
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• U.S. Senate Committee on Commerce, Science, and Transportation– March 2009 Hearings on Deceptive
Health Industry Trade Practices http://commerce.senate.gov/public/index.cfm?p=Hearings&ContentType_id=14f995b9-dfa5-407a-9d35-56cc7152a7ed&Group_id=b06c39af-e033-4cba-9221-de668ca1978a&MonthDisplay=3&YearDisplay=2009&Label_id=&Label_id=
OUT-OF-NETWORK REIMBURSEMENT
Products of Ingenix Investigation
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• Franco v. Connecticut General Life Ins. Co., 2:07-CV-D6039 (D.N.J.) (Complaint Dec. 20, 2007).
– Putative Class of Providers and Subscribers
– Alleged ERISA, Sherman Act, RICO and state law claims arising of payor’s UCR determinations based upon Ingenix database.
OUT-OF-NETWORK REIMBURSEMENT
Litigation Spawned by Ingenix
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RECENT OUT-OF-NETWORKREIMBURSEMENT
LITIGATION
OUT-OF-NETWORK REIMBURSEMENT
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• Spectrum Health v. Good Samaritan Employees Ass’n Trust Fund, No. 08CV182, 2008 WL 5216025 (W.D. Mich. Dec. 11, 2008)(In ERISA case, payor’s determination of R&C charge was arbitrary and capricious).
• -Payor’s reliance on 90th percentile using Physicians’ Fee Reference (PFR) was reasonable.
• However, Payor did not properly apply PFR to geographic area as required by Plan.
OUT-OF-NETWORK REIMBURSEMENT
“Reasonableness” = The Amount the Provider is Paid
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• Baker County Med. Services, Inc. v. Aetna Health Mgt., LLC, No. 1D08-0067, 2010 WL 624192 (Fla. Dist. Ct. App. Feb. 24, 2010).– Court considered relevant factors
• Reimbursement from other commercial payors
• Contracted rates with other HMOs• Worker’s Compensation Payments• Private Pay• Charity Care
OUT-OF-NETWORK REIMBURSEMENT
Fair Market Value = “Reasonableness”
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• Harrison v. Blue Cross and Blue Shield of Alabama, No. 7:08-CV-1039-LSC, U.S.D.C. for the Northern District of Alabama (Order of Jan. 12, 2010, Denying Class Certification).
– Fact Finder must consider relevant, individualized factors in considering “reasonableness” of charges and reimbursement for Ambulance Services:
• wear and tear on vehicle for mileage charges• amount of time required for treatment• severity of injuries• number and type of supplies used for treatment
OUT-OF-NETWORK REIMBURSEMENT
Fair Market Value = “Reasonableness”
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• Prospect Med. Group, Inc. v. Northridge Emergency Med. Group, 39 Cal. Rptr. 3d 456 (Cal. Ct. App. 2006).
OUT-OF-NETWORK REIMBURSEMENT
Medicare Allowance ≠ “Reasonable”
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• Baker County, 2010 WL 624192 at *3.– “In determining the fair market value of the
services, it is appropriate to consider the amounts billed and the amounts accepted by providers with one exception. The reimbursement rates for Medicare and Medicaid are set by government agencies and cannot be said to be ‘arm’s-length.’”
OUT-OF-NETWORK REIMBURSEMENT
Medicare Allowance ≠ “Reasonable”
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• Victory Memorial Hosp. v. Rice, 493 N.E. 2d 117, 119 (Ill. App. Ct. 1986).
– Hospital’s costs, functions, and services must be considered.
– Random sampling of hospital charges in the area all used to establish “reasonableness.”
• Greenfield v. Manor Care, Inc., 705 So. 2d 926, 930-31 (Fla. Dist. Ct. App. 1997).
OUT-OF-NETWORK REIMBURSEMENT
Billed Charges ≠ “Reasonable”
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• ERISA Preemption
• ERISA claims – Failure to Exhaust Administrative Remedies
• Lack of Standing
OUT-OF-NETWORK REIMBURSEMENT
Defense Strategies
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• Urology Center of Georgia, LLC v. Blue Cross Blue Shield Health Plan of Georgia, Inc., and Blue Cross and Blue Shield of Georgia, Inc., Civil Action No: 5:09-CV-161, United States District Court for the Middle District of Georgia, Order of Dismissal (Mar. 4, 2010).
OUT-OF-NETWORK REIMBURSEMENT
Dismissal – Failure to Exhaust
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• Oklahoma – OKLA. STAT. ANN. tit. 36, § 6571C.
• Colorado– COLO. REV. STAT. § 10-16-704.
• Florida– FLA. STAT. § 641.513(5).
• Utah– UTAH CODE ANN. § 31A-22-617(2)(b).
• Maryland– MD. CODE. ANN. HEALTH-GEN. § 19-710.1(h).
• Prospect Med. Group, Inc. v. Northridge Emergency Med. Group, 45 Cal. 4th 497, 198 P. 3d 86 (2009). – Balance Billing For Emergency Services is
Illegal Where Provider has Recourse Against HMO
– Construing Health and Safety Code § § 1340, et. seq.
BALANCE BILLING
Providers Prohibited from Balance Billing
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• Sabban v. Scripps Health, No. 37-2009-00081971 (Cal. Super. Ct.) (Complaint Jan. 26, 2009).– Putative class of subscribers sued
providers of emergency services for balance billing alleging violations of California law.
BALANCE BILLING
Recently Filed Balance Billing Class Action
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• Joseph L. Riley Anesthesia Assocs. v. Stein and Florida HealthCare Plan, Inc., 27 So. 3d 140 (Fla. Dist. Ct. App. 2010).– Non-participating hospital-based
anesthesiologists and other hospital-based providers may not balance bill HMO enrollees.
– Construing FLA. STAT. § 641.3154
BALANCE BILLING
Providers Prohibited from Balance Billing
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• Do payors have a duty to monitor balance billing practices by Participating Providers?
– Edith Harris v. MCG Health, Inc., d/b/a MCG Hospital, United Healthcare Insurance Company and UnitedHealthcare of Georgia, Inc., currently pending in the Superior Court of Richmond County, Georgia.
BALANCE BILLING
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MAJORITY OF STATES HAVE NO STATUTORY
PROHIBITION AGAINST BALANCE BILLING
BALANCE BILLING
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• New York– N.Y. INS. LAW § 3221(i)(15)– Prohibits balance billing by ambulance
providers for emergency care
BALANCE BILLING
Statutory Protections
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• Florida– FLA. STAT. § 641.3154– No balance billing for covered services
Traditional Public Policy Supporting theAssignability of Contracts
vs.Public Interest in Controlling Health Care
Costs
Tension
ASSIGNMENT OF BENEFITS
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• Encourages Network Participation
• Controls Health Care Costs by Limiting Reimbursement to Contract Amounts
Plan Benefits of Anti-Assignment Clauses
ASSIGNMENT OF BENEFITS
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MAJORITY OF COURTS HAVE UPHELD ANTI-ASSIGNMENT
PROVISIONS
ASSIGNMENT OF BENEFITS
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• Abraham K. Kohl v. Blue Cross & Blue Shield of Fla., Inc., 955 So. 2d 1140, 1144-45 (Fla. Dist. Ct. App. 2007).
• Somerset Orthopedic Assocs., P.A. v. Horizon Blue Cross & Blue Shield of N.J., 785 A. 2d 457, 461 (N.J. Super. Ct. App. Div. 2001).
Cases Upholding Anti-Assignment Clauses
ASSIGNMENT OF BENEFITS
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• Parrish v. Rocky Mountain Hosp. & Med. Servs. Co., 754 P. 2d 1180 (Colo. Ct. App. 1988).
• Obstetrics-Gynecologists v. Blue Cross & Blue Shield of Neb., 361 N.W. 2d. 550 (Neb. 1985).
Cases Upholding Anti-Assignment Clauses
ASSIGNMENT OF BENEFITS
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• Kent Gen. Hosp., Inc. v. Blue Cross & Blue Shield of Deli, Inc., 442 A. 2d 1368 (Del. 1982).
• Augusta Med. Complex, Inc. v. Blue Cross of Kan., Inc., 634 P. 2d 1123 (Kan. 1981).
Cases Upholding Anti-Assignment Clauses
ASSIGNMENT OF BENEFITS
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Cases Upholding Anti-Assignment Clauses
• Blue Cross and Blue Shield of Alabama v. Nielsen, et al., 714 So. 2d 293 (Ala. 1998) (option not to honor).
– Blue Cross plan exempt from statutes requiring direct payment to various classes of providers holding assignments.
ASSIGNMENT OF BENEFITS
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Cases Upholding Anti-Assignment Clauses
• Kassab v. Med. Serv. Ass’n of Pa., Inc., 39 Pa. D. & C. 2d 723, 725 (Pa. Ct. Comm Pl. 1966, aff’d, 230 A. 2d 205 (Pa. 1967).
– “Agreement against assignment of any right is not only valid, but essential to the continued success of the Blue Shield Plan.”
ASSIGNMENT OF BENEFITS
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• Am. Med. Int’l, Inc. v. Ark. Blue Cross & Blue Shield, 773 S.W. 2d 831 (Ark. 1989). – As a matter of public policy, a payor may not
refuse to honor an assignment of benefits.
• Toranto v. Blue Cross & Blue Shield of Tex., Inc., 993 S.W. 2d 648, 649 (Tex. 1999).– Enforcement of anti-assignment clause is
prohibited by the Texas Insurance Code.
Cases Voiding Anti-Assignment Clauses
ASSIGNMENT OF BENEFITS
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COURTS WILL ENFORCEANTI-ASSIGNMENT CLAUSE INERISA PLANS IF THE PLAN IS
CLEAR AND UNAMBIGIOUS
ASSIGNMENT OF BENEFITS
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• Physician’s Multi-specialty Group v. HealthCare Plan of Horton Homes, Inc., 371 F.3d 1291 (11th Cir.), cert. denied, 543 U.S. 1002 (2004).
– Unambiguous anti-assignment clause consistent with Congressional intent.
Cases Enforcing Anti-Assignment Clauses in ERISA Plans
ASSIGNMENT OF BENEFITS
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• Le Tourneau Lifelike Orthotics & Prosthetics, Inc., v. Wal-Mart Stores, Inc., 298 F.3d 348 (5th Cir. 2002).
– Anti-assignment clause renders assignment unenforceable, reversing District Court.
Cases Enforcing Anti-Assignment Clauses in ERISA Plans
ASSIGNMENT OF BENEFITS
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• City of Hope Nat’l Med. Ctr. V. Health Plus, Inc., 156 F.3d 223 (1st Cir. 1998).– Anti-assignment clause not contrary to
public policy; Congress chose to bar alienation of pension plan benefits, but not welfare plan benefits.
Cases Enforcing Anti-Assignment Clauses in ERISA Plans
ASSIGNMENT OF BENEFITS
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• Tenn. Code Ann. § 56-7-120 – General Application: Applies to All Covered
Services
• Alaska Stat. § 21.51.120– General Application: Applies to All Covered
Services
ASSIGNMENT OF BENEFITS
Mandated Assignment Statutes
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Mandated Assignment Statutes
• CMS Rule: Special Rules for Ambulance Service and Emergency and Urgently Needed Services, and Maintenance and Post-Stabilization Care Services, 42 C.F.R. § 422.113 – Applies to Emergency and Urgently
Needed Services Provided to Medicare Advantage Plan members.
Assignment of Benefits
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• FLA. STAT. § 641.513– Applies to Emergency Services
• CAL. HEALTH & SAFETY CODE § 1371.4– Applies to Emergency Services
• 40 PA. CONS. STAT. ANN. § 991.2116– Applies to Emergency Services
Assignment of Benefits
Mandated Assignment Statutes
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ERISA Preemption of Mandated Assignment Statute
• La Health Serv. & Indem. Co. v. Rapides Healthcare Sys., 461 F.3d 529 (5th Cir. 2006), cert. denied, 549 U.S. 1279 (2007). – ERISA does not preempt Louisiana anti-