Presentation on theme: "2012 Texas Health Law Conference"— Presentation transcript:
12012 Texas Health Law Conference Out of Network: Exclusion of Providers Based Upon Referral Patterns and Network Adequacy2012 Texas Health Law ConferenceSusan Feigin Harris
2The Out-of-Network Payment Issue: Where the Rubber Meets the Road Issues:Providers that adopt an “out-of-network” strategyProviders with ownership interest refer to the entity, which is also out of networkProviders that discount beneficiary copayments and deductibles – patient financial obligationsHealth plans that push back – refuse to contract with providers; attempt to shut providers out of the marketQuestions:What are the payment obligations of health plans out of network?What are the legal parameters under which these issues should be evaluated?
3Health Plan Policies Provide out-of-network benefits to beneficiaries May advertise on websites re: PPO or POS“Advantages of a PPO include the flexibility of seeking care with an out-of-network provider if so desired . . .”“In a POS, you have greater freedom to see out-of-network providers than with an HMO . . .”
4Out-of-Network Payment Health plans may or may not pay “usual and customary” ratesThe term “usual and customary rate” is not well-defined in state or federal law and is subject to market forcesHealth plans have responded over the years to lack of definition and have developed their own application – % of Medicare
5Out-of-Network Payment Common Characteristics Varies widely among payors based on plan benefitsDenials for “allowable amounts” as determined by the health plan and employerSubsequent recoupment of payment or overpayment requestsScare tactics used to pressure physicians who refer out of network and patients who see OON providers
6Provider 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 amountsIs this legal?What actions must providers take to ensure legality when discounting OON?What actions have payors taken in response?
7Discounts vs. Waivers to Patient Financial Obligations Legal considerationsRelief of the patient financial obligationsMedicare Civil Monetary Penalty StatuteOIG concernsLetters from TDSHS and TDITexas 1993 AG opinionTexas Penal CodePricingIllegal pricing prohibition (Tex. Ins. Code § )Advertising restrictions (Tex. Admin. Code § (11-12))
8Medicare 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)
9Waiver of Copayments Safe harbor protection afforded if: Not offered as a part of an advertisement or solicitationPerson doesn’t routinely waiveWaiver is made following a good faith determination of financial needWaiver is made without regard to diagnosis or length of stayNo bad debt claimedThis applies to Medicare / Medicaid patients, but also Texas anti-solicitation provisions42 USC § 1320a-7a(i)(6)
10Waiver vs. Discount of Patient Financial Obligations Texas state law considerationsIllegal pricing prohibitionCriminal penaltyCommon law fraudHealth facility regulationsActions by regulatory agenciesOccupations Code provisionsCase law
11Texas 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.”
12Texas Insurance Code § 552.003 Illegal pricing prohibition 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 CodeNot applicable when provided to indigent or uninsured individual who otherwise qualifies for financial indigency policy
13Usual and Customary / Out of Network Texas Attorney General Opinion DM-215 (April 13, 1993)Section 4(c) of Article “…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.”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
14Usual and Customary / Out of Network Texas illegal remuneration statuteProhibits 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 agencyClass A misdemeanor and constitutes grounds for disciplinary action by the state healthcare regulatory agency that has issued the license, certification, or registrationBoth sides of the transaction are subject to civil penalties of not more than $10,000 for each day of violation and each act of violationTex. Occ. Code § (a) & § (a)
15Usual and Customary / Out of Network Texas Penal CodeA person will be found to have committed insurance fraudIf 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; orSolicits, 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 policyPenaltiesRange from a Class C misdemeanor to a first degree felonyTex. Penal Code Ann. §35.02(a)-(c)
16Usual and Customary / Out of Network Hospital audits of billing“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.”“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.”Violations are subject to disciplinary action, including licensure denial, revocation, suspension, or nonrenewal.Tex. Health & Safety Code §
17Usual and Customary / Out of Network Texas common law fraud elementsA material misrepresentation,Which, when made, was known by the speaker to be false,Which was made with the intent that it be relied and acted upon, andWhich 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).
18Usual and Customary / Out of Network Advertisement restrictionsProhibits 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 co-payments 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)
19TDSHS / TDI 2005 Letters TDSHS (Feb. 15, 2005) 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.”Cited Ins. Code ArtHospitals may be cited for violations of 25 TAC § (a)(1)(F)
20TDSHS / TDI Letters 2005 Texas Department of Insurance (Dec. 9, 2005) Cited “inquiries” that suggest noncontracted providers are waiving applicable patient financial obligations to attract patients to out-of-network facilityWarned 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 § (recodified as ) regarding waiver of copayments and deductibles when accepting assignmentCited AG opinion DM-215; 22 TAC § that prohibits advertising of waivers; and warned of allegations of fraud and violations of Texas Occupations Code § and Texas Health & Safety Code § for provider’s failure to disclose waiver
21Aetna v. Humble Surgical Hospital, LLC Allegations include: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 interestthat to induce patients to use the out-of-network facility, patients were promised that their out-of-pocket costs would not be any different than if they received the service at an in-network facilityAetna vs. Ifeolumipo O. Sofola, M.D., Navin Subramanian M.D. and Humble Surgical Hospital LLC (case#: /Court 152), Harris County, Texas
22Aetna v. Humble Surgical Hospital, LLC breach of Specialist Physician Agreement provisionagreement 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 harmlessfailure to disclose the physician’s financial interestfailure to disclose the discountstortious interference of contractcommon law fraud and conspiracy to overcharge beneficiaries
23Aetna 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-1206Additional violations:Texas Occupations Code § (which prohibits a professional from violating § 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 § – 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
24Aetna v. Humble Surgical Hospital, LLC Texas Occupations Code §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 marketTexas Insurance Code §By seeking inflated reimbursement from Aetna for treatment and services rendered to members simply because the particular patient had medical coverage through Aetna
25Aetna v. Humble Surgical Hospital, LLC Claims for ReliefCommon law fraudMoney had and receivedUnjust enrichmentInjunctive reliefDeclaratory action
26Aetna’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
27Aetna Life Ins. Co. v. Bay Area Surgical Management, LLC Aetna suit against Bay Area Surgical Management, several affiliated physicians and surgery centers in northern CaliforniaAccusations include:Overcharging Aetna $20 million in two yearsIllegally waiving their fees to induce patient choiceCharging $66,100 for a bunion procedure when the average in-network fee was $3,677Failing to inform patients of physician ownership in out-of-network facilitiesNo. 112CV217943, Superior Ct. of California, Santa Clara (Feb. 2, 2012)
28California Medical Assn. v. Aetna Health of California, Inc. California Medical Assn. and 50+ physicians sue AetnaUnderpaying out-of-network physiciansRefusing to authorize some out-of-network servicesTerminating the contracts of doctors referring to out-of-network providersSeek restitution, injunction against Aetna and reinstatement of provider agreements Aetna terminated in retaliation for referral to OON facilities or providersNo. BC Superior Ct. of California, Los Angeles (July 3, 2012)
29California Medical Assn. v. Aetna Health of California, Inc. Charges against AetnaUnfair business practicesAttempts to control, direct and participate in the selection of health facilities by PPO membersFalse advertisingMaking false statements about member’s rights to OON benefitsBreach of contractWith patients and physiciansIllegal retaliationFor terminating participating physician contracts and retaliationInterference with prospective economic advantage
30Aetna 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 CMAPhysicians 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
32Typical Contract Language That Forms Basis for Health Plan Actions Referral by primary care physicianPhysician 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.
33Sample Contract Language Utilization managementCompany 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.
34Sample Contract Language ReferralsTo 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.
36Physician-Patient Relationship Interference with Relationship Between Patient and Physician or Health Care Provider Prohibited - Tex. Ins. Code §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.
37Blue Cross Blue Shield 2009 Agreement with Texas Attorney General Resolved investigation into Blue Cross’ handling of out-of-network referralsState 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
38Blue Cross Blue Shield 2009 Agreement with Texas Attorney General “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 AbbottUnder 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.
39Blue Cross Blue Shield Assurance of Voluntary Compliance “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.”
40Misrepresentation Regarding Policy or Insurer – Tex. Ins. Code § 541 It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to:(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
41Legislation – S.B. 521 / H.B. 1393 – 82(R)-2011 Prohibits an HMO from: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 conditionTerminating or threatening to terminate an insured’s participation in a preferred provider benefit plan solely because the insured uses an out-of-network providerProhibiting a healthcare provider participating in a preferred provider benefit plan from communicating with a patient about the availability of out-of-network providersTerminating or penalizing a healthcare provider participating in a preferred provider plan solely because the provider’s patient uses an out-of-network provider