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The State of Adverse Benefit Claim Determinations

For patients, when we get sick, the concern is how much it will cost to cover medical benefits. Due to changes in health care law and a movement for patient advocacy, this is becoming less of a problem. No insurance company wants to see a deceased or terminally ill patient fighting for insurance benefits reminiscent of plot in The Rainmaker.

But an underpaid doctor? For providers, it is about actually getting paid for services they perform.  The health insurance companies are willing to take their chances with underpaying healthcare facilities, physicians, and even hospitals.

Denials for Out-of-Network Providers

The insurance companies’ biggest targets are out-of-network facilities. Across the country they are being squeezed by insurance providers to go in-network. For those that refuse, they are usually met with claim denials, disputes on reasonable and customary or even lawsuits alleging everything from unjust enrichment for overpayment to fraud.

Back in 2012, Roseland Ambulatory Surgery Center in Essex County, New Jersey was sued by Connecticut General Life Insurance Co (a Cigna subsidiary) for its out-of-network facility practice of waiving co-pays and deductibles. In fact, Cigna has stayed quite busy.

Sometimes they react to out-of-network facilities’ actions against the insurer with counter-claims like in North Cypress Medical Center Operating Company, Limited, et al. v. Cigna Healthcare, et al. In that case, Cigna counter-claimed arguing that it paid more than was owed and that North Cypress did not charge the patients for coinsurance, but billed Cigna as if it had–the so called fee waiver defense. The 5th Circuit did not buy this fee waiver protocol argument in March 2015 and has already proved to be a significant obstacle for Cigna.

It does not quite end there. Just as common as these aggressive lawsuits by insurers or third party administrators ( TPAs) are the recoupments. The TPAs determine an overpayment on a previous claim and then sometimes dip into another patient’s plan to get paid in lieu of paying out to the provider. Astonishingly, for many of these recoupments and other denials, many of these TPAs still get paid and in many cases benefit even more than they would on a benefits paid claim while plan sponsors turn a blind eye.

In December 2014, a New Jersey federal judge certified a class of health care providers accusing UnitedHealth Group Inc. of improperly recouping payments for overpayment. Not dissimilar is the class action filed in the Central District of California against Aetna Inc. for allegations related to recoupment.

Appealing Adverse Benefit Determinations

Outsourced or internal revenue cycle management and billing & collection departments are a necessary and commonplace in most medical facilities and practices. The most effective of them are those that take advantage of the ERISA appeals process, given that most adverse benefit claim determinations are sourced from self-insured employer plans. Unfortunately, even those that take advantage of the process fall short in combatting the very aggressive claim denials that TPAs utilize.

Handling a medical necessity claim denial is one thing, but handling adverse claims dealing with overpayment, recoupments, fee-forgiving protocols, underpayment, and whatever the next strategy TPAs choose to pursue is another thing altogether.

Sometimes it is just not enough to simply send in a form appeal letter–especially when the adverse benefit determination is being used as a tactic against your facility.

An effective adverse benefit determination appeals process is more than just a mere paper push. Each claim from each TPA needs its own tailored strategy that deals with collecting what is owed in accordance with the plan and relevant law in an all-encompassing approach. This means utilizing the tools of the ERISA appeals process and litigation.

Contact this firm for a consultation about collecting on denied or disputed insurance benefit claims and on how to avoid future adverse benefit claims.



Nasir Pasha, Esq.

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Managing attorney and co-host of podcast Legally Sound | Smart Business

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