Several days ago, ProviderLAW posted Part I of this multi-part series on the non-payment crisis involving Independence Blue Cross. Specifically, we examined two issues: (1) what happened in the IBC crisis? and (2) what do IBC chiropractors need to know from a billing and coding perspective? A copy of Part I can be accessed through the Public Directory of the ProviderPRO web site as follows: www.providerpro.net > public.

In this Part, we examine two equally-important topics. The first topic relates to recoupment and poses the question – could a new crisis be on the rise? In the second topic, we switch gears and propose a SOLUTION. The second topic raises the question – what needs to be in place, at a strategic level, in order for providers to prevent – and more quickly resolve – non-payment and recoupment issues such as the ones discussed herein?

As mentioned previously, in the course of reviewing the IBC crisis, another payment issue quickly surfaced – carriers automatically "recouping" substantial sums of money from providers without notice and without prior opportunity to appeal.

What is "recoupment?" Recoupment refers to situations where a carrier believes it is owed money by the provider relating to a particular patient account. Some carriers, when faced with this situation, will not only withhold future payments due on that particular account, they will even withhold payments due on other patient accounts as well until the amount of the alleged debt is satisfied.

To make matters worse, we're now beginning to see a new strain of recoupment – recoupment without notice or prior opportunity to appeal. In these kinds of situations, the carrier simply deducts the money owed to the provider on multiple patient accounts, automatically and without warning. Recently, we spoke with one provider who had $15,000 automatically recouped by a carrier without notice or prior opportunity to appeal. In another case, $3,000 was automatically recouped without notice.

Before proceeding to the law on point, recall a recommendation we made in Part I of this series. We strongly urged all IBC providers participating in Personal Choice® and their billing staff to attend the September 27th meeting (Market Street) hosted by Independence Blue Cross.

We also suggested that, while there, you might consider asking IBC what its specific policies are on recoupment, i.e. what specific limitations it places on recoupment? For example, how far back in time does IBC go? Does it expand recoupment beyond the scope of a particular patient account and seek to recoup from other, unrelated patient accounts? Does it necessarily provide advance notice and prior opportunity to appeal when it seeks to recoup? How does IBC expressly deal with these issues in its underlying health benefit plans or insurance policies, and in its provider manuals? Does IBC vary its recoupment policies on a facility-by-facility, or specialty-by-specialty, basis? How soon could IBC provide written answers to these kinds of questions?

Law aside (for the moment), why not go ahead and get a definitive statement from at least one carrier on the issue?

Now, let's consider some federal law on point – in this case, the federal "Claims Procedure" regulation.

In 2002, the federal "Claims Procedure" regulation became effective. This Claims Procedure regulation (29 CFR, Section 2560.503-1) applies to health benefit plans governed under a body of federal law known as ERISA. The ERISA statutes essentially define a health benefits plan as any employee welfare benefit plan "...established or maintained by an employer ... for the purpose of providing ... through the purchase of insurance or otherwise, ...[m]edical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident...." 29 USC, Section 1002(1). By statute, the following types of plans do not constitute ERISA plans: (1) governmental plans, (2) church plans, and (3) plans governed under "applicable workmen's compensation laws." 29 USC, Section 1003(b)(1)-(3).

Because the definition of "health benefit plan" under ERISA is so broad, it is likely that most of the "health insurance" patients which you treat are actually covered under plans governed by ERISA, and hence by the ERISA Claims Procedure regulation.

Notably, one of the pillars of ERISA relates to the duty of loyalty. Under ERISA, the entity/individual who actually processes your claims and determines whether to pay or deny the benefits owes the patient and the provider-assignee a heightened duty of loyalty referred to as a "fiduciary" duty (pronounced, fi · DOO · shee · air · ee). Some attorneys refer to this duty as the "highest, highest duty of loyalty."

In fact, so important is the duty of loyalty under ERISA law that (1) individual employees of carriers can be held personally liable for any breach of that duty, and (2) any promise by the health benefit plan to indemnify (i.e., reimburse) the employee for legal fees and court awards stemming from a breach of loyalty are unenforceable. See 29 USC, Sections 1009-1010.

Here's one other point you should consider before we turn to the ERISA Claims Procedure regulation – in this Advisory, we will only be looking at one federal law on point. There may be numerous other federal and state laws on point, including court cases, which could be cited in addition to the one referenced below. You should keep this in mind as you review the ERISA Claims Procedure regulation. Our main purpose in highlighting the below provision is to raise serious questions regarding the practice of recoupment.

The Claims Procedure regulation provides in relevant part (emphasis added):

"Adverse benefit determination"... – wouldn't that include refund requests? Wouldn't that include decisions by the plan that it shouldn't have disbursed the proceeds after all? Isn't a refund request "adverse?" Doesn't the regulation say in a fairly definitive fashion that adverse benefit determinations shall be rendered within 30 days of the receipt of claims (or 45 days in the event that a one-time extension is necessary)? Doesn't the regulation say that the time for rendering an adverse benefit determination can be extended, but only once, and only for 15 days?

We're not talking about cases where the carrier requests medical records within the 30-day period. We're talking about cases where the plan pays you, and then either requests a refund months – or even years – down the road, or simply takes the money out of other patient accounts without asking.

Doesn't a request for refund by a plan two months down the road..., six months down the road..., one-year down the road..., simply amount to an attempt to extend the time-frame for rendering adverse determinations beyond the 30-day or 45-day period mandatory period?

Let's ASSUME for the moment that a carrier CAN request a refund from you, say, six-months down the road. Does that mean the carrier can take the money out of other patient accounts? How would your patients feel if they knew what was happening? How would they feel knowing that the money that was supposed to be getting applied to their accounts, was actually being applied to someone else's account instead? Might such practices constitute a breach of fiduciary duty to the insureds, beneficiaries, and provider-assignees alike?

OK, let's ASSUME that a plan can in fact recoup money out of other patient accounts. Does this mean it has a right to collect the money automatically, without notice, and without prior opportunity to appeal? In many situations, providers have 180 days to appeal the denials of claims under the ERISA Claims Procedure regulation. See, e.g., 29 CFR 2560.503-1(h)(3)(i). Shouldn't plans, which are bent on recouping, likewise afford healthcare providers at least 180 days to appeal their adverse refund determinations?

At a minimum, the questions raised by the practice of recoupment, and by the federal Claims Procedure regulation, merit a moment of pause and reflection.

More accurately, they merit full-blown legal research at both the federal and state levels.

In the previous sections, we looked at specific problems. We looked at information which could be used in addressing specific problems.

The purpose of this section is to take a step back from the issues discussed, and to look at the bigger picture. It's to define, at a more strategic level, what needs to be in place in order to be able to address payment and recoupment problems in general.

In our humble opinion, solving issues like the ones discussed herein – and doing so in a consistent, long-term, preventative (and also after-the-fact) fashion – won't come down to a single person or entity. It will come down to team development. Not just a team of individuals either. But rather, a team of individuals, entities, information, resources, and various other team "players" if you will.

The following list is by no means an exclusive list. Think of it more as a starting point. Nevertheless, here are a few "players" which, we believe, need to be in place, at a strategic level, in order for providers to prevent – and more quickly resolve – issues like the ones discussed in this series.

1. Staff. Staff members, you will play an integral role not only in identifying these kind of problems as they arise, but also in being firm and persistent in protecting your practice's interests. Truthfully, few innovations and breakthroughs in history have occurred without persistence. Your persistence will be key.
2. Leaders. Sorry, no one gets out of this one, especially you, providers. The fact is that everyone is called upon every day to serve as a leader. Healthcare providers. Management consultants. Professional organizations. Insurance employees, supervisors, and directors. State and federal officials. But we would be remiss not to ask each one of you a very important question – in any given case, are you thinking and acting as a true leader would? As you read our series, ask yourself, how would you solve the problems discussed herein? Sometimes we get locked into thinking that solving a big problem will cost too much money. Or it will take too much time. Or it is impossible to solve in the first place. Or WE can't solve it. When what the problem may really need, first and foremost, is just a little bit of thought. Yes, your thoughts. Where do you think the phrase, "American ingenuity," comes from? Our guess is it has to do with the way WE think about, or look at, the problem in the first place.
3. Information-Enhanced Collaboration. Recently, ProviderPRO.net implemented live web conferencing. There is a reason we implemented this new technology. Live web conferencing, by its very nature, not only welcomes and promotes the performance of research on key issues (see below), it blends the delivery of that research with collaboration. The result? Information-enhanced collaboration. In order to promote information-enhanced collaboration, ProviderPRO.net has launched an educational initiative to promote the use and "spread" of this exciting new technology. See, e.g., www.brighthought.org.
4. Well-Researched Information. Some say "knowledge is power." Actually, we heard a provider challenge this once. His point? "Knowledge is strength. Action is power." What a great concept. Few will dispute, nonetheless, that accurate information is absolutely critical to our ability to make sound decisions. Research is not glamorous. It can be difficult, exhausting work. But ongoing research, particularly in the area of law, is an absolute must. What's more, it can lead, and often does lead, to some really powerful and cool solutions.
5. Communication "Templates." Information is certainly key. But information encased in carefully-drafted, written templates, takes that information to an entirely new level. Let's look at an example. WHAT IF a sample letter, based on well-researched law and information, were to be drafted and archived for easy retrieval on the issue of recoupment? Providers would have an easier time not only becoming more educated on laws regarding recoupment based on such a letter, but also visualizing how the law might potentially be communicated. Providers would have a means, when the problem arose, wherever the problem arose, to more quickly respond to recoupment notices disbursed by insurance carriers, and to state their case. What's more, with such educational information in hand, individuals in different regions would have the ability to more easily operate as a fluid team, responding to issues as and wherever those issues might arise. But there's that word, again. Team.
6. A Well-Constructed Web Site. Did you know that the development of the library system is considered to be one of the most significant innovations in the world? Now, with the dawn of computers, we literally have at our fingertips, one gigantic library known as the world wide web (the Internet). The "well-researched information" and "communication templates" mentioned above will certainly need to be stored somewhere. Why not in a well-constructed web site to enhance their quick location and retrieval?
7. Healthcare Attorneys. We believe that healthcare attorneys constitute one of the most underutilized, yet powerful, mechanisms for healthcare providers to solve insurance problems. What's needed is for us, in the healthcare profession, to collectively identify and deploy the pathways by which the attorneys on any given payment issue, on a case-by-case basis, can be brought into the equation, at a moment's notice, to attempt to solve the problem (without going to court and without getting "nasty") when our own efforts to solve the problem through reasonable means fail. Part of our responsibility, as team players, is to know where our talents leave off, and where others' pick up.

Payment problems, such as the ones addressed in our series of Advisories, are certainly solvable. But we need to be thinking about how we can solve them at the strategic level. We need to be thinking about how they can be solved in a consistent, long-term, preventative (and also after-the-fact) fashion.

Team and Life Conditioning, Inc. – originally you had asked us to take a look at these issues and to provide our comments. We find it very significant that your very mission is about Team development.

Keeping your September 20th "Action Dissolves Fear" letter in mind – the one you took the time and effort to draft to your TLC brothers and sisters, and to the Chiropractic profession at large...

What are your thoughts, as Team Developer, on the issues presented herein?