LibGuides: Health Care Claims Disputes: Introduction To Healthcare Claims

Provider Claims Basis Under ACA

This Pathfinder addresses the new sources of payment to acute care providers and the particular claims disputes that are likely to arise.

http://www.cms.gov/cciio/index.html

Bitter Pill: Why Medical Bills are Killing Us

This is an excellent overview of how, where and when hospital charges originate. What's missing is the understanding of why. Not because it isn't asked but rather because, by inference, it is tied to the hospital's overall profitability. That's likely a disingenuous answer. In my ~30 years in dealing with patient charges and the routines for pricing those charges, there were two underlying drivers of charge levels: 1) the allocation of costs between Medicare and other payors to reliably complete required annual Medicare Cost Reports and; 2) the "we've always done it this way" answer because the interaction between charges, attendant revenue recognition and budgeted results is so unclear that the users of the charges as a proxy for results recognition are paralized in any effort to change the prices to some rational basis.

This article in Time Magazine by Steven Brill, Monday, Mar. 04, 2013 is a must read to gain a good overview of how Charges are levied and how irrelevant they are to most claims excepting those individuals who have to pay the charges when they have no coverage, when their coverage limits are exceeded or when they share a pecentage of the overal charges as a coinsurance liability.

Health Law Blog

Managed Care Contracting Issues

What is a Hospital Paid

Charges for an inpatient hospital stay typically involve an accumulation of individual charges for items used, tests and procedures performed, therapies delivered, drugs administered and myriad other details. And most discussions of hospital charges revolve around the dollar amount associated with each of these particular items items. Hospitals maintain a comprehensive list of chargeable items in a master catalog known as a "charge master." For a typical hospital will have several thousands of individual charges depending on the level of detail kept in it. When one considers all the detail associated with particular supply items, lab tests, interventional procedures and drugs, the number easily reaches six figures.

While the typical discussion of hospital charges will concern these "list prices," the informed consumer quickly notes that these rates bear little, to no, relationship to the amounts actually received by the hospital for the services delivered. In many respects, these rates are equivalent to the "rack" rates one sees at a hotel and are deeply disounted to specific groups based on their purchasing power or to various government agencies through the enabling legislation.

The article below discusses the basic accounting procedure whereby "gross charges" (the summation of all the patient's detail charges at list price) are discounted by the contractual provisions between the hospital (provider) and the entity paying the claim (governent, insurance company, employer through a self-funded plan and other arrangements).

http://0-healthlawrc.bna.com.aquinas.avemarialaw.edu/hlrc/4207/split_display.adp?fedfid=24338699&vname=hlbsporrc&fn=24338699&split=0#24338699

Rate setting

Unlike most commercial activities, the cost of health care provided by hospitals is regulated in a variety of ways. Since few patients pay for hospital services “out of pocket,” hospital payment rates are more commonly set by government regulation or contractual agreement than by the market. The government regulates the rates for Medicare and Medicaid recipients, which often comprise a large percentage of hospital revenues. Hospital contractual arrangements with insurance companies establish the rates for most other patients. In either case, the amount actually paid to the hospital is typically less than the hospital's full established rates for the services provided.

For additional details on how the various payment sources affect the amount the hospital is paid for the same services see "Classification of Hospital Revenues" at the following link:

http://0-healthlawrc.bna.com.aquinas.avemarialaw.edu/hlrc/4207/split_display.adp?fedfid=24338658&vname=hlbsporrc&fn=24338658&split=0#24338658

ACA Adds New Claims Volume to Existing Claims

Acute care claims are funded by a variety of means such as the major government programs Medicare and Medicaid, employer-self-funded health plans, employer provided commercial insurance, indiviuial health insurance policies and personal payment. There are also replacement products for both Medicare and Medicaid programs which are operated by private insurances but provide essentially the same coverages to the individuals as did the governament program. TriCare is another large federal government health care program for active duty and retired service members. Since Medicare and TriCare programs typically have large co-pay and coinsurance liabilities, there are supplemental policies that fill these voids. These Medicare Supplement policies are referred to as Medigap insurance. In addition to serving as primary insurance coverage for persons below minimum income levels, Medicaid also serves as a supplemental insurance for Medicare beneficiaries who meet the Medicaid eligibility income tests. TriCare serves this purpose for service members who are Medicare eligible and requires that the member utilize Medicare upon reaching age 65 to maintain TriCare eligibility.

Medicare regulations require that other health insurance provided by large group employers function as the primary payor even when the patient is Medicare eligible.

Typically all coverages require that personal injury liability insurances pay to the fullest extent before the health insurance benefits apply.

What are Covered Charges

Construction and Application of Term "Actual Charges" in Supplemental Health Insurance Policy

Construction and Application of Term "Actual Charges" in Supplemental Health InsurancePolicy

68 A.L.R.6th 297 (Originally published in 2011)

Supplemental health insurance policies frequently calculate the benefits based upon a medical provider's "actual charges" for a covered medical event. Where the insured has other insurance, and a medical provider has granted the other insurer a discount, uncertainty may arise as to whether the supplemental "actual charges" benefit should be based upon the provider's undiscounted or discounted fee. For example, Where the class action plaintiff insureds, all South Carolina residents, had submitted claims for "actual charges" benefits under supplemental health insurance policies, and the defendant insurers had paid their "actual charges" claims based on the discounted amounts medical providers accepted from third-party payors as payment in full, and in Ward v. Dixie Nat. Life Ins. Co., 257 Fed. Appx. 620 (4th Cir. 2007) (applying South Carolina law) Ward I, the Fourth Circuit had determined that "actual charges" was ambiguous and therefore would be construed in favor of the plaintiff insureds to mean the undiscounted amount initially billed by medical providers for treatments, and where the South Carolina legislature thereafter enacted S.C. Code Ann. § 38-71-242, which in substance adopted the definition of "actual charges" unsuccessfully urged by the insurers in Ward I, the presumption that a statute does not operate retroactively to reach conduct and claims arising before the statute's enactment was not overcome, and § 38-71-242 therefore did not apply to the insurance claims litigated in Ward I, it was adjudged in Ward v. Dixie Nat. Life Ins. Co., 595 F.3d 164, 68 A.L.R.6th 709 (4th Cir. 2010) (applying South Carolina law). This annotation collects and discusses all cases that have construed or applied the term "actual charges" in a specified disease or other supplemental health insurance policy.

68 A.L.R.6th 297 (Originally published in 2011)

Why Every Patient is not Impacted by Chargemaster (List) Prices

Purpose of the Medical Record
Details of the medical record are the basis for healthcare providers' billing for services and supplies furnished to patients. The medical record evidences to third-party payors and their agents that certain care was provided and that it met the payors' standards for medical necessity and appropriateness.

UK/CLE Kentucky Health Law § 1.3

Because Balance Billing is generally prohibitied for those charges covered by a third-party payor such as Medicare, Medicaid, or Commercial Insurer.

See the following collection of cases delineating how this limit on patient liability for "list vs. net" charges came into existence.

Propriety and Use of Balance Billing in Health Care Context by David J. Marchitelli, J.D.

As government and private health insurance became more available, control of the health care finance system gradually shifted from physicians and other medical providers toward government and private health insurers, that, in order to combat spiraling health care costs, implemented various regulative and contractual mechanisms to control costs. Limitations placed on rates of reimbursement to medical providers provided significant savings, but threatened to burden patients with large out-of-pocket expenditures to cover the cost of medical services that exceeded the limited reimbursement rates, which in turn prompted government and private insurers to adopt limitations and prohibitions on "balance billing" patients for medical charges that exceeded the reimbursement rate of the particular insurance plan. Because restrictions on balance billing are creatures of law and contract, they ostensibly apply only to providers of medical supplies or services that have agreed to participate in the particular health insurance plan, but there are some exceptions, such as in the case of Prospect Medical Group, Inc. v. Northridge Emergency Medical Group, 45 Cal. 4th 497, 87 Cal. Rptr. 3d 299, 198 P.3d 86, 69 A.L.R.6th 733 (2009), in which the Supreme Court of California, observing that a State statute required that all medical fee disputes concerning emergency medical services be resolved solely between health insurance payors and emergency medical providers, interpreted the law as prohibiting balance billing of patients, regardless of whether the medical provider participated in the particular insurance plan. There has been a substantial amount of litigation regarding the enforceability, applicability, and limits of various "balance billing" restrictions. This annotation collects and analyzes the cases in which courts have dealt with those issues.

69 A.L.R.6th 317 (Originally published in 2011)

Determination of Amounts Due

Accounting for Hospital Receivables
This article describes the "gross to net" accounting procedures used to reduce the total accumulation of chargeable items and services consumed by the patient to an actual payment amount the facility will receive for having provided them.

Subrogation

This ALR by Allan E. Korpela, LL.B. collects cases involving the rights 0f providers or insurers to be subrogated to certificate holder's claims against a tortfeasor.

73 A.L.R.3d 1140 (Originally published in 1976) The trend is moving towards, but has not consolidated on the position of, reducing the insurance liability by first offsetting any amounts recovered from a tortfeasor for medical damages against the insurer's liability.

Fiduciary or No Fiduciary? That's the ERISA Question

This A.L.R. by James Lockhart, J.D. discusses the circumstances under which the third-party administrator of an employer's ERISA plan crosses the boundary between providing administative sevices only (not a fiduciary) and begins exercising discretionary control over plan assets (becomes a fiduciary).

When Is Insurer Fiduciary Under § 3(21)(A)(i) or (iii) of ERISA (29 U.S.C.A. § 1002(21)(A)(i) or (iii))

James Lockhart, J.D.

Under § 3(21)(A) of the Retirement Income Security Act of 1974 (ERISA) (29 U.S.C.A. § 1002(21)(A)), which makes a person a fiduciary of an ERISA plan to the extent that the person exercises authority, control, or responsibility with respect to the plan or its assets, an insurance company may become a fiduciary in a number of ways, based on a number of different, plan–related activities. In National Union Fire Ins. Co. of Pittsburgh, Pa. v. Louth, 40 F. Supp. 2d 776, 181 A.L.R. Fed. 817 (W.D. Va. 1999), the court found that an insurance company that provided liability insurance to an ERISA plan administrator did not exercise authority or control over plan assets merely by paying money to the administrator to settle a liability insurance claim, inasmuch as such an obligation could not be considered an asset of the plan. This annotation collects and analyzes federal cases dealing with when insurance companies or related entities or individuals are considered ERISA fiduciaries.

181 A.L.R. Fed. 269 (Originally published in 2002)

Validity of Minimum Essential Coverage Under ACA

Validity of the Minimum Essential Medical Insurance Coverage, or "Individual Mandate," Provision of § 1501 of the Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119 by Douglas A. Bass, J.D. in 60 A.L.R. Fed. 2d 1 (Originally published in 2011) collects cases relating to this key provision of ACA. The article begins with a clear introduction to the issue; "The Patient Protection and Affordable Care Act (the Act) was signed into law by President Barack Obama on March 23, 2010. The proponents of this Act identified its purposes as reforming America's health-care system to achieve universal medical insurance coverage for all Americans and lowering the costs of health care nationally. To achieve these goals, Congress identified as a crucial component of this Act the provisions of § 1501, which establish a mandate that all individuals, with certain limited enumerated exceptions, must procure what the Act defines as "minimum essential" medical insurance coverage or be subject to a financial penalty." 60 A.L.R. Fed. 2d 1 (Originally published in 2011).