Ask the Experts: Non-Contracted Insurer Payment Rates

What are providers’ options to respond to the growing number of non-contracted self-insured payers—governed by ERISA—offering payment based on some share of what Medicare pays for a given service?

Some background: These non-contracted payers are offering some share of Medicare payment—whether 100 percent or 100 percent plus 30 percent—and they do not use the term “usual and customary charges,” which appears to be the basis for their approach. The few payers that have offered an explanations ay that the reimbursement is adequate for our region.

An additional complication is that the carrier shows these discount amounts as denials, not contractuals, which then makes the provider liable and more complicated to recover. The amount is not reflected in the balance for the patient to pay and obtaining the difference requires appealing it.

Answer 1: Our health system informs members about our non-contracted status with these plans during scheduling, and tells them they will be responsible for full charges, less payment made by their plan (we offer to bill their plan as a courtesy). We also encourage these members to go elsewhere for non-emergent services if there is a hospital or network, which does offer discounts to these patients. For a non-contracted plan, we are under no obligation to honor their explanation of benefits, so any service paid less than 100 percent of billed charges is aggressively pursued with the plan and the patient. If necessary, we utilize outside legal-collections to pursue.

I suggest utilizing a legal collection firm which is familiar with your state’s specific regulations and experienced with this specific issue. Additionally, I suggest pursuing to the fullest extent possible with the patient, employer, and the plan.

This response is limited to non-contracted commercial plans and would not apply to non-contracted Medicaid HMO or Medicare Advantage plans.

This question was answered by: Craig Ganger, director, managed care & decision support, Premier Health, and a member of HFMA’s Southwestern Ohio Chapter.

Answer 2: We recommend you could contact your state’s labor agency, but we are not aware of any regulation, particularly in ERISA laws, that could be cited as the reason for this approach.

The more likely scenario is that self-funded employers who are funding the claims payment but using a TPA to actually pay the claims are increasingly cost-shifting to patients in an effort to encourage enrollees to use in-network providers. Setting Medicare or Medicare plus some percentage point as their liability would be part of their approach as the plan sponsor.

Regardless of whether the payer calls it a denial, the lack of an agreement between a provider and with the specific insurer administering the plan leaves the patient ultimately liable for the difference between their plan, or an employer’s payment, and the full charges.

One approach we have seen is to remind payers who are advocating this approach that without a contract the patient has absolutely no protections and the absence of a contract eliminates standard protections for patients, such as the ability to balance bill the patient, and potentially means the patient could be charged for any remaining amounts up to the full charge of the services, in advance. Employers want to keep their employees somewhat protected and out of the fray, and a reminder that such an insurer a tactic places the employee in the middle and eliminates employee protections might dissuade them.

This question was answered by: Paula Dillon, director of managed care, Illinois Hospital Association and a member of HFMA’s First Illinois Chapter.

Answer 3: First, the law that applies to rates of payment from a self-insured plan is contract law. If you do not have a contract with the self-insured plan, you are entitled to balance bill the patient, even if the insurer is using Medicare rates to pay you (not including Medicaid, TriCare and other statutory programs with whom you participate).

State law does not apply because of the ERISA preemption, so even if you have a state law that prohibits balance billing, you can do so.

It is important to confirm that your organization does not have a contract with the plan. Your organization may have a contract with a third-party administrator, which incorporates all or many of the self-insured plans that they administer.

Moreover, you need to be sensitive to your patient relations, as discussed by others. You definitely need to discuss your payment policy in advance and disclose your intention to balance bill.

Also, for large balances, you may want to check the patient’s healthcare plan. Surprisingly, these plans often do not specify Medicare as the rate of payment. You need to get a copy of the plan and read it. Do not relay on the summary plan description (SPD). Ask the self-insured plan in writing for a complete copy of the plan documents, which will include the complete plan –not just the SPD. It also will include the contract between the TPA and the self-insured plan. If the plan does not supply all the relevant plan documents within 30 days, it may be subject to a penalty of $110 per day. However, you have to go to federal court to get a judgment ordering the payment of the penalty.

This question was answered by: Robin A. Johnson, owner, The Health Law Group and a member of HFMA’s Massachusetts-Rhode Island Chapter.

Answer 4: I concur with other’s responses. As non-par, the provider is able to balance bill the member. It seems the problem this provider faces is that the payment codes used by the payer do not accurately reflect the claim payment status, making it appear to be a contractual or “allowable” write-off, therefore hard to catch it and move the balance to member responsibility.

You should try working with the payer or claim administrator to correctly code the payment.

In the event the payer does not correct their payment reporting to accurately reflect the patient balance, you will need to design your system to flag this payer and identify outstanding balances so that you can bill the patient.

This question was answered by: Michele Marcum, hospital contract executive, Humana, Inc. and a member of HFMA’s Idaho Chapter.

The information provided through the Forum’s Ask the Expert service does not constitute legal advice, even when the advice is provided by lawyers. You need to obtain your own legal counsel for legal advice, and consider the laws and regulations that govern your state. The content and opinions expressed are those of the Forum experts, and not that of their employers or of HFMA. HFMA does not endorse the material or warrant or guarantee its accuracy. The responses are based only on the specific facts or circumstances provided. Forum experts cannot be held liable for outcomes related to any information provided.

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