I’d like to introduce you to my colleague, Nick Kopcho, the reimbursement guru of the Brouse Health Care Practice Group. He’s been handling issues with insurance companies since the beginning of his career, and he’s a guest author today to discuss a very important topic: getting paid.

Seeking reimbursement for treatment provided is typically a familiar and straight-forward process for hospitals and medical practices -- a patient provides their insurance card before treatment, the provider submits a claim, and the insurer pays the rate contractually agreed upon with the practice or hospital. Or, the patient informs the provider that he or she is uninsured and will be paying directly for the care received. But, what happens when a patient produces a card from a company unfamiliar to the provider because the company is a non-contracted payor, and after submitting a claim the unknown company remits only a small portion of the total charges? This last scenario is becoming more common as new companies seek to disrupt the health benefits industry and providers need to know their options when dealing with these non-contracted payors.

The increased use of self-funded plans by employers has led to the creation of a new type of benefits management company — one that markets itself as considerably cheaper than using a traditional insurance company or a third-party administrator. These companies, sometimes known as “true cost” or “Medicare plus” plans, allow patients to see any doctor and receive treatment at any hospital with virtually no restrictions because they do not enter into provider reimbursement contracts or form provider networks. Instead, these companies create their own reimbursement formulas, and when a bill is submitted the company re-prices the services using its proprietary formula and submits reimbursement for an amount it considers “usual, customary, and reasonable.”

The end result? Typically an angry provider that received only a fraction of billed charges, wondering why.

What can be done when this happens? The provider typically has three options: 1) accept the amount submitted as payment in full; 2) fight back for additional compensation; or 3) balance bill the patient. The first option is straight-forward — sometimes the provider decides the amount remitted is acceptable, so they will write off the remainder and consider the account paid in full. The potential problem with this option is the provider still does not know how the company came up with the amount paid, and there is no guarantee the same amount will be paid for the next claim. Regarding the third option many probably thought, “Wasn’t balance billing outlawed?” Surprisingly, ERISA doesn't prohibit balance billing, and even though many states have enacted some sort of balance billing prohibition, those state laws don't apply to self-funded plans. But, depending on the services provided and the bill amount, balance billing may not be successful because the patient may be unable to pay.

That leaves option two, seeking additional reimbursement from the plan. When contacted, the plan typically responds by saying “the amount remitted was an accord and satisfaction and the account should be considered paid in full.” This argument is almost never correct. Under Ohio’s accord and satisfaction law, the parties must first go through a process of offer and acceptance (an accord), the accord must have been carried out (payment made, or satisfaction), and it must be supported by consideration (each side provides something of value). In these situations there is never an accord because there is no negotiation, the non-contracted payor simply submits an amount it wants to pay and says to the provider “take it or leave it.”

Next, the company may threaten that by seeking additional compensation, the provider is violating a number of scary sounding laws. The problem is the laws cited almost never apply to physicians or the specific situation. The company typically accuses the provider of violating various Acts, including the “Fair Credit Billing Act” (generally does not apply), Fair Debt Collection Practices Act (does not apply to original creditors), Ohio Consumer Sales Practices Act (does not apply to transactions between physicians and their patients), or that the provider is violating IRS Section 501(r) (only applies to tax-exempt entities).

Finally, after overcoming all of these obstacles, the companies are usually willing to negotiate and a fair reimbursement rate can be achieved. If your practice receives an unexpected reimbursement well short of billed charges from a non-contracted payor, call Brouse McDowell and we can help you through the reimbursement process.