Shawn Gretz, Ridiculously Nice Vice President of Sales
A letter or EOB arrives at your facility from the bully that states: Accepting and depositing the previously sent payment means the Provider “agreed that such payment constitutes an accord and satisfaction and will take precedence over any previous terms,” or “we demand that the hospital cease and desist all collection activity against the beneficiary and demand that the hospital appeals the determination through the Plan’s internal dispute resolution process.”
As any person being bullied knows, and as Freud has written, there are two options: 1. Fight or 2. Flight.
Background: Since the 1980’s, the basic approach employers have used to control healthcare costs has been through Preferred Provider Organizations (PPO) that negotiate discounts off the gross/billed charges. This is considered “top down” negotiating. “Top down” negotiating leaves room for a hospital to overstate the gross costs for a procedure leaving the insurance company paying a lot more than the actual cost of a procedure. Enter in self-funded groups who want to work the way Medicare does with “bottom up” pricing as a means to control costs. Medicare establishes a base rate for each service and then makes adjustments based upon patient complications, geographic location differences, and other factors to determine the maximum amount they will pay a hospital for a procedure.
Self-funded/employer-sponsored health plans would prefer to work the way Medicare does by using “bottom up” pricing or what is termed Reference Based Billing. They are electing not to enter into a contract with hospitals and have no provider network or one that is very limited. A patient is free to choose any hospital they wish to have the procedure done, which patients appreciate versus being told which facility they must visit because it is in-network. These plans want to limit the payment for the hospital services provided to the patient by “Re-Pricing” the service at a “bottom-up” amount. Many benefit consulting firms are telling these health plans that they can state their “bottom-up” price. They create what is called an “allowable claim limit.” “Allowable claim limits” for inpatient are based upon a percentage of Medicare reimbursement or cost as reported to Medicare on the most recent cost report. Generally, this is 120%-150% of Medicare costs or other published data. Some reference based pricing models are only doing this for specific procedures such as appendectomy or knee-replacements.
After the service was provided to the patient, a hospital usually receives payment on an EOB stating that by depositing this payment the hospital is agreeing to accept the “bottom-up” pricing and the amount should be considered payment-in-full minus any co-payments, co-insurance, or deductibles that the patient may owe. The idea is that reference based bullies want you to think that you cannot balance bill the patient. This is the “flight” that these self-funded/employer sponsored health plans are hoping you choose.
But Can You “Fight” or Balance Bill the Patient?
The answer is usually YES, but be ready to deal with legal counsel from the self-funded/employer sponsored group to start the bullying. Before we get into how you can defend your “fight” or balance billing the patient, let’s talk about the offense and defense to fight this bullying. As any sports fan has heard “the best offense is a great defense.”
Defense Tactic #1: Admissions and Registration need to be on the lookout for insurance cards that read:
“We restrict hospital charges to the amount the Plan deems reasonable and states that by accepting an assignment of benefits from the beneficiary, a hospital waives any right to recover payment more than the Plan determined Allowable Claim Limit.” Or something to that nature. If a registration person receives an insurance card that reads this, they need to go on offense.
Offensive Tactic #1: Start with a discussion with the patient immediately that although the hospital will bill the insurance for the services, they do not agree to the terms of this insurance card. Create a form letter that the insurance card can be scanned into that creates an admission agreement that states: XYZ hospital does not agree to the terms of this insurance card, and the patient understands that the patient’s insurance is out-of-network. Any charges including deductibles, co-insurance, copays, along with charges that are not contractually agreed to will be balanced billed to the patient. The patient agrees that they will pay for any balance-billed charges. Then ask the patient to sign the agreement.
Offensive Tactic #2: Immediately call the self-funded/employer sponsored plan and notify them that the patient agreed to the admissions agreement that they will be “balanced billing the patient” for any charges for an “out-of-network” admissions. Any further communications that attempts to prevent this billing will be considered a “tortious interference” with my business relationship with the patient. We would gladly welcome the opportunity to discuss a potential contract with your plan by calling XXX.
Defensive Tactic #2: After receiving a letter or EOB as mentioned above with the language of “cease and desist all collection activity” or “accord and satisfaction” it is time to start sending letters to the plan and also the patient. This letter should contain language that the hospital does not agree to the terms the EOB or letter states because of no contractual agreement between the plan; and therefore, will follow our policies of balance billing the patient for the remaining charges along with any deductible, co-insurance, and co-payment. If the Offensive Tactic #1 was completed, mail this along with this letter and continue billing the patient.
Offensive Tactic #3: Call the patient to ensure that the legal counsel does not represent the patient interest and document that this question were asked of the patient. “I am calling to see if you have any legal representation. If you do not, we will continue to communicate with you.”
Offensive Tactic #4: As these plans start to appear more frequently at your facility, then it is time to assign a billing representative to oversee responses. This includes having conversations with the plan administrator and working out an arrangement or contract that is agreeable to all parties. Sometimes the best tactic is to negotiate.
Offensive Tactic #5: Update your billing and collection policy to include strong language for those contracts that are out-of-network. My suggestion for this language would be:
It is the patient’s responsibility to present at the time of admission, registration, pre-authorization or discharged any third-party-payer available to pay for services. XYZ will attempt to bill all third party payers for services provided. The patient is responsible for ensuring that XYZ and all doctors performing services are within network. If XYZ is out-of-network with the third party payer, the patient will be responsible for out-of-network charges including coinsurance, co-payments, deductibles, and also additional balances for being out-of-network that will be balanced billed to the patient. XYZ does not participate with the out-of-network reference based billing plans.
If all these offenses and defensive tactics fail, Americollect is here to help. Our legal team of professionals will communicate with the plan and the patient to ensure the account is paid-in-full. If you have any questions in-regards to reference based bullies, please call or email Shawn at 920-420-3420 or shawn@americollect.com.