"Should You Consider Going Non-Par?"
Going out of network is not a simple decision.
Gil Weber, M.B.A.
Adapted with permission from Podiatry Management
© Copyright 2009. All rights reserved.
In January 2008 I published an article titled Cut Your Best Deal for Out of Network Services. In that article I discussed some of the issues physicians without provider agreements encounter when trying to collect from third party payors. And I wrote, in part:
"Oftentimes a practice can collect more in total reimbursement when the patient is seen on an out-of-network (non-par) basis. In these instances the amount received from a third-party payor added to the patient's out-of-network co-insurance can be quite a bit more than that paid to panel (in-network) physicians. Of course there are some issues the practice needs to address to preclude claims submission and payment problems being thrown in its path..."
"In an ideal situation you'd collect full charges (U&C) from the patient seeing you as a non-par provider. You'd then give the patient a paid receipt and she'd submit to her insurance for partial reimbursement. In an almost ideal situation you'd collect full charges, but with part coming from the patient as co-insurance and the balance coming from the payor."
The choice is not simple
Of course going non-par is not a simple decision. While many physicians have found non-par success with one or more payors, every physician considering the move immediately wonders, "Will I get still get referrals if I'm non-par, and how will patients react?" Let's assume you've thought this through and, on balance, feel that the risks of going non-par with a particular payor seem to be more than offset by the potential benefits.
Before finalizing that decision please also consider two often unappreciated issues that can complicate both the decision to go non-par and the process of collecting if you are. The first issue centers on what is Usual and Customary for purposes of determining payment.
Certainly U&C is in the eyes of the beholder, or in this case as defined by the physician and, usually quite differently, by the payor. Exactly what constitutes U&C can be a huge bone of contention. If the payor's determination of "fair and reasonable" U&C is lower than the non-par physician's the result will be lesser payments than had been anticipated when agreeing to accept assignment.
For example, let's say your U&C for a surgical procedure is $1000, and the patient's out-of-network benefits plan calls for a 60/40 split (60% paid by insurance; 40% paid by patient). Under such a scenario you would expect to receive $600 and $400 respectively. But if, in its infinite wisdom, the payor decides that reasonable U&C is just $850, then it will pay only 60% of that amount, or $510. What happened to the other $90 you were anticipating?
In such cases the payor may also do one of two things. It may declare that the patient owes you just 40% ($340) of the same reduced amount, meaning you also get less from the patient and your total reimbursement ends up as $850 rather than $1000. Or it may disingenuously try to shift some of the difference to the patient -- telling the patient that she owes 40% of your U&C number ($1000) while it pays you 60% of its U&C number ($850). Slimy, isn't it?
As you can imagine when the payor's EOB hits your desk with an "adjusted" check for less than expected, and when you then try to collect the balances from both plan and patient, it sets the stage for a series of problems and unpleasantries for your business office.
What to do when a payor says your U&C is unreasonably high and "shorts" or otherwise manipulates your non-par payments
In February 2009 the Associated Press issued one of several reports on legal actions filed in New Jersey federal court by the American Medical Association and others against CIGNA, Aetna, and others for using allegedly rigged U&C data sets to short-change non-par physicians and unfairly shift costs to patients. The data came from Ingenix, a subsidiary company of United HealthCare Group.
A month before, Andrew Cuomo, the Attorney General of New York state, finalized an agreement with UHC for Ingenix to cease operations. Cuomo's office announced it had determined that the Ingenix data understated the true market rates of medical care by up to 28 percent.
Physicians had long suspected, and Cuomo's investigations confirmed, that something rotten was permeating the health care marketplace. And it will be interesting to see how all of this plays out in the coming years as a new, independent database of U&C is to be funded and developed as a result of Coumo's efforts.
But at the practice level what can you do now to fight back if one of your non-par claims is repriced, and a payor says your U&C is not in line with the community? Here's a sample letter you can use to model your own. Please ask your attorney for help modifying as appropriate.
Now, that's playing hardball! But it's your money that the payor is trying to pocket, so why not fight doggedly to get what you worked so hard to earn? If you don't the payor is more than happy to keep the difference.
Will you get a favorable response? Initially probably not, and you'll likely have to follow-up. But given the recent discrediting of Ingenix's database and the public exposure of these payment inequities that have been so endemic in the past, at least payors now might give your non-par practice more attention than in the past, and it might even cause a payor to think before it tries to shortchange you the next time. This sample letter certainly is not the cure-all for every incidence of U&C conflict, but it's one way to fight back against the pressure to go par.
When payors refuse to send payments to non-par physicians
The other key issue centers on payors who make it difficult and, in fact, financially risky for practices to accept assignment. These payors refuse to honor assignment authorizations and will mail checks only to patients (Members). And as so many physicians know from bitter experience, trying to get that money back from some patients is a protracted and, sometimes, unsuccessful battle.
The practice may appeal to the payor for assistance, but as there is no contract with the payor that party has absolutely no interest in helping the physician collect what's due. That then leaves the practice to fight a collections battle with the patient. To avoid such hassles many physicians join provider networks even though that means accepting deeply discounted payments. But there's recent good news.
An interesting court case may gradually lead to nationwide change
If you are non-par or are considering going non-par then you should be interested in an August 2006 decision in the United States Court of Appeals, Fifth Circuit (includes Louisiana, Texas, and Mississippi). In time this case might change certain dynamics of third party care in other parts of the country and make it financially safer for non-par physicians to see patients. Here's a quick synopsis.
Blue Cross and Blue Shield of Louisiana lost this case (Louisiana Health Service & Indemnity Co. d/b/a/ Blue Cross and Blue Shield of Louisiana vs Rapides Healthcare System, No. 04-31114) that it had appealed from the District Court. BCBS refused as a matter of policy to honor its own Members' (patients) assignment of benefits authorizations to send payments directly to non-contracted providers, but here the Appeals Court said it must honor such requests.
What was simply fascinating about this case was the fact that Louisiana had a statute in place at the time [LA. REV. STAT. ANN. §40:2010 (2004)] that said payors must honor an assignment of benefits request from the patient. And in this matter before the Court BCBS did not dispute that its actions violated that statute. So given both of those facts, what caused the Blues to act in a manner that seemingly flaunted the assignment of benefits statute?
Despite what was written in state regulations, all health insurance plans issued and administered by Blue Cross/Blue Shield in Louisiana had in their subscriber (Member) contracts some provisions that said payments would be made only to contracted network providers or directly to the Member, that such benefits were not assignable in whole or in part, and that BCBS would not recognize any attempt to assign benefits and designate payment directly to a physician.
Such language flew in the face of the Louisiana assignment of benefits statute and created reimbursement (cash flow) nightmares for physicians. So what was BCBS' defense?
It argued exemption under ERISA (Employee Retirement Income and Security Act), and that ERISA (federal law) trumped state law. As so many other third party payors have done in the past, BCBS was trying to shield itself behind ERISA, some of the most wide-reaching health care legislation ever concocted by Congress. While promulgated based on the best of intentions, ERISA has proven itself to be incredibly anti-provider, and it's a rare instance, indeed, when ERISA favors providers over payors.
In what seems a disingenuous and almost absurd contention, BCBS argued that enforcement of the Louisiana statute would impose a "double recovery" of benefits. In other words, if BCBS' own language obligated it to send payment to the patient (Member), and if the assignment of benefits statute required payment directly to the provider, then it would be paying twice.
But the Court did not buy that argument and noted: "Blue Cross's obligation to pay the provider only arises if Blue Cross has notice of the assignment. If Blue Cross ignores the assignment, then it risks paying a claim twice... Should Blue Cross pay a patient after receiving notice that the patient assigned her benefits claim... Blue Cross can seek recovery from the person improperly paid)..."
In its decision against BCBS ordering it to honor assignments and pay directly to non-par physicians the United States Court of Appeals also opined that in this instance ERISA did not trump the Louisiana statute. So now what does this mean for you?
Remember that a finding in one court's jurisdiction does not automatically or necessarily apply elsewhere. So on its own this decision is not going to transform overnight the national provider-payor landscape, and this disingenuous ploy is not going to disappear in an instant. Getting paid as a non-par provider could still be a problem in your state -- at a minimum in the short term and, perhaps, for some time yet to come.
But this could be an important step to leveling the playing field in other parts of the country and with other third party payors, for a decision in one court sometimes can be used successfully to support cases argued in other jurisdictions. Therefore, if you're experiencing problems getting paid as a non-par provider or know that the problem exists in your community you'll certainly want to find out how, or if, this decision can be used to leverage your position vis-à-vis any other payors who are using the same or similar disingenuous tactics. The problem has not been limited to BCBS, and it has not been limited to major medical plans.
So I'd recommend getting an opinion from your state society's legal counsel. The wording of state law vis-à-vis ERISA is key. Find out if this decision in the U.S. Court of Appeals might be used as leverage against any of your local payors that refuse to honor assignment of benefits authorizations. If yes, then press your state society to take an active role in getting the word out to such payors that assignment of benefits authorizations should be honored.
If your society's legal counsel opines that this decision does not offer promise in your locale then you still need to press the society -- in this case to bring pressure, perhaps even an action, on behalf of its members, or at a minimum to work with other medical societies in a concerted effort linking multiple health care specialties.
Ultimately relief may need to come from the legislature, and sometimes then from the courts if a third party payor seeks to contest a law it doesn't like. Fighting to implement physician-friendly legislation can be a long and expensive process, and going to court and then through and extended appeals process can be problematic.
There's no doubt that BCBS would have continued with its outrageous policy of not honoring assignment had it not been forced to change. If you want to strike back against onerous protocols or laws in your state you'll have to gain the support of legislators. Change won't come about until and unless you demonstrate to your elected representatives that you have strength, purpose and resolve.
These materials are intended to provide useful information about the subject matter covered. The author believes that the information is as authoritative and accurate as is reasonably possible and that the sources of information used in preparation of the materials are reliable, but no assurance or warranty of completeness or accuracy is intended or given, and all warranties of any type are disclaimed.
The materials are not intended as legal advice, nor is the author engaged in rendering legal services. The materials are not intended as a replacement for individual legal or professional advice. Information contained herein is presented only for illustrative purposes, and it should not be used to establish any fees or fee schedules, nor is it intended and it should not be construed as encouraging any user of the materials to take any action that would violate any state or federal antitrust laws, tax laws, or Medicare or Medicaid laws.
Gil Weber is a nationally recognized author, lecturer and practice management/managed care consultant to physicians and industry. He can be reached at (321) 433-0623 or by e-mail through his website contact page.