Managed Care E-Mail Bulletin
May 2008
The evolving ERISA battlefield
E-Mail Bulletin
Hello, everyone.
I found this news story about our old friend, ERISA, and thought you might find it interesting. It's from the St. Louis Post-Dispatch
Gil Weber, MBA
Insurer, physicians fight over ERISA limits
By Mary Jo Feldstein
ST. LOUIS POST-DISPATCH
05/28/2008
For many of their largest clients, health insurance companies no longer provide insurance at all.
The employer or union takes on the risk and the health insurer is paid to negotiate discounts with hospitals and doctors, process paperwork and help employers establish the plan's benefit design such as how much patients will pay in co-payments and deductibles.
These arrangements help "plan sponsors," known to most of us as employers and unions, keep a better handle on costs while the insurers get paid for their expertise in managing those costs.
There's another thing about employer-sponsored plans — most state laws don't apply, so the plans are not subject to state-mandated benefits. They're also not required to pay doctors and hospitals within a certain period of time — sort of.
This is a concern of Signature Health Services, one of the area's largest specialty practices, and Dr. George Schoedinger, an orthopedic surgeon at Signature. They sued United Healthcare of the Midwest, one of the area's largest insurers, for paying patients' bills too slowly a couple of years ago. They're currently appealing the federal court's decision, which found only partially in their favor.
Signature has many complaints with United. The practice accuses United of purposefully trying to delay or deny paying claims for as long as possible. Signature also dismisses the insurers' claims that any mistakes were inadvertent errors and any delays were caused by legitimate need for more review.
"They're masters of obfuscation," said Jan Vest, Signature's chief executive, referring to insurers.
United declined to comment, citing the ongoing lawsuit.
Though Signature has some isolated complaints, the issue of how to regulate self-funded insurance plans is affecting medical practices and patients across the country. It's one that will likely become more prominent in the coming years as more employers choose this approach. Between 1999 and 2007, the percentage of workers covered under a self-funded plan rose to 55 percent from 44 percent.
For nearly three decades, courts have debated how the Employee Retirement Income Security Act, or ERISA, the federal law governing a variety of employee retirement and health benefits, intersects with state laws regulating other health plans.
Related to physicians and hospitals, the courts have often found they are still free to sue the insurer administering the benefit — United in this case — as a breach of their contract with the hospital or doctor, said Stan Schroeder, an attorney with the Lowenbaum Partnership who specializes in these issues.
The theory is that these disputes involve the ERISA plans only peripherally. The main opinion cited is one of a Texas case involving Baylor University Medical Center and Arkansas Blue Cross Blue Shield. In Baylor, the court refused to "insulate an insurer from liability."
But in the case of Signature versus United, federal court Judge Stephen Limbaugh found the Texas law differed from Missouri's in one key aspect. The Texas law does not apply to plan participants, better known as the insured patients. Missouri's law does. He found this was enough to make the federal law and the state law overlap.
Since federal law supersedes state law, the Missouri statute requiring prompt payment was pre-empted, Limbaugh said.
Signature disputes this, saying the state statute has no impact on benefit administration or design and therefore should not be superseded by ERISA. Oral arguments on the appeal are scheduled for June 11.
Schroeder said eventually the state Legislature will likely have to revisit the issue and make the law more clear.
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