"Treating Out-of-Network Patients"
The U.S. Court of Appeals Issued a Decision That Could Make it Easier for Dermatologists to Get Paid for Treating These Out-of-Network Patients.
Gil Weber, MBA
Reprinted with permission of the publisher.
Skin & Aging, Volume 15 - Issue 1
January 2007 - Pages: 62-64
A recent decision in the United States Court of Appeals, Fifth Circuit (Louisiana Health Service & Indemnity Co. d/b/a/ Blue Cross and Blue Shield of Louisiana vs Rapides Healthcare System, No. 04-31114), could make it easier and less risky for dermatologists in Louisiana and, perhaps, in other states to see patients as a non-par (out-of-network) provider.
In August, Blue Cross and Blue Shield of Louisiana lost this case it had appealed from the District Court. Where previously Blue Cross had refused to honor its own Members' (patients) assignment of benefits authorizations to send payments directly to non-contracted health care providers, here the Court said it must honor such requests.
The Facts of This Case
Louisiana has a statute in place that says payers must honor an assignment of benefits request from the patient. And here Blue Cross did not dispute that its actions violated that statute. So given both of those facts, you might wonder why in the world this case even went to trial, and how it managed to get up to the United States Court of Appeals.
The relevant language of the Louisiana assignment of benefits statute reads as follows:
Itemized statement of billed services by hospitals. No insurance company, employee benefit trust, self-insurance plan, or other entity which is obligated to reimburse the individual or to pay for him or on his behalf the charges for the services rendered by the hospital shall pay those benefits to the individual when the itemized statement submitted to such entity clearly indicates that the individual's rights to those benefits have been assigned to the hospital.1
1 LA. REV. STAT. ANN. §40:2010 (2004).
What in the world caused BCBS to act in a manner that seemingly flaunted the assignment of benefits statute?
Despite what was written in the regulations, all health insurance plans issued and administered by Blue Cross in Louisiana had in their subscriber (Member) contracts a provision that said payments would be made only to contracted network providers or directly to the Member.
The Court's decision noted that the relevant language in all Blue Cross plan documents read substantially as follows:
Direct Payment to Member
1) All benefits payable by the Company [Blue Cross] under this Benefit Plan and any amendment hereto are personal to the Member and are not assignable in whole or in part by the Member. The Company has the right to make payment to a Hospital, Physician, or other Provider (instead of to the member) for Covered Services which they provided while there is in effect between the Company and any such Hospital, Physician, or other Provider an agreement calling for the Company to make payment directly to them. In the absence of an agreement for direct payment, the Company will pay to the Member and only the Member those Benefits called for herein and the Company will not recognize a member's attempted assignment to, or direction to pay, another, except as required by law.
Clearly such language flew in the face of Louisiana law. So what did BCBS argue exempted them from compliance with the clearly worded assignment of benefits statute?
The Role of ERISA?
As quoted above, the contracts between Blue Cross and its Members contained language that stated: "...the Company will not recognize a member's attempted assignment to, or direction to pay, another, except as required by law."
The words "except as required by law" were an important focus of the case. Blue Cross argued that the law referred to in the words "except as required by law" is ERISA (Employee Retirement Income and Security Act), and that the state assignment of benefits statute was trumped by this federal legislation. Therefore, the no-payments-to-non-par-providers provision in its agreements with Members should be deemed as the prevailing language.
As so many other third party payers have done in the past, Blue Cross tried to shield itself behind ERISA, some of the most wide-reaching health care legislation ever concocted by Congress. ERISA has proven itself to be incredibly anti-physician, and it's a rare instance, indeed, when ERISA does not favor payers.
Conversely, the other side argued that "except as required by law" refers to Louisiana law – to the assignment of benefits statute. Given that, BCBS should be required to honor a patient's assignment to non-par providers.
The Court Finds Against BCBS
The Court determined that in this instance ERISA did not trump the Louisiana statute. Further, while the Court noted that both sides had valid arguments for what is in the best interests of the public, in this case they found that ERISA did not preempt public policy as established by the legislature.
The hospitals battling Blue Cross had opined that the ability of a patient to assign direct payment of benefits to any provider worked to the benefit of all patients, in particular to the benefit of low-income patients. On the other hand, the Court also recognized Blue Cross' contention that the ability to receive direct payments was a key incentive causing providers to join the BCBS network (albeit at reduced fees).
However, the Court stated that in this case "...the preemption inquiry is not resolved by or concerned with arguments of policy... we leave public policy decision to Louisiana's legislative body. They have chosen assignment of benefit claims over inducing hospitals to enter into Blue Cross's provider networks. Nothing in ERISA requires us to alter than choice."
Score one for the good guys!
Remember that a finding in one court's jurisdiction does not necessarily apply elsewhere. So on its own this decision applying to the Fifth Circuit (Louisiana, Mississippi, Texas) is not going to transform overnight the national provider-payer landscape, and this disingenuous ploy is not going to disappear in an instant. Getting paid as a non-par physician could still be a problem in your state.
But this could be an important step to leveling the playing field in other parts of the country and with other third party payers, 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 you'll certainly want to find out how or if this decision can be used to leverage your position vis-à-vis any other payers who are using the same or similar disingenuous tactics to try to force you into joining their networks.
I'd recommend getting an opinion from your state society's legal counsel. Determine if this decision in the U.S. Court of Appeals might be used as leverage against any local payers that refuse to honor assignment of benefits authorizations. The wording of your state's laws vis-à-vis ERISA is key to determining if ERISA will trump them.
If your society's legal counsel opines that this decision does not offer promise in your locale then encourage the society to advocate on behalf of its members by aligning with other societies in a concerted effort linking multiple health care specialties. Recognize that third party payers typically do not change their policies – especially physician-unfriendly ones – unless compelled to do so. As in the circumstances described here, they have no interest in making it easier for you to get paid.
Ultimately relief may need to come from the legislature, and sometimes then from the courts if a third party payer seeks to contest a law it doesn't like. Fighting to implement physician-friendly legislation can be a long and expensive process.
In this case BCBS was challenged by some hospitals with the resources to stand up to the insurer. But, obviously, going to court against one of the "800 lb. gorillas" likely is beyond the financial means of one or a small group of physicians. Thus, it's essential that dermatologists call upon their professional societies to spearhead these efforts.
Strength In Numbers: Money Talks
Physician-friendly legislation doesn't just happen. The Bills that have worked to level the managed care playing field were passed as the result of a lot of effort and time invested by physicians such as you. These Bills were enacted only after health care professionals in those states were able to mobilize their resources effectively.
There's no doubt that BCBS would have continued with its policy of not honoring assignment in Louisiana had they 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.
Today, more than ever, you need to participate in the political action committees sponsored by your state and national societies.
Par Or Non-Par?
There are many reasons why a health care provider might see a patient on a non-par (out-of-network) basis. An established patient with insurance might wish to continue seeing "her doctor" who has dropped off a panel. Or, perhaps, a patient with an open-access plan elects to utilize that physician's services even though the practice is not listed in the provider directory.
The patient has exercised his or her permitted choice to obtain services from a physician with no contractual tie to the third party payer. Patients understand that their benefits and financial responsibility likely will be different than if they had stayed in-network. But that's each patient's choice.
When a patient decides to see a physician who is out o fhis or her network, typically the practice has the patient sign an assignment of benefits release that authorizes the payer to send reimbursement directly to the physician. In years past this has worked with relatively few glitches. Not so anymore, however.
Increasingly I hear from physicians (or administrators) who have problems getting reimbursed by third party payers for out-of-network services. Unfortunately, some third party payers have been making it difficult and, in fact, financially risky for practices to accept out-of-network assignment.
Less Than Optimal Choices For Non-Par Physicians
Some third party payers refuse to honor such assignment authorizations. These payers will not mail checks to non-par physicians. Instead, they will send out-of-network payments only to patients (Members).
But a surprising number of patients simply pocket the payer's check and refuse to turn it over to the practice. The practice may appeal to the payer for assistance, but as there is no contract with the payer 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 for the money.
In recent years third party payers around the country have used this disingenuous refusal-to-honor-assignment protocol as a means to discourage non-par claims submissions. It's a cynical, intentional ploy designed to force physicians out of non-par status and into rigorously managed networks.
Joining such networks means that a dermatologist must accept deeply discounted payments. And those can translate into much lower reimbursements than might be available when services are billed on a non-par basis and the physician collects from the patient amounts not paid by the insurance.
Gil Weber is a nationally recognized author, lecturer and practice management/managed care consultant to physicians and industry. He has served as Director of Managed Care for the American Academy of Ophthalmology.