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ERISA CAUSES OF ACTION FOR HEALTH CARE PROVIDERS – PART II

by David A. Blakeley, Esq., Senior staff attorney

In the last installment in this series, we began to explore the Civil Enforcement Provision of the Employee Retirement Income Security Act of 1973 (ERISA). We left off with an introduction to the term “fiduciary” in the ERISA context. We will now begin to explore the causes of action provided by ERISA.

The first subsection of the Civil Enforcement provision, § 1132(a)(1)(B), creates a statutory cause of action that gives standing to a participant or beneficiary to recover benefits, or enforce or clarify a participant’s rights. The second subsection, § 1132(a)(2), provides standing for suit to be filed by “the Secretary, or by a participant, beneficiary, or fiduciary,” but it does not describe any cause of action. Instead, it specifies that a party given standing by § 1132(a)(2) may bring action under another section, § 1109. This latter section creates a cause of action against a fiduciary for a breach of fiduciary duty. It is important to note that, while the second subsection is clearly directed against fiduciaries, the first subsection is silent as to whom it is that a suit to recover benefits or clarify rights should be directed. This silence creates interpretive difficulties.

Without any statutory reference to a fiduciary in the first subsection – and since explicit fiduciary liability is detailed in the next subsection as a separate cause of action – a reasonable interpretation would be that the claimant only has a cognizable claim against the employer. Under the second subsection, on the other hand, a suit may be brought against “any person who is a fiduciary of the plan” and “who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by [ERISA].” This seems a simple enough distinction. One addresses suit for non-payment of benefits to the employer and suit for breach of fiduciary duty to the administrator. In practice, however, courts have not addressed the law in this way.

First, the 5th Circuit has not felt constrained to interpret § 1132(a)(1)(B) in this way. In Pierre v. Connecticut General Life Insurance Company/Life Insurance Company of North America, for example, an action was brought under § 1132(a)(1)(B) to recover benefits from a welfare plan. There was no question that Connecticut General was a fiduciary with respect to the plan. The Court did not, however, note any difficulty in bringing suit against a fiduciary under the first subsection.

Further confusing the issue, non-payment of benefits has, itself, been held to be a breach of fiduciary duty. The 5th Circuit reached this conclusion in American Federation of Unions Local 102 Health and Welfare Fund v. Equitable Life Assurance Society of the United States. In this case, the welfare fund brought suit against a life insurance company and its agent, Glen Holden, for a breach of fiduciary duty. The issue presented in the case was actually whether paying benefits to ineligible claimants, rather than denying benefits to an eligible claimant, was a breach of fiduciary duty; however, the Court answered this question in broad terms. Ruling on the question of whether Holden was a fiduciary of the welfare fund, the Court held that “. . . authority to grant or deny claims, to manage and disburse fund assets and to maintain claims files clearly qualifies as discretionary control respecting management of a plan or its assets within the meaning of § 1002(21)(A).”

If the authority to grant or deny claims makes one a fiduciary, then the first subsection of § 1132(a) seems superfluous. Whether the processor of claims – that is, the entity with “authority to grant or deny” them – is the employer or the administrator, both could be sued under the second subsection of §1132(a) as fiduciaries. The possibility that the apparent redundancy is a consequence of shoddy drafting cannot be ruled out. Conison has already complained that “[1132(a)] is quite unsystematic and . . . contains much duplication.” His treatment of the legislative history of the § 1132(a)(1)(B) demonstrates the likelihood that the subsection is a sort of legislative vestigial organ whose original use and significance did not survive the drafting process. However, § 1132(a)(2) is also problematic. In the next installment in this series, we will look at that section.

§ 1132(a)(1)(B).

§ 1132(a)(2).

§ 1109(a).

§ 1132(a)(2).

§ 1132(a)(1).

§ 1109(a).

Pierre v. Conn. Gen. Life Ins. Co./Life Ins. Co. of N. Am., 932 F.2d 1552, 1553 (5th Cir. 1991).

Id. at 1555.

Am. Fed’n of Unions Local 102 Health and Welfare Fund v. Equitable Life Assurance Soc’y of the U.S., 841 F.2d 658 (5th Cir. 1988).

Id. at 660.

Id.

Id. at 663.

ERISA, 29 U.S.C. 1132(a)(2) (2006).

Conison, supra note 77, at 5.

Id. at 14–17.

 

When Coordination of Benefits Becomes Uncoordinated

What is coordination of benefits?  Coordination of benefits is defined as “the practice of ensuring that insurance claims are not paid multiple times, when an enrollee is covered by two health plans at the same time” according to USLegal.com.  One insurance plan is considered the primary payer while the second insurance plan is defined as the secondary payer. The primary payer is billed first by a patient’s healthcare provider, followed by the secondary payer. The secondary payer usually pays a portion of the remaining cost. This concept seems simple enough but it is not uncommon for insurance companies to point the primary finger at each other.

The following scenarios can occur when a patient is insured by Medicare and another insurance carrier at the same time. A sixty-five-year-old patient is admitted to the hospital. The patient has Medicare and is also insured through their employer. The hospital bills Medicare as the primary payer under the good faith belief that Medicare is primary since the patient qualifies for Medicare because of their age. Medicare denies the claim stating that it is not primary payer, but the other insurance on file is the primary payer. In this scenario, Medicare is secondary only if the patient’s employer has more than twenty employees.[1]

Now let us consider this slightly different scenario. A sixty-four-year-old patient has Medicare and private health insurance coverage through their place of employment. The sixty-four-year-old patient is eligible for Medicare because of a disability. The patient’s employer has more than twenty employees but fewer than one hundred employees. In this scenario, Medicare is primary. Why? When a patient is Medicare eligible because of a disability, Medicare is primary if the patient’s workplace employs fewer than one hundred people.[2]  Timely filing deadlines and the patient’s limited knowledge of their insurance plans add layers of complexity for you to address.

If we change the scenario to assume the patient’s employer has fewer than twenty employees and Medicare denies the claim stating Medicare is not the primary payer; the hospital is allowed to bill the private insurance.  However, because the employer has less fewer than twenty employees the private insurance will likely deny under the assertion they are not the primary payer.  In this scenario, Medicare is the primary payer because the patient’s workplace employs less than twenty people. To resolve the issue the patient must contact Medicare to update their coordination of benefits. The hospital cannot update coordination of benefits on behalf of a patient. While the hospital waits for the patient to update their coordination of benefits, the timely filing clock keeps ticking. Every insurance company has its own timeframe of when a claim is considered to be filed timely. If a claim is submitted past the timely filing deadline, it will be denied. A healthcare provider can dispute or appeal the denial, and in doing so, a healthcare provider must lay out its case of why the claim should not be denied for timely filing.

Coordination of benefits can become uncoordinated the moment a claim is billed to an insurance payer. It is imperative that healthcare providers verify eligibility and the billing order of payers before the claim goes out the door. Provider portals (e.g. Availity) are a good starting point and when in doubt, waiting on hold with a payer is a small price to pay compared to the time and cost involved with a denied claim.

[1] Which Insurance Pays First? Retrieved from U.S. Centers for Medicare & Medicaid Services:

https://www.medicare.gov/supplement-other-insurance/how-medicare-works-with-other-insurance/who-pays-first/which-insurance-pays.html

[2] Id.

 

By Shirley La

Staff Attorney at Praxis Healthcare Solutions

 

Are You Prepared for MACRA?

The final reporting requirements for the new MACRA (Medicare Access and CHIP Reauthorization Act) rule for physician payment were finalized this month and will be implemented January 1, 2017.   MACRA puts an increased focus on quality and value of care. According to CMS, the goal is to create and implement a core set of performance measures to be used by private and public insurers so all are on the same page when comparing quality, making data more easily gathered and understood. The intent is to build a system of better care where clinicians work together to have a full understanding of patients’ needs and making a health care system more responsive to patients and families resulting in better care, smarter spending and healthier people and communities. Therefore, Medicare pays for what works and spends taxpayer monies more wisely, and patients are in the center of their care, resulting in a healthier country.

A physician’s reimbursement may be increased or decreased depending on how well one performs on established quality and cost metrics. This new Medicare payment system for physicians allows for eligible physicians to participate in one of two tracts. The first tract is the Merit-based Incentive Payment System (MIPs). This gives clinicians the opportunity to be paid more for better care and investments that support patients. In the first year, it also provides a flexible performance period, so that those ready to report their data beginning in January can do so, but those who need more time to prepare reports may do so later in the year. The second path is called the Alternative Payment Model (APMs), such as participation in an accountable care organization or patient-centered medical home. APMs can apply to a specific clinical condition, a care episode, or a population. Clinicians get paid primarily for keeping people healthy. When they get better health results and reduce costs for the care of their patients, the clinicians receive a portion of the savings. Those excluded from the program are clinicians with low volume (less than 100 Medicare patients or less than $30K in Part B charges). At this moment, CMS will only provide performance feedback on an annual basis, but are exploring more timely feedback measures.   It is anticipated that 2018 will also be a year of transition and that MACRA will continue to evolve.

CMS grace period ENDS October, 2016

The ICD-10 grace period was a time where unspecified ICD-10 codes were permitted as acceptable codes on claims submissions. Therefore, codes could be submitted and not denied when the codes were not selected to the highest level of specificity. This grace period was a joint effort between the Centers for Medicare and Medicaid and the American Medical Association to allow for a smoother transition from the I-9 diagnosis coding to the I-10 diagnosis coding. This grace period extended from October 1st, 2015 to October 1st, 2016. Many third party payers also followed this rule, however, some have not accepted unspecified codes from the beginning of ICD-10 implementation last October.

Beginning October, the use of unspecified codes may trigger denials on your claims. Coding professionals select an unspecified ICD-10 code when the provider’s documentation does not support a more specified code. Therefore, providers are urged to document conditions to the highest specificity possible so that the appropriate diagnosis codes are supported and in turn submitted on the provider’s claims. Thus, coding professionals are urged to query providers for more specific diagnoses.

Providers who do not document to the highest specificity possible may be subject to denials. These denials create a delay in reimbursement besides resulting in costly claim resubmissions and appeals in some cases. If there is a response to the query, the provider can then make an addendum to their documentation to support the highest level of specificity for the diagnosis.

In order to ensure clean claim submission and timely payment from the insurance contractors, it is best to evaluate your ICD-10 code reporting prior to October 1st, 2016 and ensure that documentation supports diagnosis coding to the highest specificity.

The Burden of Denied Claims

It has been reported that denied claims represent 90% of missed revenue opportunities. Whether this is true or not, we all can believe that denied claims are a burden due to rework and chasing for dollars that have already been spent!

According to Change Healthcare, it costs an average of $6.50 to file an initial claim. If denied, that one claim can cost an additional $25.00 to resubmit. And we know, often it takes more than this! So say you have 100 denied claims per month – the cost of submission is around $30,000/year. Now, if a larger organization gets 1000/mo or even 1000/week in denied claims, you can see how quickly the expense adds up to resubmit denied claims.

According to a study conducted by CMS< 60% of denied, lost or ignored claims will never be paid in full. What changes are you putting in place to decrease first pass denials? We know that determining benefit eligibility/verification, getting medical necessity documentation prior to and during care delivery can help make this happen. Many organizations have addressed the low hanging fruit and improved these processes. However, begin looking below the surface for many of those difficult areas that create claim denials, such as changes in procedures from that which is scheduled, or same day authorizations that are needed for radiological services. Design workflows and processes to avoid denied claims and rework among your team members.

 

Dallas Fallen Officers Fundraiser

At Praxis Healthcare Solutions, our team believes in always giving back to our community.  Every quarter we raise and donate funds or goods to one of many worthy charities.  As a group, our hearts are broken and prayers go out  in the tragic loss of our Dallas Police Officers and their families.  Yesterday we hosted a fundraiser in our building.  100% of money raised will be matched by Praxis Healthcare Solutions and donated to these hero’s and families  who put themselves in harms way every day.  We thank you for your hard work and dedication.

 

Dallas Police DepartmentFallen Officers FundraiserCharityv2

Transitioning to Value-Based Care

So what do we mean when we say value based care? Value based initiatives transitions the care delivery focus from volume to value. This includes thinking about the entire patient experience among multiple care settings. Many hospitals are already experiencing bundled payments as it relates to joint replacements which is a form of value based care. Therefore, reducing costs and improving quality presents financial incentives while avoiding potential costly penalties. This actually shifts some of the financial accountability away from payers to the healthcare providers. Today, maybe 5% of your total revenue has some value based component in your contracts, but is projected to increase to nearly 40% within the next 5 years. The goal of the Department of Health and Human Services is to tie 50% of Medicare payments to a value-based payment model by 2018.

Providers will begin addressing new strategies that will include more data analytical tools to address population health management as well as improved patient billing techniques. Most hospitals today possess certified electronic health record technology which is a good starting point for revenue cycle analytics. More robust analytics can identify real time claims data combined with clinical data that can measure improved quality based on outcome results. Data will reveal expensive patient populations, which tend to have high readmission rates and frequent emergency room visits.

These analytics can also better identify root causes of denials, suggest resolutions and cause fewer write-offs. Whether you outsource your denied claims or work them internally, always attempt to identify root causes so that prevention measures can be implement.

As we begin to transition to value based contracts, new payment models will address access, quality of care and patient outcomes while driving greater value for our healthcare dollar.


Yvonne Focke, RN, BSN, MBA

Vice President, Clinical Operations

Praxis Healthcare Solutions, LLC

 

QIO Temporary Suspension of Short Stay Audits

On May 4, 2016, the Centers for Medicare & Medicaid (CMS) announced that the Quality Improvement Organizations (QIOs) were to suspend further claim audits regarding short stays. This suspension or pause is expected to be between 60-90 days. Last October 1, 2015, The QIOs had been given the CMS contract from the Medicare Administrative Contractors (MACs) to review these billed claims.

The purpose for this pause is for CMS to standardize the QIO review process, provide training to the QIOs regarding the 2 midnight (2MN) rule, evaluate previous QIO denied claims as well as conduct provider education. Therefore, the intent is for CMS to promote a consistent application of patient status medical reviews on short hospital stays.

The suspension of reviews was a result of many hospital complaints that the QIOs were not following regulatory requirements surrounding the 2MN stay. In particularly, the QIOs were not counting the time patients were in observation, nor the Emergency Department as part of the stay which would qualify for inpatient status if the span of time covered 2 midnights.

According to the American Hospital Association, hospitals were also concerned that the time between QIO audits did not allow hospitals to provide education and/or make Improvements prior to the next audit. In addition, the QIOs delayed receipt of review results which prompted hospitals to rebill denied claims under Part B due to the one year filing timeline. Had the reviews been more timely, it may have prevented hospitals from rebilling.