FOCUS Fall Conference
2013 Legal Updates on Third Party Contracting
and DME for Sleep Labs
October 3, 2013
Las Vegas, NV
Jayme R. Matchinski
This presentation and outline are limited to a discussion of general principles and
should not be interpreted to express legal advice applicable in specific circumstances.
Key Regulations Which Impact Sleep
Labs/Sleep DME Suppliers
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Stark Law – Stark III
Anti-Kickback Statute
HIPAA
Anti-Markup Rule
2013 Physician Fee Schedule (PFS)
DME Regulations
Key Compliance Issues:
 Medicare Coverage and Payment
 Billing and Reimbursement
 National Coverage Determination (NCD)
 Local Coverage Determination (LCD)
 Independent Diagnostic Testing Facilities (IDTF)
 OIG Work Plan for FY 2013
 Expanded Enforcement Activities
Overview
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Administering Your Payor Agreements
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Key issues to consider during contract negotiation
Understanding contract terms and definitions
Fee schedules and contract attachments
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Risk-Based payment
Discount Fee-for-Service
Global fees
Capitation
Percentage of premiums
Risk pools
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History of prompt pay laws
Reasons claims are denied
Getting paid correctly for the services provided
Settlement agreements with Payors
Utilizing and Preserving your contract and legal remedies
Payment Methodologies
Managed Care Contract Dispute Resolution
Administering Your Payor Agreements
 Contract negotiation
 Due Diligence
 Identify Covered Services
 Define Medical Necessity
 Clarify Financial Arrangement
 Know Your Termination Rights
 Carve Out Arrangements
 Establish your deal points before
executing your payor agreement.
Administering Your Payor Agreements
 Understand Key Contract Terms
 “Medical
Necessity”
 “Covered Services”
 Review all fee schedules and attachments
to the agreement.
Payment Methodologies
 Risk-Based Payment
 Discount Fee for Services
 Per Case Rate / Global Fees
 Capitation
 Percentage of Premiums
 Risk Pools
Managed Care Contract Dispute Resolution
 Know the specific procedures to appeal a
reimbursement decision and resolve any
disputes that may arise.
 Identify the dispute resolution mechanism
available in your agreement.
 Define “clean claim.”
 Determine whether mediation or
arbitration is binding or non-binding.
Managed Care Contract Dispute Resolution
 Set the time frames for dispute resolution.
 Utilize state and federal statues to receive
timely payments.
 Carefully chart your course when
negotiating and administering your payor
agreements.
Payors Apply a Wide Variety of Tactics to
Deny Providers the Appropriate
Reimbursement
Payors Also Deny Claims Based Upon
Medical Necessity on Grounds Which
may be Contrary to Current Medical
Standards
Make Sure You Understand
Your Payor Agreement
Before Signing
History of Prompt Pay Laws
 Establish a timeline to pay claims.
 Mechanism to resolve disputes between
Providers and Plans concerning what
documents are reasonably necessary.
 Eliminate “slow pay” by payors.
History of Prompt Pay Laws
 Define “clean claim.”
 Penalty for late payment: Full amount of
billed charges submitted on the claim or
Plan / Provider negotiated plus interest
paid on such amount.
Prompt Pay Laws
 State
 49
States and the District of Columbia
have prompt pay laws.
 Enforced by State Department of
Insurance.
 Prompt pay statutes are usually under the
Insurance Code.
 Sanctions may include: penalties, fines
and restitution.
Prompt Pay Laws
 Federal
 Employment
Retirement Income Security
Act (ERISA)
 Federal Health Care Programs § 1842
(c)(2) of the Social Security Act (42 U.S.C.
§ 1395u(c)(2))
 Patient protection legislation.
Violations of State Prompt Pay Laws
 Penalties
 45
States
 May include interest as high as 18% per
annum on unpaid/untimely paid claims.
 Administrative Fines
 15
States
 In addition to interest
Why Claims are Denied—What Insurers Say
Duplicate submission
Lack of necessary information
No coverage based on date of service
Non-covered/non-network benefit or service
Coordination of benefits
Coverage determination
Utilization review
Authorization
Preexisting condition review
Invalid codes
Other
Source: America’s Health Insurance Plans
35%
12%
8%
7%
5%
4%
3%
3%
1%
1%
21%
100%
Why Claims are Denied—What Insurers Say
 Other reasons include: Medicare as
primary provider, incorrect provider ID,
no physician, ineligible physician and
possible third-party liability.
Provider Lawsuits
 Types of claims being asserted by
Providers
 Breach
of Contract
 Violation of State Prompt Pay Laws
 Violation of Implied Duty of Good Faith and Fair
Dealing
 Unjust Enrichment
 Common Law Fraud and Misrepresentations
Prompt Payment: Contract Considerations
 Several States require MCO contracts
with Providers to contain prompt pay
provisions.
 Contracts may also include provisions
regarding impact on various lines of
business.
Prompt Payment: HIPAA
 HIPAA transactions and code sets
regulations establish electronic standards
for specific transactions, including claims
payment. (45 CFR Part 162)
 Covered entities must comply.
 No timeframes are specified for claim
payment.
 HIPAA provision that is contrary to State law
provision preempts State provision.
Settlement Agreements With Payors
 Payment Terms
 Address
each claim denial and set forth
payment provisions.
 Billing Procedures and Practices
 Acceptance
facsimile.
of billing documentation by
Settlement Agreements With Payors
 Billing Procedures and Practices
 Identify
a contact person.
 Agreement to cease and desist from
denying claims on the grounds of medical
necessity in the absence of a review by
the insurance company’s Medical
Director.
Settlement Agreements With Payors
 Include
language which states that in the
absence of good cause shown, the payor
will not engage in repeated requests for
medical documentation and the Provider
will be reimbursed for medical records
requested beyond the initial request.
Settlement Agreements With Payors
 Releases
 Mutual
Releases
 Reserve the right to pursue all available legal
remedies, including administrative and
judicial process.
 The release should not operate to bar any
claims arising out of the obligations and
representations set forth in the Settlement
Agreement.
Settlement Agreements With Payors
 Successors and Assigns
 Provision
which binds not only the payor
to the terms of the Settlement
Agreement, but also any future
individuals or entities with which the
payor merges or transfers or assigns
ownership.
Successfully Challenging the Payor
 Getting Paid Correctly for the Work You
Do
 Managed
Care Companies v. Sleep Labsincreasing adversarial relationships
 Managed Care Company profits v.
reimbursement at contract/usual and
customary rate.
 Managed Care Contract – terms and
interpretations.
Successfully Challenging the Payor
 Claim
denial and underpayment practices
 Trends
 Billing companies
Successfully Challenging the Payor
 Commonly
Encountered Claim Denials
 Downcoding
 Bundling of services inappropriately deemed
Incidental or Integral.
 Delaying claims
 Arbitrary and repetitive appeal processes.
Successfully Challenging the Payor
 Commonly
Encountered Claim
Underpayment Practices
 Incorrect fee schedule allowance when
contract exists.
 Applying
fee schedule for past contracts.
 Applying the lowest common IPA rate.
Successfully Challenging the Payor
 Commonly
Encountered Claim
Underpayment Practices
 Applying PPO discount when contract does
not exist (the Silent PPO).
 Reimbursing bilateral procedures as
unilateral.
Successfully Challenging the Payor
 Maximize
Contract
Reimbursements: Know Your
 Terms of coverage and medical necessity.
 Payment and documentation terms.
 Certification requirements and procedures.
 Appeals and other administrative remedies.
 Dispute resolution: court vs. arbitration.
Successfully Challenging the Payor
 Maximize
Reimbursements: Use Accurate
Coding and Documentation
 Identify and comply with MCO documentation
requirements.
 Monitor coding changes and requirements.
 Keep documentation in patient files for claims
support.
 Anticipate and avoid the Carrier’s grounds for
denying your claim.
Successfully Challenging the Payor
 Maximize
Reimbursements: Hold Your
Billing Service Accountable
 Make your billing company responsible for
tracking claims activity.
 Track
submission of claims and EOB receipts.
 Audit grounds for denial of claims.
 Monitor for “prompt payment” underpayment and
processing errors.
 Conduct comparative analysis of paid claims.
 Pursue Administrative Appeals.
Successfully Challenging the Payor
 Challenging
the Payor in Court: Three
Different Approaches to Litigation
 Individual litigation on behalf of your sleep
lab.
 Class Actions
 Arbitration
Successfully Challenging the Payor
 Challenging
the Payor in Court: Benefits
and Costs of Each
 Time
 Recovery
 Attorneys’ Fees
Successfully Challenging the Payor
 Challenging
the Payor in Court: Individual
Litigation Strategies
 Move quickly. Time is money.
 Use litigation aggressively to maximize the
amount of recovery as quickly as possible and
to discourage future bad faith practices.
 Choose the court system with the fastest
docket.
 Identify legal theories that get to judgment as
quickly as possible.
 Keep it simple.
Successfully Challenging the Payor
 Challenging
the Payor in Court: Individual
Litigation Goals
 Enforce your contractual rights.
 Enforce your statutory rights.
 Prompt Pay Statutes
 Insurance Codes
 Deceptive Trade Practices Acts
 ERISA
Successfully Challenging the Payor
 Challenging
the Payor in Court: Individual
Litigation Goals
 Stop unfair and deceptive practices.
 Establish objective standards for future
claims.
 Recover lost dollars.
Jayme R. Matchinski
(312) 704-3574
jmatchinski@hinshawlaw.com