Legal Update on
Reimbursement Laws
Renee M. Jordan, Esq.
Bacen & Jordan, P.A.
2901 Stirling Road Suite 206
Fort Lauderdale, FL 33312
(954) 961-5544 (800) 499-7840
rjordan@bacenjordan.com
2009 Legislative Updates
• 627.638 Direct payment for hospital, medical services.—
• (2) Whenever, in any health insurance claim form, an insured
specifically authorizes payment of benefits directly to any
recognized hospital, licensed ambulance provider, physician, or
dentist, or other person who provided the services in accordance
with the provisions of the policy, the insurer shall make such
payment to the designated provider of such services. The
insurance contract may not prohibit, and claims forms must
provide an option for, the payment of benefits directly to a
licensed hospital, licensed ambulance provider, physician, or
dentist, or other person who provided the services in accordance
with the provisions of the policy for care provided pursuant to
s. 395.1041 or part III of chapter 401. The insurer may require
written attestation of assignment of benefits. (July 1, 2009)
Prompt Payment Statute
-The statutory terms are binding and
override contract terms:
“The provisions of this section may not be waived,
voided or nullified by contract.”
**Also applies to PPOs
Prompt Payment
Defines a claim for an institutional provider as a
paper or electronic billing instrument submitted
to the HMO’s designated location that consists of
the UB-92 data set, or its successor, with entries
stated as mandatory by the National Uniform
Billing committee.
(Requests for additional documentation =
prepayment audit)
Prompt Payment
All claims for payment or over payment, whether
electronic or non-electronic, must be mailed or
electronically transferred to the primary HMO
within 6 months after discharge for inpatient or date
of service for outpatient, and 6 months after the
provider has been given the correct name and
address of the patient’s HMO.
Claims to the Secondary must be filed within 90
days after a final determination by the primary.
The claim is considered submitted on the date it’s
electronically transferred or mailed.
Prompt Payment
Within 20 (40) days of receipt of a claim
the HMO must pay, deny or contest the
claim.
A contested claim must include an
itemized list of additional information or
documents the insurer can reasonably
determine are necessary to process the
claim.
Prompt Payment
Provider must submit additional
information/documents within 35 days
after receipt of the notification.
Claim must be paid or denied within
90 (120) days after receipt of claim.
Failure to pay or deny within 120 (140)
days
creates
an
uncontestable
obligation to pay the claim.
Prompt Payment
•
A permissible error ratio of 5 percent is established for health
maintenance organizations' claims payment violations of
paragraphs (3)(a), (b), (c), and (e) and (4)(a), (b), (c), and (e). If
the error ratio of a particular insurer does not exceed the
permissible error ratio of 5 percent for an audit period, no fine
shall be assessed for the noted claims violations for the audit
period. The error ratio shall be determined by dividing the
number of claims with violations found on a statistically valid
sample of claims for the audit period by the total number of
claims in the sample. If the error ratio exceeds the permissible
error ratio of 5 percent, a fine may be assessed according to s.
624.4211 for those claims payment violations which exceed the
error ratio. Notwithstanding the provisions of this section, the
office may fine a health maintenance organization for claims
payment violations of paragraphs (3)(e) and (4)(e) which create
an uncontestable obligation to pay the claim. The office shall not
fine organizations for violations which the office determines were
due to circumstances beyond the organization's control.
HMO Case Law
• Foundation Health v Westside EKG, 944
So.2d 188 (Fla. 2006) – Supreme Court of
Florida held that a provider can bring a
cause of action against HMO for failure to
comply with the prompt payment
provisions of the HMO act.
HMO Case Law
• Merkle v. Health Options, 940 So.2d 1190 (4th
DCA 2006) – ER provider sued Health Options,
Aetna, Vista and NHP under F.S. 641.513(5)
(ER access statute).
• Court held that provider has a private cause of
action for violation of 641.513(5).
• “641.513(5) clearly imposes a duty on HMOs to
reimburse non-participating providers according
to the statute’s dictates, not based on Medicare
reimbursement rates.”
Prompt Payment
• 641.3154 Organization liability; provider billing prohibited.-• (1) If a health maintenance organization is liable for services
rendered to a subscriber by a provider, regardless of whether a
contract exists between the organization and the provider, the
organization is liable for payment of fees to the provider and the
subscriber is not liable for payment of fees to the provider.
• (2) For purposes of this section, a health maintenance
organization is liable for services rendered to an eligible
subscriber by a provider if the provider follows the health
maintenance organization's authorization procedures and
receives authorization for a covered service for an eligible
subscriber, unless the provider provided information to the health
maintenance organization with the willful intention to misinform
the health maintenance organization.
• (3) The liability of an organization for payment of fees for
services is not affected by any contract the organization has with
a third party for the functions of authorizing, processing, or
paying claims.
Prompt Payment
•
•
•
•
•
4) A provider or any representative of a provider, regardless of whether
the provider is under contract with the health maintenance organization,
may not collect or attempt to collect money from, maintain any action at
law against, or report to a credit agency a subscriber of an organization
for payment of services for which the organization is liable, if the
provider in good faith knows or should know that the organization is
liable. This prohibition applies during the pendency of any claim for
payment made by the provider to the organization for payment of the
services and any legal proceedings or dispute resolution process to
determine whether the organization is liable for the services if the
provider is informed that such proceedings are taking place. It is
presumed that a provider does not know and should not know that an
organization is liable unless:
(a) The provider is informed by the organization that it accepts liability;
(b) A court of competent jurisdiction determines that the organization is
liable;
(c) The office or agency makes a final determination that the
organization is required to pay for such services subsequent to a
recommendation made by the Subscriber Assistance Panel pursuant to
s. 408.7056; or
(d) The agency issues a final order that the organization is required to
pay for such services subsequent to a recommendation made by a
resolution organization pursuant to s. 408.7057.
Prompt Payment
• A provider or any representative of a provider, regardless of
whether the provider is under contract with the health
maintenance organization, may not collect or attempt to collect
money from, maintain any action at law against, or report to a
credit agency a subscriber for payment of covered services for
which the health maintenance organization contested or denied
the provider's claim. This prohibition applies during the pendency
of any claim for payment made by the provider to the health
maintenance organization for payment of the services or internal
dispute resolution process to determine whether the health
maintenance organization is liable for the services. For a claim,
this pendency applies from the date the claim or a portion of the
claim is denied to the date of the completion of the health
maintenance organization's internal dispute resolution process,
not to exceed 60 days. This subsection does not prohibit
collection by the provider of copayments, coinsurance, or
deductible amounts due the provider.
Preemption – Federal vs. State
Law
– Typically, ERISA preempts state laws.
– However, there is no preemption if the state
law:
• Seeks to regulate insurance
• Does not conflict with an ERISA law
• Does not give a claimant more benefits then the
ERISA law provides
– 29 CFR 2560.503-1(K)(1) – Nothing in this
section shall be construed to supersede any
State law that regulates insurance, except to
the extent that such law prevents the
application of this section (claim procedure).
Preemption – Federal vs. State
Law
• Baylor University Med Ctr v. Arkansas Blue Cross Blue
Shield, 331 F.Supp.2d 502 (N.D. Tex 2004) - Texas’s
prompt payment law was not preempted by ERISA.
• “ERISA does not preempt generally applicable state laws
that impact ERISA plans only tenuously, remotely, or
peripherally.”
• “The court will not, in the name of ERISA, insulate an
insurer from liability against a third-party health care
provider seeking to enforce its rights under a state
statute that requires prompt payment of claims.”
• Baylor’s breach of contract claim was also upheld as not
preempted by ERISA.
Prompt Payment - Refunds
HMO may not retroactively deny a claim
because of subscriber ineligibility more than
ONE year after the date of payment of the
claim.
• Refund requests may go back 30 months from date of
payment for reasons other than eligibility.
• The health maintenance organization may not reduce
payment to the provider for other services unless the
provider agrees to the reduction in writing or fails to
respond to the health maintenance organization's
overpayment claim as required by this paragraph.
• **Physicians = 12 months
Prompt Payment - Refunds
• A provider must pay, deny or contest a claim for
overpayment within 40 days after receipt of the claim.
• A provider must contest or deny the claim, in writing,
within 35 days and provide specific reasons for
contesting or denying the claim – as well as identify
additional information for contested claims. The payor
has 35 days to provider the requested information. Once
the provider receives the additional information, they
have 45 days to pay or deny.
• Provider has 120 days to pay or deny contested claims,
and failure to pay or deny within 140 days creates an
uncontestable obligation to pay.
Refund Law
• Common law “Innocent Third Party
Creditor Exception” = At the time of
rendering services the Hospital became a
third party creditor and received the
insurance payment in good faith, and thus
no refund is required.
• Equity dictates that the party that created
the situation occasioning the loss be the
party that sustains the loss.
Refund Law
• Federated Mutual Ins v. Good Samaritan
Hospital, 214 N.W.2d 493 (Neb. 1974) –
Hospital insurer, which overpaid hospital,
could not recover from hospital the
difference between the policy coverage
and patient’s bill where overpayment was
due solely to insurer’s mistake and lack of
care, hospital made no misrepresentation
to induce payment, and hospital acted in
good faith in receiving overpayment.
ERISA Refund Requests
• ERISA does not address refund issues.
• Use State laws – If prompt payments laws
are not preempted then refund laws may
not be preempted.
ERISA Refund Request
• National Benefits Administrators v. Mississippi
Methodist Hospital, 748 F.Supp. 459 (S.D. Miss.
1990) – Plan administrator could not maintain
ERISA action against provider to recover
payments made in error. Congress did not
authorize courts to develop or allow causes of
action or remedies not expressly provided for by
Act.
• The insurer, possessing the policy and the
knowledge of its terms, made the mistake and,
as between it and the hospital, it must bear the
loss.
Authorizations
• 641.3156 - (1) A health maintenance organization must pay any
hospital-service or referral-service claim for treatment for an eligible
subscriber which was authorized by a provider empowered by
contract with the health maintenance organization to authorize or
direct the patient's utilization of health care services and which was
also authorized in accordance with the health maintenance
organization's current and communicated procedures, unless the
provider provided information to the health maintenance
organization with the willful intention to misinform the health
maintenance organization.
• (2) A claim for treatment may not be denied if a provider follows the
health maintenance organization's authorization procedures and
receives authorization for a covered service for an eligible
subscriber, unless the provider provided information to the health
maintenance organization with the willful intention to misinform the
health maintenance organization.
• (3) Emergency services are subject to the provisions of s. 641.513
and are not subject to the provisions of this section.
Authorizations / Promissory
Estoppel
• Humana v. CAC-Ramsay, 714 So.2d 1025 (3rd
DCA 1997) – HMO that erroneously verified
coverage was liable on promise to reimburse
skilled nursing facility for care after contract had
expired; when facility telephoned to verify
coverage, HMO orally authorized admission and
signed agreement providing for per diem rate.
• Subscriber is entitled to rely on superior
knowledge of HMO and cannot be faulted for
HMO’s error in verifying coverage.
Underpayments / UCR
• Goble v Frohman, 848 So.2d 406 (Fla. 2d
DCA 2003) and Hillsborough County
Hosp. Auth v Fernandez, 664 So.2d 1071
(Fla. 2d DCA 1995) – Evidence of a
contractual discounts received by
managed care providers is insufficient,
standing alone, to prove that
nondiscounted medical bills were
unreasonable.
Underpayments / UCR
• Harrison v Aetna, 925 F.Supp. 744 (M.D.FL
1996) – A plan that requires only reasonable
charges be paid, but makes no reference to a
predetermined rate in the definition of “charges”,
requires analysis of the provider’s rate and not
the substitution of another rate that the
administrator finds more favorable. Aetna relied
on a compilation of rates which it stated were
UCR in the area but produced no evidence as to
whether the compilation actually results in
charges that reflect the prevailing charges in
Central Florida.
Underpayments / UCR
• Get a copy of the policy
• Definition of “reasonable charges”
• Formula, calculations and methodology
– Medicare rate+, AWP, Prevailing Healthcare
Charges System (PHCS), Ingenix
• ERISA - 29 U.S.C. 1024(b)(4) –
Administrator is required to furnish
participant or beneficiary a copy of the
plan description upon written request.
Supreme Court Declines to hear
“Usual and Customary Charges”
• Baker County Medical Services v. Aetna
and Humana – The 1st DCA held that the
term “usual and customary provider
charges”, pursuant to F.S. 641.513(5),
may include the amount billed and amount
accepted by providers from other payors
(except Medicare and Medicaid).
Workers’
Compensation
Workers’ Compensation
– Coverage required for 4 or more employees.
– Excludes independent contractors = self pay.
– Construction – 1 or more employee
– Independent contractor or subcontractor in
the construction industry
**Out of state carriers paying Florida fee
rates – Look for jurisdiction
Workers’ Compensation
• Claims to be paid within 45 days
• Carrier has 120 days to adjust, disallow or
deny a claim
• Interest in the amount of 12% per year
shall be added to all balances not timely
paid.
Workers’ Compensation
• A Provider can file a complaint of non-payment with the
Division of Workers’ Compensation, Office of Medical
Services by submitting:
• A legible copy of the accurately completed medical bill;
• An itemized Billing Statement (Hospital Bill);
• An accurately completed DFS-F5-DWC-25 for each
date of service (physician encounter);
• Proof of submission or mailing of the medical bill to the
insurer; and
• A call log or any communication between the health care
provider and the carrier regarding payment of the
outstanding charges for medical service(s) or treatment.
• Via fax (850) 922-4475
• workers.compmedservice@myflorida.com
• 200 East Gaines St., Tallahassee, FL 32399-4232.
Workers’ Compensation
– The Dept shall impose penalties for late payments or
disallowances or denials of provider’s bills that are
below a minimum 95% timely performance standard.
The carrier shall pay to the W/C Administration Trust
Fund a penalty of :
• $25 for each bill below the 95% timely standard
but meeting a 90% timely standard.
• $50 for each bill below 90% timely standard.
Workers’ Compensation
• Any carrier that engages in a pattern or practice
of arbitrarily or unreasonably disallowing or
reducing payments to providers may be subject
to one or more of the following penalties:
– Repayment of the appropriate amount.
– An administrative fine – not to exceed $5k per
instance of improperly disallowing or reducing
payment.
– Award of provider’s cost, including attorneys’ fees
Workers’ Compensation
• On-site Audit:
– Medical record review to determine the medical
necessity of hospital services pursuant to this section
may be done either concurrently, during the hospital
stay, or retrospectively, after discharge. However, a
retrospective review shall not toll the 45 day time
period established to pay, disallow, or deny the
hospital bill pursuant to s.440.20(2)(b).
Workers’ Compensation
• When a carrier denies, disallows or adjusts a payment
the carrier shall remit a minimum partial payment as
follows:
– IP: the applicable per diem rate for each IP day for which the
hospital obtained pre-certification, and for which there is no
dispute as to the medical necessity.
– OP & IP Stop Loss: The greater of the applicable per diem rate
for each IP day for which the hospital obtained pre-certification,
and for which there is no dispute as to the medical necessity,
plus any itemized charges that are not denied, disallowed or
adjusted; and the applicable reimbursement for each itemized
charge not denied, disallowed or adjusted.
– Upon receipt of the partial payment the hospital may elect to
contest the disallowance or adjustment.
Worker’s Compensation
• Reconsiderations must be made within 60 days – but
doesn’t waive the timely filing limits for a Request for
Resolution of a Disputed Reimbursement. Carrier shall
respond within 60 days.
• File a Petition for Resolution of Disputed Reimbursement
within 30 days.
• Carrier has 10 days to respond. Failure to timely
respond = waiver of objection to petition.
• 21 days to file ALJ hearing to challenge the outcome of
the Petition.
•
Disputed Reimbursement
Resolution
The petition must be accompanied by all documents and records
that support the allegations of the petition, including:
–
–
–
–
–
All bills and resubmitted bills with attachments.
EOBR
All relevant correspondence between the carrier and provider.
Notations of phone calls regarding authorization.
Any pertinent or required health care records or reports or carrier
medical opinions.
• Failure to include such documentation results in a Notice of
Deficiency (10 days to reply).
• The carrier must submit to the agency within 10 days after receipt of
the petition all documentation substantiating their disallowance or
adjustment. Failure to submit documents timely constitutes a waiver
of all objections to the petition.
• Within 60 days after receipt of all documents, the agency must
provide a written determination as to the proper reimbursement
amount and provide for reconsideration through physicians and peer
review before an appeal to the First District Court of Appeal.
• If the agency finds an improper disallowance or adjustment the
carrier shall reimburse the provider within 30 days.
PIP Law
PIP Law
 PIP – No Fault covers you in your vehicle, in another
vehicle or as a pedestrian. It also covers others in your
vehicle or as pedestrians, as well as, family members in
your household.
 Auto insurance
 Make & model of car
 Accident date & location
 Auto insurance of family members in household
 Info on person that owns the car
 Attorney info
• BI, UM and Commercial insurance require fault
PIP Balance billing
• 627.736 (5) If an insurer limits payment as
authorized, the provider may not bill or
attempt to collect from the insured any
amount in excess of such limits, except for
amounts that are not covered by the
insured’s PIP coverage due to the
coinsurance amount or maximum policy
limits.
PIP Balance Billing
• PIP Fee Schedule applies only to PIP
payors.
• Balance billing is only against the insured.
• Applies only to amounts not covered by
the insured’s PIP coverage due to
coinsurance or maximum policy limits.
PIP Balance Billing
•
•
•
•
•
•
Example:
Inpatient Services = $100k
Paid at 200% of Medicare or $40,000.
PIP pays $5,000 max benefits.
Bill Secondary or File Lien for $95,000
Bill the Pt $95,000 because benefits were
maxed.
PIP Balance Billing
•
•
•
•
•
•
Example:
ER Services = $8,000.
Paid at 75% or $6,000.
80% paid by PIP and 20% paid by Pt.
PIP pays $4,800 ($6,000 x 80%).
Bill Secondary or File Lien for $3,200
($8,000 less $4,800)
• Or bill pt for $1,200 ($6,000 x 20%)
Self Pay
SPOUSAL & PARENTAL
RESPONSIBILITY
• A spouse is not financially responsible for
the medical expenses of their spouse
unless they sign a guaranty.
• Parents are always responsible for the
medical expenses of their children
regardless of divorce decrees.
SPOUSAL & PARENTAL
RESPONSIBILITY
• Emancipation:
– The right of the minor to collect and control
his/her own wages and labor.
– Military does not equal emancipation
– A minor having a child does not equal
emancipation
SPOUSAL & PARENTAL
RESPONSIBILITIES
• Insurance Coverage for Newborns:
– Insurance and HMO statutes require
coverage for newborns (including a covered
family member who has a baby - 18 months).
– Adopted children are covered from the
moment of placement in the residence or from
the moment of birth if a written adoption
agreement was entered into prior to the birth.
– Birthday rule: the parent with the earlier
birthday (excluding year) is primary
APPLICATION OF FUNDS AND
CREDIT BALANCES
• Where a payment is made without specific
instructions from the debtor as to the application
of the funds, the creditor may apply the funds in
whatever manner it desires.
• In absence of an agreement to the contrary, the
courts allow payment to first discharge the oldest
debts.
• Suggestion: Add this language to your
Conditions for Admission.
CAN COPAYS BE WAIVED?
• The upfront waiver(pre-provision of services
agreement) of a patient’s copay, co-insurance,
or deductible without regard to the patient’s
financial ability to pay may be considered a false
claim under the Florida Insurance Code which is
subject to civil fines and criminal conviction.
• Said waivers must be disclosed on the claim
form to the insurer to avoid filing a false claim.
GUARANTY & ASSIGNMENT OF
BENEFITS
• Actual guaranty?
• If patient refuses to sign they are still liable
• Notice of interest on past due accounts
and the percentage to be charged
• Notice of cost and attorneys fees to be
charged on past due accounts
How long to collect?
• Statute of Limitations:
– 4 years on a non-written agreement
– 5 years on a written agreement
– A payment tolls the time and starts it running
again
– Written acknowledgement of a debt tolls the
time and starts it running again
– SOL is a defense only
PAYMENTS
• Accord and Satisfaction:
– Payment in full on a disputed debt
– Exceptions:
• An organization proves that before the check was tendered, it
sent a statement that all communications concerning
disputed debts, including an instrument tendered as full
satisfaction of a debt are to be sent to a designated person,
office or place, and the check was not received by the
designated person, office or place.
• Repay the money within 90 days after payment of the
instrument. An Organization is not allowed to repay the
money if it sent a statement as noted above.
PAYMENTS
• Bad Checks:
– Judgment will include 3x the amount of the check,
costs, atty fees, bank fees, & interest.
– Must send a statutory demand letter via cert mail:
“You are hereby notified that a check numbered ____
in the face amount of $___ issued by you on ___,
drawn upon (name of bank), and payable to ____,
has been dishonored. Pursuant to Florida law, you
have 30 days from receipt of this notice to tender
payment in cash of the full amount of the check plus a
service charge of $25, if the face value does not
PAYMENTS
• Bad checks:
– (Cont.) exceed $50, $30, if the face value exceeds
$50 but does not exceed $300, $40 if the face value
exceeds $300, or 5 percent of the face amount of the
check whichever is greater, the total amount due
being $____. Unless this amount is paid in full within
the 30 day period, the holder of the check or
instrument may file a civil action against you for three
times the amount of the check, but in no case less
than $50, in addition to the payment of the check plus
any court costs, reasonable attorney fees, and any
bank fees incurred by the payee in taking action.”
PROBATE
• Estate must give actual notice to all known
creditors.
• 30 days to file Statement of Claim from receipt of
notice.
• 90 days to file Statement of Claim from first
Notice of Publication.
• Amendment of Claims must be authorized by the
Court.
• Petition for Payment after 5 months from
Publication
• 2 year SOL from date of death
PROBATE
• Objection to claim must be filed 30 days
after Statement of Claim filed or 4 months
after Publication.
• Creditor must file independent action
within 30 days from receipt of Objection
• Class 4 vs. 8 if reasonable medical and
hospital expenses of the last 60 days of
the last illness of the decedent.
GUARDIANSHIP/TRUST
• Guardian of person = person authorized to
give medical consent for patient.
• Guardian of property = person is custodian
of the patient’s property
• Trust = assets are administered through a
trust instrument by a trustee.
BANKRUPTCY
• Chapter 7 asset or no asset liquidation
• Chapter 13 individual wage earner
repayment plan
• Chapter 11 corporate repayment plan
• File a proof of claim and look for the
schedule of repayment
• Attend the Creditor’s meeting only if fraud
is involved