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Self Funded/TPA Question


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We need some insight...my husband had a major medical emergency earlier this year. He was fully covered at the time. I have found out that his company's health plan is self funded and BCBS is the administrator. Fast forward to several months later, his company abruptly closed, now filling Ch 11. His claims are high-dollar, about 900k and it took BCBS a while to finalized the claims due to the complexity of the claim. BCBS send payment over to the hospital, which they confirmed to me that the payment has posted. However, now, we are being told by his HR that they never funded the account for BCBS to issue payment and the HR is confused on how a payment was made. The BCBS reps told me that they would never send over payment if there were insufficient funds in the account and when they issued the payment, there was sufficient funds in the employer's account. So, my question is, can BCBS ask for that payment back from the hospital and then we will be liable that bill even though he was insured during the time of hospitalization? BTW...the EOB (which I saved) says we owe $0.  Or what how do you think this will play out?  We are worried sick.  Thank you.

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I am sorry for your situation.  Also, there a many variables in this scenario which are unknown and will not lead to an answer from me now.  But it is possible that the provider was paid, so bear with me as I explain.

An underwriter determines the amount of expected claims for the employer, let’s use $1,000,000 per year.  Some employers may purchase Aggregate coverage ( a percentage of expected claims, 110%, 115% etc.) some may purchase Specific coverage ( a specific number, $25,000, $35,000, etc) to help lessen their risk.  For this example, let’s assume the employer purchased an Aggregate of 110% and a Specific of $25,000.  This means that the employer is responsible for $1,100,000 of claims ( expected claims $1,000,000 x 1.10).  The $1,100,000 is the amount the employer needs to be ready to fund.

The specific is $25,000, which means that the employer is financially responsible for only $25,000 of an individual claim.  Since your husbands claim was incurred a few months ago, it is possible that the provider was paid, especially since the administrator paid it and the provider confirmed it.  In this scenario it is possible for the employer claim account to have paid their share ($25,000) while the specific carrier paid the remaining.  I AM NOT SAYING IT WAS PAID, JUST A GUESS ON HOW IT COULD HAVE. I would not put much credibility into HR response, many of these people mean well, but do not understand this issue.

If this were me, I would verify with the provider what, if any balance is due to them.  

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I did call the provider, they have posted the payment, and they don't see anything wrong.  However, they are appealing the claim since they are want for more money.  

I found out just now that more employees are in similar boat...however, in their situations, their claims are not being paid at all.  I don't understand how a company is allow to do this and from what I've been advised there's no much the DOL can do.

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Make sure that you contact the DOL yourself so that they can open a complaint on the situation.  Don't assume that someone else has called.  If this is truly a case of the employer collecting premiums and failing to pay claims, the DOL will take the complaint seriously.

Pamela L. (Bobersky) Shoup CEBS, RPA, QKA

AMI Benefit Plan Administrators, Inc.

100 Terra Bella Drive

Youngstown, Ohio 44505

800-451-2865

www.amibenefit.com

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BCBS could certainly recall a payment to the provider so I hope that answers your question specifically.  As to how this will play out, that is not a question we can answer without knowing the intimate details of the plan details and the bankruptcy.  

If I had to guess, I'd say you may have gotten lucky.  You may have been the one to actually drain any funds the group health plan had left.  If that's the case, I would guess it highly unlikely that the employer can get those funds back from BCBS (via recalling provider payment).    

Unfortunately, things like this do happen in other instances...not just where the employer goes bankrupt.  Many states have a guarantee association that would ensure the claims will be paid in the event of carrier insolvency.  Admittedly, this is different because it is due to an employer bankruptcy.  For now, I suggest not borrowing trouble and fretting over what you (Or anyone else) doesn't know.  If this goes worst case scenario, you will have options to ensure that you're not ultimately on the hook for those claims.

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2 hours ago, Michelle_C said:

BCBS could certainly recall a payment to the provider so I hope that answers your question specifically.  As to how this will play out, that is not a question we can answer without knowing the intimate details of the plan details and the bankruptcy.  

If I had to guess, I'd say you may have gotten lucky.  You may have been the one to actually drain any funds the group health plan had left.  If that's the case, I would guess it highly unlikely that the employer can get those funds back from BCBS (via recalling provider payment).    

Unfortunately, things like this do happen in other instances...not just where the employer goes bankrupt.  Many states have a guarantee association that would ensure the claims will be paid in the event of carrier insolvency.  Admittedly, this is different because it is due to an employer bankruptcy.  For now, I suggest not borrowing trouble and fretting over what you (Or anyone else) doesn't know.  If this goes worst case scenario, you will have options to ensure that you're not ultimately on the hook for those claims.

I agree with most of what has been said by the other posts, but not the last sentence by Michelle.  If the company is bankrupt, and if it did not segregate additional funds in a trust for the claims, it is more than likely that any employee who has claims unpaid will need to line-up in bankruptcy court with other creditors.  Chance of receiving any funds could be very low and the amount due to the provider will still be owed.   

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2 hours ago, Pam Shoup said:

Make sure that you contact the DOL yourself so that they can open a complaint on the situation.  Don't assume that someone else has called.  If this is truly a case of the employer collecting premiums and failing to pay claims, the DOL will take the complaint seriously.

Yes, I have contacted the DOL and they said that they already have several cases currently opened for this company.  From my understanding, their claims have NOT been paid yet.  Or they had signed up for Cobra only to find out the company is not paying their premiums on that too!

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3 minutes ago, Slammed said:

Yes, I have contacted the DOL and they said that they already have several cases currently opened for this company.  From my understanding, their claims have NOT been paid yet.  Or they had signed up for Cobra only to find out the company is not paying their premiums on that too!

When a company liquidates via bankruptcy there is no COBRA available.

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9 minutes ago, leevena said:

I agree with most of what has been said by the other posts, but not the last sentence by Michelle.  If the company is bankrupt, and if it did not segregate additional funds in a trust for the claims, it is more than likely that any employee who has claims unpaid will need to line-up in bankruptcy court with other creditors.  Chance of receiving any funds could be very low and the amount due to the provider will still be owed.   

No one will give me the plan details...I just wanted to read to see if there's a stop loss run out period.  I'm pretty sure if I were to get this information, I would need help to decipher it.

From what I've heard so far, there's several employees now that are finding out that their claims unpaid.  With my situation, the claims HAVE been paid, but posted to the account.  Just don't know what will happen later down the road.  I've been told by a BCBS rep not to worry, because now it's between the employer and BCBS (which I STRONGLY hope).  And until I get a written notice from the providers or BCBS, I can only assume it's ok...I just called  the providers today and confirmed again the payments and everything looks ok. 

This is an unusual situation and I am thankful for all of your insights. 

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10 minutes ago, leevena said:

When a company liquidates via bankruptcy there is no COBRA available.

Well, at the beginning, the company wasn't planning to file bankruptcy.  However, weeks later, creditors sued them into involuntary Ch 7.  So, the company filed Ch 11 to stop the Ch 7.  It's very messy.  

Employees already signed up for Cobra and used it for almost 2 months now.  

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4 hours ago, Slammed said:

No one will give me the plan details...I just wanted to read to see if there's a stop loss run out period.  I'm pretty sure if I were to get this information, I would need help to decipher it.

From what I've heard so far, there's several employees now that are finding out that their claims unpaid.  With my situation, the claims HAVE been paid, but posted to the account.  Just don't know what will happen later down the road.  I've been told by a BCBS rep not to worry, because now it's between the employer and BCBS (which I STRONGLY hope).  And until I get a written notice from the providers or BCBS, I can only assume it's ok...I just called  the providers today and confirmed again the payments and everything looks ok. 

This is an unusual situation and I am thankful for all of your insights. 

Start with your Summary Plan Document (SPD), it will contain a significant amount of information.  It is provided to you on a yearly basis.

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I do have a copy of the benefits, not just the summary.  It's 104 pages and from I've read, there's what I believe applies to my situation.  I wished I can get a copy of the contract specific of the plan itself...to understand how the stop loss or the Aggregate coverage.

Refund of Benefit Payments
If the Claim Administrator pays benefits for Eligible Expenses incurred by you or your Dependents and it is found that the payment was more than it should have been, or was made in error, the Plan has the right to a refund from the person to or for whom such benefits were paid, any other insurance company, or any other organization. If no refund is received, the Claim Administrator may deduct any refund due it from any future benefit payment.

Subrogation
If the Plan pays or provides benefits for you or your Dependents, the Plan is subrogated to all rights of recovery which you or your Dependent have in contract, tort, or otherwise against any person, organization, or insurer for the amount of benefits the Plan has paid or provided. That means the Plan may use your rights to recover money through judgment, settlement, or otherwise from any person, organization, or insurer.  For the purposes of this provision, subrogation means the substitution of one person or entity (the Plan) in the place of another (you or your Dependent) with reference to a lawful claim, demand or right, so that he or she who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights or remedies.

Right of Reimbursement
In jurisdictions where subrogation rights are not recognized, or where subrogation rights are precluded by factual circumstances, the Plan will have a right of reimbursement.  If you or your Dependent recover money from any person, organization, or insurer for an injury or condition for which the Plan paid benefits, you or your Dependent agree to reimburse the Plan from the recovered money for the amount of benefits paid or provided by the Plan. That means you or your Dependent will pay to the Plan the amount of money recovered by you through judgment, settlement or otherwise from the third party or their insurer, as well as from any person, organization or insurer, up to the amount of benefits paid or provided by the Plan.

Right to Recovery by Subrogation or Reimbursement
You or your Dependent agree to promptly furnish to the Plan all information which you have concerning your rights of recovery from any person, organization, or insurer and to fully assist and cooperate with the Plan in protecting and obtaining its reimbursement and subrogation rights. You, your Dependent or your attorney will notify the Plan before settling any claim or suit so as to enable us to enforce our rights by participating in the settlement of the claim or suit. You or your Dependent further agree not to allow the reimbursement and subrogation rights of the Plan to be limited or harmed by any acts or failure to act on your part.

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This is not the right venue for your issue, too many variables.  If you have verified with provider that they were paid and that no other monies are due, count your blessings and move on until an issue arises.  No need to worry yourself sick on a possibility.

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