Providers demanding interest on healthcare claims paid "late" by health plan

[Guest beneman]

Can anyone refer me to guidelines on interest owed health care providers if thier claims are paid "late"? I have heard of calls from doctors demanding such.

Is this ERISA, HIPAA, some other reg?

[GBurns]

This should fall under your state insurance laws governing late payment of claims.

[Guest beneman]

Thanks. I gather from your response that an ERISA self-funded plan would not be subject to such, due to ERISA pre-emption of state regs. I was wondering about non-ERISA self-funded plans such as municipalities. Any idea?

[GBurns]

No. I said no such thing. ERISA pre-empts those laws that pertain to benefits not those that pertain to insurance etc. Payment of claims from providers is not a benefit issue and providers are not plan participants.

[mbozek]

ERISA preempts all state laws that pertain to a self funded plan which is not a MEWA, including insurance laws. ERISA 514(a); Met Life v. Mass., 471 US 724 (1985); FMC Corp v. Holiday 498 US 52. I am assuming that the claims are for treatment of plan participants which were assigned to the provider instead of being paid to the participant. Payment of claims for health benefits from a self funded plan is definitely a payment under a plan subject to ERISA since there is no shifting of risk to an insurer.

[KJohnson]

What he said...in most Circuits the provider with an assignment steps into the shoes of the participant for an ERISA Section 502(a)(1)(B) claim. However, if the Plan does not provide for interest, it is a question of whether there would be a 502(a)(1)(b) claim since you are not suing for any benefits provided by the plan. Since the principle amount has already been paid, it would be difficult to classify this as prejudgment interest. After Kundson your interest claim would have to be equitable in nature. My recolleciton is that the 7th Circuit might have recognized an equitable interest claim post Knudson but but I don't have a cite handy. Here is a link to an article about a district court case...

http://www.ebia.com/weekly/articles/2002/E...21003Parke.html

[GBurns]

Here is one of the many examples that show that ERISA does not "pre-empt all state laws", whether related to fully insured or self-insured plans. It always depends on What is the issue?:

http://www.ebia.com/weekly/articles/2003/ERISA030403KAHP.jsp

[mbozek]

GB: If you had read the post you cited you would have seen that the KY ins. law is applicable to self-insured non ERISA plans and HMOs regulated as insurers. The Ky law upheld by the SUP ct did not regulate a self funded single employer welfare plan subject to ERISA and exempt from state ins.laws. The cases cited earlier are still the ruling precedeents on the preemption of state ins laws under ERISA.

[GBurns]

mbozek,

The point is that ERISA does not "preempt all state laws" as you constantly erroneously usually claim... It depends on the issue, fascts and circumstances, which is why the cited post ststes, if you read it, "The Sixth Circuit had held that the Kentucky law was not preempted because it regulated insurance."

That is ALL that I said ... ERISA does not prempt "all" everytime, nothing more.

[Steve72]

I don't think that's what mbozek said:

"ERISA preempts all state laws that pertain to a self funded plan which is not a MEWA, including insurance laws"

The second part of the quote is important. State insurance departments cannot regulate a self-funded plan. ERISA does not preempt a state insurance law to the extent it governs the insurance provider (e.g., a state can set standards for group contracts sold within its jurisdiction). This has an effect on fully insured plans, but will not impact a self-insured plan, as there is no group insurance contract involved.

[GBurns]

Steve,

From mbozek .."ERISA preempts all state laws that pertain to a self funded plan which is not a MEWA, including insurance laws."

However, his post was in response to my post ..."ERISA pre-empts those laws that pertain to benefits not those that pertain to insurance etc. Payment of claims from providers is not a benefit issue and providers are not plan participants.

His response had nothing to do with what I posted nor with the original post to which I responded.

The problems that providers have are very often not solved by ERISA litigation but otherwise, for example:

http://www.businessinsurance.com/cgi-bin/news.pl?newsId=2929

Note that "He also ruled that the health care providers were entitled to pursue such a claim under the Pennsylvania Quality Health Care Accountability and Protection Act. "

A similar situation exists in the case/cases before Judge Moreno in Re Managed Care Litigation. Not every issue between service providers and health plans is an ERISA issue. That is ALL I have pointed out.

ALL that I pointed out is the simple fact that not every issue, whether for self-insured or fully insured plans, is an ERISA issue.

[KJohnson]

GBURNS The last link that you provided again involved insured plans. I would wholeheartedly agree with you that preemption is not cut and dried. The issue has been up before the Supreme Court a ridiculous number of times mainly because Section 514 is written so broadly (and so poorly).

That said, I think the point is that if a provider is seeking interest with regard to "late-paid" claims from a self-funded plan then ERISA would preempt any state law statute or cause of action that would provide for payment of interest.

[david rigby]

Let me take this a bit further.

Assume there is no statute. If the provider (that is, the recipient of payment) is alleging that the payor should pay more due to delays (assuming no debate over who is doing the delaying), is there a course of action such provider could take?

Plan appeal procedure first? What court? Type of claim? etc.

[GBurns]

A provider claim is not a plan issue. I doubt that anyone on this forum can find provider relations, provider contracts or provider payment issues in any PD. Provider payment issues are subject to the contract between the provider and whomever the contract for payment is with whether a Claims Administrator or insurance company. This contract is most often with either the PPO in self-funded plans or the HMO/Insurance Company in fully insured plans.

The cases cited such as In Re Managed Care has nothing to do with whether the providers were being paid for rendering service to partipants in fully insured or self insured plans, the claims by the Doctors covered ALL types of payments under ALL types of contracts.

In Parke vs First Reliance cited by KJohnson it was a plan participant suing not a service provider. This case cited Knudson which again is related to a plan participant filing suit re benefits related payments. None of these cases which are ERISA cases involved service providers but involved plan participants who receive benefits from the Plan at question.

Doctors are service providers not plan participants. Doctors do not receive benefits from plans.

[KJohnson]

I think this is probably fruitless, but in a self-funded plan what a provider has is an assigment of any benefits that the participant is entitled from the plan. The providef then stands in the shoes of the participant to bring any claim for benefits--See for example Herman Hospital v. MEBA Medical Ben. Plan. 845 F.2d. 1286 (5th Cir. 1988). Any state laws regarding that claim for benefits would be preempted.

I believe that the one area where Courts have made an exception is when a plan pre-certifies coverage to a provider and then it turns out that the particpant/services were not covered at all. In those instances I think some Circuits have allowed the provider's state law negligence/misrepesentation claim to go foward. Hospice of Metor Denver Inc. v. Group Health Ins. Inc. 944 F.2d. 752 (10th Cir. 1991); Traditional Hosp. Corp v. Blue Cross Blue Shield 164 F.3d 952 (5th Cir. 1999)(providers claim for benefits based on plan/contract preempted but claim for fraud/misrepresentation is not). I think the 6th Circuit does not agree Cromwell v. Equicor-Equitable HCA Corp. 944 F.2d. 1272 (6th Cir. 1991)

As to insurance laws, it is clear that the "deemer" clause in Section 514 means that even any laws that clearly regulate insurance are preempted when applied to self-funded plans. FMC Corp. v. Holliday 498 US 52 (1990)

[Guest eafredel]

Getting back to the original issue, the question was whether a medical provider could charge interest if payment for services is not received on a timely basis. While most medical providers do not do so, if the contract under which the services are provided states that interest will be charged if payment is not received on a timely basis, I would think a medical provider could charge interest at a resonable rate as long as it is disclosed in advance. In some cases, the medical provider may have a contract with an insurance company or the third-party administrator where the medical provider has agreed to provide services at negotiated rates. In other cases, the contract may be directly between the medical provider and the patient. It may be a good idea to provide that the benefits provided under a health plan do not include interest (or other fees) charged by medical providers. Despite the Department of Labor regulations mandating faster claims processing by health plans, many insurance companies and TPAs take a long time to process claims (probably in part because medical providers do not provide all the necessary information to process the claims).

[mbozek]

I think the question of paying interest on benefit claims can be classified as follows:

1. State insurance laws mandating payment of interest on health benefit claims are preempted by ERISA from application to self funded plans which are not MEWAs by applicable Sup Ct. precedents whoch preempt state laws that relate to a plan. (E.g., self funded plans subject to ERISA are specificially exempted from recently proposed MEWA regulations issued by the NJ ins. dept).

2. While a self funded plan administrator could permit payment of interest for late payment I have never seen any such plan provison. A provider could not unilaterally impose such a provision as a condition to providing service. Every contract between a SElf funded plan or HMO and a provider who treats participants that I have reviewed requires the provider to accept the amount determined by the plan/HMO. The provider is required to sign the contract before submitting claims to the plan/hmo.

3. A provider who accepts payment from a Plan/HMO under an assignment from the participant will not be able to collect interest from the participant under a separate contractual agreement between the provider and the participant because the contract between the provider and the plan/hmo contains a provision that forbids a provider who receives payment from collecting any amount from the individual participant (other than any required co-pay).

4. A provider could collect interest from a participant if the participant signs a separate contractual agreement with the provider which provides for payment of interest and the participant is reimbursed by the plan/hmo for the treatment without any separate contract between the provider and the plan/hmo.

[GBurns]

I do not see where this is a question af paying interest on benefit claims. Doctors do not make benefit claims. It is a question of paying interest on provider claims for services rendered.

How prevalent is this as calimed by mbozek?? ... "Every contract between a SElf funded plan or HMO and a provider who treats participants that I have reviewed requires the provider to accept the amount determined by the plan/HMO. The provider is required to sign the contract before submitting claims to the plan/hmo. "

The plans that I see have an agreement between the Plan and the Provider Networks (Beech Street etc) and not with the Doctors. The Doctors etc have a contract with their IPA, with the Network/HMO or with the Insurance Company NOT with the Plan.

I also do not see much of ... "A provider who accepts payment from a Plan/HMO under an assignment " Mainly because the providers that I see do not accept any assignment, they simply bill for services rendered.

In fact, I do not see where there is anything for a plan participant to assign because there are usually no values stated in the coverage only rights to service, limitations and exclusions. For example coverage is given for an Office visit, but while the co-pay is stated the value of the visit is not, so there is no known value to assign and I cannot see any insurer allowing an open ended liability. I also cannot see plan participants being allowed to assign something whose value is not known.