Category Archive for ‘Insurance’
Billing Disputes with Managed Care Organizationsby Scott Einiger, Esq.
Billing Disputes With Managed Care Organizations–How To Avoid Scrutiny
As most physicians know, governmental agencies have heightened scrutiny and emphasis on health care fraud and abuse. The Health Care Financing Administration (HCFA) has instructed Medicare carriers to focus their efforts on where there may be significant, potential abuse. Additionally, commercial “for profit” insurance carriers are actively seeking ways to contain costs and reduce payment to providers in this managed care environment.
Needless to say, these efforts surround services that insurance carriers may deem to be excessive, non-covered and/or medically unnecessary and the carrier accomplishes this task through utilization of claims data. Data obtained is analyzed and compared against both local and national claims data, looking for and identifying any possible patterns or aberrancies in terms of CPT codes submitted.
The insurance carriers review, typically look at the most commonly performed procedures for your practice and/or specialty based on the number of charges or number of services rendered. In an ongoing effort to focus and address compliance in your practice, it is recommended that a check be done regularly (e.g., monthly, semi monthly, quarterly, and/or annually) and compare the physicians utilization patterns, as well as the entire practice’s patterns against this local data.
By performing this exercise and monitoring, your practice, you will be in a better position to identify any areas that may possibly be viewed as potential aberrancies within the practice’s data. This can then prompt an investigation of these patterns further by comparing medical record documentation to determine if the services have been coded according to the documentation present.
Generally, the result of this activity prepares you to determine any necessary corrective action plans, which often result in increasing physician and staff awareness and education on coding and documentation as well as increased/implementation of quality assurance checks on any coding personnel.
Today, many multi-specialty groups have or are in the process of planning and/or implementing a comprehensive billing compliance plan as part of their overall corporate compliance initiatives. Typically, these types of billing compliance plans require that billing trends and patterns be reviewed regularly and that medical record documentation be assessed to determine and verify coding and documentation accuracy.
Once a carrier has determined that group or individual provider has an unusual billing pattern, an expanded investigation is warranted. Most carriers will then select a relatively small sample of claims at random from all claims submitted during a particular period. At that point, documentation will be requested from the physicians to determine whether or not the documentation supports the service to be billed. In these instances, the physician will be required to respond with any supporting and complete documentation typically within 45 days of the request.
( Special Note: In the event that you receive a request for refund from the carrier without any details supporting their request for refund, you should demand a specific accounting in writing of the patients and services involved in the carriers audit/refund request prior to undertaking any dialogue or settlement negotiation with the carrier.)
Many medical societies have peer review and ombudsman programs to assist you in reviewing your billing and coding practices with medical and billing experts to guide you along the way.
For those claims that are included in this payment review, a final determination should not be made until all documentation is received and reviewed.
The carrier should then contact you in writing within a reasonable amount of time to notify you of their final review determination. 1 If not provided, physicians should request a detailed breakdown of the points that the carrier still feels is owed.
In the event that the physician still feels that the carrier determination is still inappropriate, the physician should be aware of the appeals mechanism at the carrier and should avail themselves of a formal appeal.
If after the appeal, the physician feels that the determination is being made in bad faith, without rational criteria being applied, or as a harassing tactic, its is recommended that the Office of the Attorney General and the State Insurance Department be apprised in writing of the specifics issues under review.
Given all of the above criteria, one must ensure that all physicians are aware and understand not only the requirements but also the consequences of noncompliance.
There is a need to be proactive with education and monitoring of services now more than ever. If your physician group practice does not have a plan in place for conducting these activities, it is highly recommended that you revisit these issues and obtain support and authorization to do so.
Most carriers and regulatory arms of the federal government are targeting their efforts on compliance, audit, and recoupment with an emphasis o the following coding particulars:
• Medical necessity issues
• Allegations of procedures not being performed
• Incident To services
• Procedures purposely not covered under carrier policy (experimental or elective procedures)
• Coding accuracy of physician/patient encounters (Evaluation & Management)
• Utilization of modifier 25 (Medical care & procedure – same day)
• Correct Coding Initiatives (Bundling)
• Diagnosis code utilization by physicians and other providers
• Billing services
COMPLIANCE PROGRAM ELEMENTS
At a minimum, comprehensive risk management and compliance programs should include the following seven elements to avoid the untoward scrutiny of the insurance carriers that you participate with:
• the procurement and distribution of written policies and procedures that outline the carrier’s particulars for claims submissions, and applicable coverage policy and that address specific areas such as claims development and submission processes, code gaming, and that this information be distributed to key office personnel responsible for claims and billing procedures as well as the physician and other health care professionals providing services.
• the designation of a chief compliance officer (i.e. the Office or Billing Manager) charged with the responsibility of operating and monitoring the compliance program to insure that the individuals responsible will be adhering to standards of the carrier. (Note: There are different standards for each carrier so it is important that one staffer be assigned the critical task of monitoring the particulars of each plan).
• the development and implementation of regular, effective education and training programs to update all affected employees to the changing rules;
• the regular use of audits and/or other evaluation techniques to monitor compliance and assist in the reduction of identified problem areas on an ongoing basis; and
• the development of a system to respond to allegations of improper/illegal activitiesand the enforcement of appropriate disciplinary action against employees who have violated internal compliance policies, applicable statutes, regulations or federal health care program requirements;
• the investigation and remediation of identified systemic problems and the development of policies addressing the non-employment or retention of sanctioned individuals.
• the development of a system to respond to insurance carrier inquiries regarding allegations of improper claim submissions and/or requests for refunds (i.e. designating a formal contact person and notifying other employees not to discuss cases under review and not to address any inquiries from carrier personnel without proper clearance.
• the maintenance of a process, such as a hotline, to receive complaints, and the adoption of procedures to protect the anonymity of complainants and to protect whistleblowers from retaliation;
1 As of July 1999, New York State has created an external review process for patients and physicians to review certain adverse decisions by managed care plans by an independent review body.
Insurance Carrier Auditsby Scott Einiger, Esq.
Insurance Carrier Audits Extrapolation and Refund Demands
If you would like more information about this topic or any other topic contact Scott Einiger
The practice of medicine has undergone a transformation with the advent of managed care healthcare delivery. Physicians need to be cognizant of the coding and billing requirements set forth by third party insurers for services rendered to ensure that their documentation satisfies the level of services provided. Managed Care organizations have recouped millions of dollars in refunds from providers who are unable to justify the level of services provided. The information contained in this article will provide a general overview of HMO allegations of over-utilization and the resultant insurance company audits and demands for repayment that can occur.
What physicians should realize is that a health insurer’s fundamental existence and financial success require detailed analyses of each provider’s practice patterns using information management systems that cost millions of dollars. Insurance companies make huge financial and personnel commitments to information technology over-utilization of medical services. As a result, carriers have extensive data banks that provide the frequency with which each participating physician bills a particular CPT code and how that compares on a percentage basis with CPT codes billed by providers serving a similar patient population.1 The third party payors generate practice profiles by gathering data indicating how often a physician performs specific procedures (e.g., colonoscopy), where (s)he performs those procedures (e.g., in or out of a hospital setting), and what CPT code the physician assigns to that procedure. All the while, insurers are comparing each physician’s practice profile to other providers. Additionally, insurers maintain data banks that compare how often a provider orders laboratory tests and which tests they order and, similarly, generate provider profiles based on this information.
Once the insurer determines that a physician or a group of physicians has billing/coding patterns that deviate from a calculated norm, the insurer will, in all likelihood, commence an expanded investigation. Unfortunately, physicians usually are unaware that their billing patterns deviate from such a norm until the insurer initiates an expanded investigation. Although New York Public Health Law mandates that insurers supply the provider with the profiling data gathered in regard to that physician under PHL 4406-d(4), in our experience insurers do not always comply with this statute. As a result, physicians have little opportunity to amend their coding and billing practices and often are completely surprised when learning they are the subject of an insurance audit.
II. The Insurance Audit Process
Physicians targeted by an insurance company will normally learn of an audit by letter requesting medical records. Participating physicians in an insurer’s network agree by contract to carrier audits pursuant to their provider agreement. If a physician is not in-network provider, an audit request by the insurer can still be made. However, Federal and State confidentiality laws must be satisfied prior to disclosure.
In the event that any physician receives notification of an audit and a request for medical records, it is critical that the physician not breach patient confidentiality by providing such records unless the patient has signed an appropriate authorization. Both Federal and New York State Law explicitly protect patient confidentiality and provide for significant penalties in the event such confidentiality is breached. Physicians must exert extreme caution before releasing any medical records.
Both Federal Law (HIPAA) and the New York State Public Health Law contain stringent requirements as to the written authorization required from the patient or authorized person prior to the release of patient information. Violation of these stringent requirements could possibly expose the practitioner to civil, or in extreme cases, criminal liability (see Art. 27-F of the Public Health Law related to release of HIV records). The managed care company must provide the appropriate authorization before medical information can be released. Be forewarned that HMO’s may suggest that they are entitled to the patient information without providing the correct interpretation of the confidentiality law.
Moreover, in cases where the managed care company alleges fraudulent practices, there is the possibility that the managed care company may report the physician to the Office of Professional Medical Conduct, resulting in an investigation that may have consequences for the physician’s medical license.
It is also important for the physician to be aware of New York State Public Health Law Section 4406-d(4), which is applicable to any managed care company initiative in which a provider’s performance, including billing and utilization patterns, is evaluated. This law provides certain procedural safeguards to providers and imposes obligations on HMO’s who are conducting an audit. It also requires a managed care plan to share information with providers and to afford the provider an opportunity to engage in a dialogue with the plan regarding their
The importance of a physician being aware of all his/her rights and the possible repercussions of an audit cannot be emphasized enough.
III. The Refund Request Without Explanation
In certain instances, physicians may receive notification of a refund request from the insurer in which the insurer fails to specify any reason that justifies the request. In such situations, physicians should demand that the insurer provide, in writing, a specific accounting that includes the names of the patients selected and the services that constitute the basis for the audit or refund request. This accounting should be provided to the physician before beginning any evaluation or settlement discussions with the carrier.
Most insurer’s refund demands are usually calculated using the technique known as “extrapolation.” Typically, a sample of between five (5) to twenty (20) charts is requested. If the submitted medical records fail to substantiate the services coded and billed, as interpreted by the HMO, the insurer recalculates the physician reimbursement downward – thereby establishing the insurer’s grounds for repayment. The insurer relies on extrapolation methodology to arrive at a final figure for the repayment demand sent to the physician based on a sampling of the physician’s representative charts for that particular code. Often times the coding analysis is conducted by an independent organization retained by the HMO who are coding “experts.”
Extrapolation enables the insurer to apply its findings from a limited population to the entire universe of patients covered by that insurer and seen by the particular physician over an extended period of time – often, a six year period.2 As a result, the insurer arrives at a repayment demand that is much greater than the amount initially calculated from the submitted medical records. The physician should be aware that the use of extrapolation is rapidly falling out of favor as demonstrated by a recent decision by Medicare to lessen reliance on extrapolation for the determination of overpayments.
V. Resources for the Physician
As noted above, Physicians are well advised not to immediately accede to the insurer’s repayment demand nor enter into negotiations alone. After receiving a letter indicating you are the subject of a medical audit, it is best to contact either your medical society or a healthcare attorney well versed in matters involving insurance company repayment demands. As already noted, there are substantial issues regarding patient confidentiality when an insurer requests medical records. Breaching such confidentiality could result in substantial civil penalties. In any event challenges to extrapolation methodology include (but are not limited to) the argument that samples are not representative of the overall practice and are not statistically valid.
VI. Arbitration and Litigation
On occasion, managed care companies may refuse to withdraw their demand for repayment or refuse to settle the case on terms agreeable to the provider. The dispute may then go to arbitration if the provider agreement includes an arbitration clause. Otherwise litigation may be initiated. The arbitration process is much like a trial. Both sides are represented by counsel and the case is heard by one to three arbitrators who make the ruling. At arbitration, besides attacking the managed care company’s findings on the merits with the testimony of the provider and possibly a coding and a medical expert, the managed care company’s determination can also be attacked on a number of other grounds. The managed care company’s use of an extrapolation will be questioned as well as the conclusions of the managed care company’s coding or statistical expert. The issue of the Managed Care Company’s compliance with the requirements of Section 4406-d(4) of the Public Health Law will also be raised.
While litigation or arbitration is expensive and not a preferred method of resolution, at times it is necessary for the dispute to go to arbitration or court to either put more pressure on the managed care company to settle appropriately or for the physician to obtain vindication.
It is crucial for the physician to be aware of the fact that any audit by a managed care company is fraught with pitfalls and can have serious repercussions not only in relation to his status with the managed care company but concerning the physician’s medical license, possible civil liability exposure and/or breach of confidentiality. For this reason any inquiry by an insurance company should be treated seriously.
I. It should be noted that providers have been compared to dissimilar providers and specializations which can skew the results of carriers’ review and dramatically affect the analysis to the detriment of a client.
2. A breach of contract action has a statute of limitations of six years by extrapolating over the minimum 6 year period the HMO can increase its refund demand.
Scott Einiger, Esq. is special counsel to the New York County Medical Society, and general counsel to the American Academy of Psychoanalysis and manic Psychiatry and has been a health care advocate for over 15 years.
Ralph A. Erbaio, Jr, Esq., was an Administrative Law Judge with the Department of Health and the Office of Professional Medical Conduct specializing in the area of Physician Discipline, reimbursement and Fraud issues.
Facility Fee Reimbursementby Scott Einiger, Esq.
The information presented in this article is intended for educational purposes only and does not constitute legal advice. In cases of specific legal questions, always contact an attorney.
A major trend in the health care industry is the recent challenge by various insurers to the reimbursement of facility fee charges for the office-based surgical practice (OBSP). (An OBSP is an office-based surgical practice in a physician’s office. This type of facility is different from an Article 28 facility and/or facilities certified through Medicare.)
Insurance companies had routinely reimbursed OBSPs for facility fee charges and professional services, which resulted in substantial savings normally associated with hospital surgeries. Now, however, insurance companies are using Article 28 as a barrier for reimbursement and have “reinvented” policies to state that only Article 28 facilities are entitled to payment for facility fees thus opening the door for refund demands.
The last year or so marks the escalation of the insurance companies’ attempt to seek “overpayment” demands based upon the rationale that OBSPs did not properly receive facility fees. Significantly, no New York State regulation or body of case law prohibits an OBSP from charging and receiving a facility fee. It is our opinion that whether to reimburse a facility fee for an OBSP is a contractual negotiation between provider and patient or provider and managed care plan if the provider is a participating provider. As such, the insurance carriers have articulated no valid justification to date for prohibiting an OBSP from receiving a facility fee.
As compelling as the contract argument is the estoppel argument where OBSPs have received no prior notification or ever been made aware that the insurance carriers seemingly have a policy excluding OBSPs (until many years after payments were made) from obtaining reimbursement for facility fees. So long as the OBSPs never held themselves out to be anything other than an OBSP, and submitted documentation in good faith for facility fees and were paid accordingly, there should be no bar to recovery. To date, no documents have ever been supplied to OBSPs (that we represent) by the carriers indicating that they were ever notified that reimbursement was only allowed for Article 28 facilities.
Our position has been conveyed to the General Counsel to the New York State Medical Society who has endorsed the position taken by this firm that this is a contract negotiation between the parties and that these OBSPs have relied on the prior reimbursement from the insurers, provided all the adequate documentation of their status as an OBSP, and that insurers are now stopped from re-claiming monies from OBSPs.
Insurance carriers fail to realize that the same medical procedures, including facility charges, cost significantly less when performed in an outpatient medical office.  It is clear that the movement of health services away from inpatient facilities to outpatient facilities and private offices creates a cost benefit to the insurance carriers by enabling them to pay out much lower fees to OBSPs. Refusing to pay the facility fees to such offices is clearly against the financial interests of the insurers. The reduced fee would also benefit patients/enrollees as well.
In the cases cited, the OBSPs plainly notified the carriers that they were accredited by various accrediting organizations such as the Accreditation Association for Ambulatory Health Care, Inc. (AAAHC) and the American Association for Accreditation of Ambulatory Surgical Facilities, Inc. (AAAASF). These accrediting bodies have stringent guidelines and regulations in order to uphold the health and safety standards of such outpatient facilities. The benefits of accreditation to an insurance carrier are, among other things, an assurance of quality and maintenance of standards of excellence by the OBSP.
Notably, the AAAASF has articulated that “most of the major insurance carriers recognize our accreditation certification and provide payment for facility charges to those that have AAAASF Accreditation.” Currently, Texas, Nevada, Florida and California recognize accreditation by AAAASF in lieu of state licensure for ambulatory care facilities. AAAASF has also recognized that the majority of agreements to pay facility fees are a product of contractual negotiation between provider and insurers.
Additionally, consultation with experts in the field and the statutory guidelines also reveals that OBSPs may bill for facility fees on an UB 92 form (despite certain carriers’ protestations that only Article 28 facilities may use such a form). Indeed, a UB 92 form is recognized as a universal form with no limitations on what types of entities may use it.
In sum, OBSPs should assert their entitlement to prior monies that carriers have paid and now seek recoupment. OBSPs that have acted in good faith in enlightening carriers of their status and that have submitted appropriate claims should not be penalized by the carriers’ newly crafted and convenient policy to recoup monies previously paid. Indeed, there is no case or statutory law upon which carriers can premise this eleventh-hour policy based upon Article 28 status. It is telling that carriers have not, as they cannot, produce any dated documents, when asked, detailing this supposed policy. However, it is also an effort by the carrier to create new rules of the road for future payment and put OBSPs on notice that they will not pay these fees on a going-forward basis. OBSPs will now be compelled to either negotiate payment of the facility fees or collect the monies directly from the patient. This re-formulated payment structure, which is driven by the carriers, will not benefit the patients or the carrier in the long run, as it only seeks to increase the patient’s costs if the patient pays out of pocket, or compel the patients to seek an in-patient procedure, leading to higher costs for the carrier.
Ultimately, this problem might be addressed by the legislature. Until then, if your office is an OBSP and intends on charging a facility fee, it is recommended to follow practices that clearly convey the circumstances of your practice so that they cannot be disputed after the fact.
Contributors to this article include:
 The American Association for Accreditation of Ambulatory Surgical Facilities, Inc. (“AAAASF”) has noted that ambulatory surgery has significantly reduced facility costs and that “[c]urrent studies indicate that specialty facility costs are approximately one–third (1/3) of hospital costs for the same procedure.”
Appealing Healthcare Claim Denialsby Scott Einiger, Esq.
Appealing Healthcare Claim Denials: Know Your Rights
As we monitor the healthcare legal landscape each year, a number of new or amended laws in New York greatly impact our clients and their practices. As healthcare providers, few laws are more significant to you and your medical practice than those that ensure you are appropriately reimbursed for the care you provide. The New York State Legislature has expanded your previously existing right to an external appeal of claim denials. This right significantly impacts your ability to obtain an independent, external review of utilization in cases of denials for services that you provided which, in your medical judgment, were necessary to properly care for your patients – those who trust you with their health. Providers may now request external appeals on their own behalf for both concurrent and retrospective adverse determinations. However, this process triggers additional considerations that you, the provider, must carefully weigh and that your patients must understand. We’ll begin with an overview of the claim denial appeals process in New York.
Reviews and Denials by Health Plans
Health plans are permitted to (and often do) deny payment for services, procedures, and treatments that they consider medically unnecessary, experimental, investigational, a clinical trial, a rare disease treatment, or, in some cases, out-of-network. The notice of denial must be in writing, sent within the time frame established by New York State law, and include the following: 1.) The specific reason(s) for denial with the medical explanation, if any; 2.) A statement that the clinical review criteria (medical standards) the plan used to make its decision are available to the member upon request; 3.) Instructions on how to file an internal appeal with the plan and what information the plan needs for the appeal; and; 4.) Notice of the right to an external appeal with an independent third party.
Health plans are required to make a determination and notify a provider or consumer of the denial of a claim within a specified period of time after receiving all “necessary information” for that claim. This “necessary information” encompasses all clinical or other information relating to an individual’s treatment required by the health plan in order to help make its determination about whether the care provided was necessary and appropriate. Additional information may be requested by the health plan if deemed necessary. The receipt of all necessary information triggers the beginning of relevant time restrictions which depend on the types of review.
There are three types of review which may result in an Initial Adverse Determination (“IAD”), or claim denial: concurrent review, pre-authorization review, and retrospective review.
Concurrent review arises where there has been a request for an extension or continuation of care that is ongoing. It also applies where there is a request for additional services for a patient undergoing a course of continued treatment. In these situations, health plans are required to notify providers or consumers within one business day of receipt of all necessary information, and this must be done via telephone and letter to the provider or consumer.
Preauthorization review occurs prior to the provision of services. Necessary information, once submitted, is reviewed and coverage for the service is either approved or denied. The health plan must communicate the denial within three business days after receipt of all necessary information.
Retrospective review arises when the health plan decides that treatment that has already been provided was not medically necessary or is not covered (e.g., experimental). Retrospective adverse determinations do not apply to pre-authorization determinations or initial determinations involving either continued or extended health care services, or additional services for a patient undergoing a course of continued treatment. A determination must be made within thirty days of receipt of all necessary information.
The Health Plan Denied Payment: Now What?
For situations where a health plan issued an IAD without consulting the treating doctor who recommended the service under review (or his documentation), a process exists for providers to request reconsideration. The reconsideration is performed by the same individual at the health plan that issued the initial IAD. Please note that except in cases of retrospective reviews, such reconsideration shall occur within one business day of receipt of the request.
An IAD by a health plan may be appealed. There are generally two types of internal appeals available with the health plan – standard appeals and expedited appeals. Any decision where the health plan has determined that care was not medically necessary may be appealed through a standard appeal. When a standard appeal is used, the plan must issue a decision within 60 days of the receipt of all necessary information. This decision must be communicated to the provider or consumer within two business days of the decision. Expedited Appeals occur where the plan’s initial denial of care involved a continuation or extension of healthcare services, or where the healthcare provider believed that an immediate appeal was warranted. In these cases, a decision by the health plan must be reached within two business days of receipt of all necessary information.
It is extremely important to keep track of these time frames, as non-timely determinations by the health plan will lead to an automatic reversal of the initial adverse determination and the claim must be paid; in other words, if the health plan fails to meet the required time frame, you (and your patients) prevail and no external appeal is necessary.
The Final Adverse Determination and External Appeal
A Final Adverse Determination (“FAD”) is an ultimate upholding of the IAD. When FADs are issued, the right to an external appeal is triggered. Some health plans may offer the option of a second internal appeal, but this does not preclude the provider or consumer from filing an external appeal. The external appeal and second internal appeal may be filed simultaneously, but regardless, the external appeal must be filed with the State within 45 days of the plan’s final adverse determination or the health plan’s letter waiving the internal appeal process. If this timeframe is not met, providers and consumers will forfeit the right to the external appeal.
As mentioned previously, if a health plan denies an initial appeal, a provider or consumer may file both a secondary internal appeal to the health plan, if available, and an external appeal with the Insurance Department, in order to ensure that the 45 day time frame does not expire. Individuals bringing external appeals can assist in the appeals process by making sure that all necessary attestations by the physician, including the relevant and necessary peer-reviewed literature, are provided.
In an external appeal, independent external review agents appointed by the New York State Department of Insurance review eligible appeals. External appeals are only available following a Final Adverse Determination. These agents are certified by the New York State Insurance Department and the New York State Health Department, and they utilize medical experts in their reviews. The number of experts that review the appeal varies based upon whether the review is of a medical necessity claim (one reviewer) or whether the care provided was experimental, investigational, a clinical trial denials or a rare disease denial (three reviewers, up to three for out-of-network reviews). Reviewers are health care professionals in the same or similar specialty, and they decide whether to overturn, uphold, or uphold in part the denials of health plans.
Decisions by the independent external review agents will be made in 3 days for expedited appealsor 30 days for standard appeals. It is important to note that the external appeal agent’s decision is final, and it is binding on the patient and the patient’s health plan. If a provider is due payment from a health plan based on an external appeal, the payment must be made within 45 days of the date the plan was notified. If payments are not made within that timeframe, the provider is entitled to interest payments. Note that providers may not pursue reimbursement from the patient if a denial is upheld (however, it is permitted to look to collect a copayment, coinsurance, or deductible owed).
Generally, legal action may not be taken against a health plan after an external appeal decision. However, New York courts do seem to suggest that there may be a small window of opportunity for consumers who have had their adverse decisions upheld. In a 2003 court case, the insured brought an administrative proceeding against the Superintendent of Insurance based on an external appeals agent’s decision upholding a health plan’s denial of coverage for medical treatment. The New York State Supreme Court wrote that external appeal agents function in an administrative capacity on behalf of the State, and that these types of administrative proceedings were thus the proper vehicle for reviewing an external agent’s determination to uphold the health plan’s denial of coverage.
Additionally, the New York State Supreme Court wrote in another case that the external appeal of an insurer’s determination was not a binding arbitration to which the parties agreed in the insurance contract. In that case, the court found that although the determination of an external appeal agent was binding on the plan and the insured, the law also provided that the external appeal agent’s determination was admissible in any court proceeding. The court’s opinion provides grounds upon which a provider could argue that an adverse external appeal decision may be reviewed in the courts.
Paying for the External Appeal
With the expansion of the right for providers to bring an external appeal, there was recognition by the Legislature that the obligation to pay for the external appeal must be imposed even-handedly to ensure appropriate utilization of the system. The payment obligation can fall on the carrier, the provider, or both. This variable is a significant factor to consider in determining if an external appeal should be undertaken.
Based on the depth of review, fees for an external appeal can range from hundreds to even thousands of dollars. Under the Insurance Law and Public Health Law, prior to January 1, 2010, payment for the external appeal was solely the responsibility of the health plan. Now, if a provider requests an external appeal for concurrent adverse determinations and the denial is upheld in whole, responsibility for payment for the external appeal falls upon the provider. If the denial is upheld only in part, the cost is evenly split between the provider and the healthcare plan. If the provider prevails in total, payment for an external appeal is the responsibility of the health plan. For retrospective adverse determinations, the health plan will pay the cost of the external appeal. In these cases, health plans may charge providers a small fee, but this fee will be returned to the provider if the external appeal leads to an overturning of the health plan’s denial in whole or in part.
The external appeal is a powerful tool in the provider’s arsenal for recouping payments and overturning denials when carriers make arbitrary and capricious decisions to deny healthcare services or payment. However, it is imperative that providers and consumers keep close track of the important time frames and necessary components of the appeal in order to maximize their opportunity for success. Being aware of both the procedures and options available will assist you in navigating through the appeals process available to you in New York.
Additional contributing attorneys: Michael S. Kelton, Esq., Basil Kim, Esq.
Proper Coding: Stay Abreast of the Lawby Scott Einiger, Esq.
Proper Coding: Failure to Stay Abreast of the Law and Current Coding Practices Can Result in Civil Liability and Criminal Prosecution.
Since the inception of the Current Procedural Terminology (“CPT”) coding system and the Healthcare Common Procedure Coding System (“HCPCS”), physicians have been attempting to ensure proper coding and record keeping practices for medical care rendered. Now, the playing field has become even more challenging. As you may know, the Obama administration has given its campaign promise to crack down on health care fraud some teeth. While the Omnibus Appropriations Act of 2009 provided $198 million for joint United States Department of Health and Human Services (“HHS”) and Department of Justice (“DOJ”) health care anti-fraud programs, with $19 million of that amount designated specifically for the DOJ , the Obama Administration’s fiscal year 2010 budget requests an additional $311 million in two year funding, $29.8 million of which is designated for the DOJ health care anti-fraud programs. 
In May 2009, United States Attorney General Eric Holder, standing alongside HHS Secretary Kathleen Sebelius, announced the creation of the Health Care Fraud Prevention and Enforcement Action Team. This team is in addition to the already established Medicare Strike Force Teams presently operating in several major U.S. cities. To support these and other anti-fraud programs, the administration has authorized a dramatic personnel increase in the fraud section of the Justice Department’s criminal division, with a direct eye towards combating Medicaid and Medicare fraud. “Health care fraud, in particular, is one of the [DOJ’s] top enforcement priorities…”.  In 2008 alone, the DOJ opened 957 new investigations and had 1,600 pending investigations by the end of the fiscal year.  According to Director Robert Mueller, as of June 2009, the Federal Bureau of Investigations had 2,400 pending health care fraud investigations. 
Moreover, according to the DOJ, as part of its effort to recover fraudulently obtained funds and discourage future abuses, the DOJ’s Civil Division, utilizing the Federal False Claims Act , “has played an enormous role in the Department’s efforts to recoup improperly obtained funds.” Providers should take note that, in 2008, 3,129 providers were excluded from the Medicare and Medicaid programs by the Office of the Inspector General.  With a roughly 50% increase to the budgets of HSS and the DOJ, the volume of investigations and prosecutions opened and pursued with these additional resources over the next few years could be staggering.
While the initial high profile investigations, prosecutions and convictions by HSS and the DOJ have involved suppliers of durable medical equipment, hospitals, nursing homes, and long term care facilities, smaller physician practices will not be exempt from scrutiny and investigations involved in this crackdown.  Moreover, the health care fraud “crackdown” has not been limited to activities of the Federal government. Not only has the Federal government actively involved the states’ Attorney Generals offices in its programs, but state governments have also, on their own, been employing programs and policies to counteract fraud and recoup improperly obtained funds. For example, in New York State, the NYS Office of the Comptroller has, over the past few years, taken a stern look at waiver of co-pay and co-insurance payments and, in conjunction with the New York State Insurance Department, has labeled such activity as fraudulent.  Further, according to the New York State Attorney General’s office, in 2008, the state’s Medicaid Fraud Control Unit obtained nearly 150 convictions and recouped payment of $263.5 million in civil damages and criminal restitution, surpassing the $113.8 million recouped in 2007 and the $59.3 million recouped in 2006.  Indeed, it must be remembered that our own New York Attorney General’s Office has already taken the insurance carriers to task for their non-participating provider reimbursement rates, labeling their practices as fraudulent. 
The greater concern for the vast majority of providers, who provide a high quality of care to their patients and attempt to bill properly, is that commercial insurance carriers (who have already been using third party administrators such as Ingenix to recover Medicare and Medicaid “overpayments”) will use the government’s mandate of stamping out healthcare fraud as an excuse to ramp up their aggressive auditing activities, and use the threat of a referral to the Justice Department as a sword to cow health care providers into complying with improper and unfounded repayment demands. Inasmuch as the DOJ readily admits that it actively involves and utilizes the investigatory and data compilation resources of the commercial insurance carriers , there is the real potential for commercial insurance carriers to use the information gained from government investigations as justification for performing aggressive audits of health care providers, even in situations where the health care provider has been “exonerated” by federal and state entities from any wrongdoing. This concern is, of course, in addition to concerns regarding audits conducted through the government’s Medicare Recovery Audit Contractor (“RAC”) program, which is now fully operational.
Health care providers in New York should be aware that commercial insurance carriers attempting to recover federal funds in civil proceedings are not bound by New York’s “two year look back” statute. Thus, the commercial insurance carrier can perform an audit, and serve a repayment demand, for up to six years after payment of the claim without having to make a showing, or even an allegation, of fraud.
No provider wants to be the subject of a federal, state or commercial insurance carrier audit. All of these entities have vast economic resources and, in some instances, the government gets to keep the proceeds of the audit which is a huge incentive to increase these initiatives.  Being proactive and not waiting for an audit to occur will ensure proper billing and coding practices and will allow the provider to correct and eliminate any problems that are uncovered before the government or a commercial insurance carrier comes knocking at the door. Further, in the event of an audit, self-auditing can go a long way towards refuting any allegation of an intent to commit fraud.
Providers should undertake measures to lessen the likelihood of being investigated by the government or being audited by a commercial insurance carrier and to successfully defend themselves in case of such an audit. These measures, which many providers have heard before, warrant repetition.
First, make sure your staff, or contractors (if you are outsourcing your coding and billing), are experienced and knowledgeable in coding for procedures performed within your specialties. Undue reliance, without doing your homework, can have catastrophic consequences. To avoid this, it is strongly recommended that you, as the provider, know your service codes so that even if you cannot perform a daily analysis and review of billing, you can perform limited periodic spot auditing that will allow you to uncover potential problems or improprieties at their initial stages. Many medical societies provide seminars and courses on proper billing and coding for their members. Most importantly, these seminars are designed to be understood by the providers and their staff.
Make sure your staff, or outsourced billing company, keeps current on billing and coding requirements. The American Medical Association (“AMA”)and Centers for Medicare and Medicaid Services (“CMS”) frequently make multiple modifications each year to its billing and coding guidelines based upon trends in health care and medical and technological advancement. Complacency, or a misplaced confidence level simply because a carrier has not picked up on a repetitive error, can be your worst enemy because an ongoing error can lead to an exponential increase in any refund demand.
Thus, it is imperative to make sure each year that the codes you are using have not been changed or modified by the AMA , CMS, or the commercial insurance carrier. Providers are obligated to stay up to date with current coding terminology. Changes in the coding requirements, even minor ones, and changes in approved and denied treatments, are subjects that are easily exploited by commercial carriers. Our experience with audits by commercial carriers makes it clear that changes in policy (i.e. covered treatments and services) happen frequently and without proper notice to the providers. Many carriers consider a simple modification to their on-line list of covered services as proper notice to the provider. Participating providers are therefore encouraged to ensure that their billers check the carriers’ website for policy changes to avoid audits and repayment demands for services that are “no longer covered.” Systemic billing errors, such as consistently using an improper billing code for treatment rendered, can give rise to an allegation of fraud by the commercial insurance carriers, as well as the state and federal authorities.
For providers that conduct their own coding and billing, we recommend considering having an independent outside analysis conducted by a medical coding expert. These independent analyses are highly cost-effective in comparison to the legal expenses incurred in defending an audit. Such proactive steps can go a long way towards preventing coding problems and assuaging a provider’s concerns and anxiety. In the event a problem is identified, it can be addressed and rectified quickly, thus avoiding potentially costly audits and significant repayment demands. Inasmuch as health care providers generally perform the same treatments and bill the same codes on a repetitive basis, a single coding error or misunderstanding can lead to an audit and extrapolation (which is a permissible tool used by commercial carriers in New York) that can be very costly, even in the absence of any fraudulent intent.
Finally …document, document, document, and do it legibly! The cardinal rule regarding documentation of treatment rendered to Medicare and Medicaid patients is that if the note is illegible the treatment did not occur. Commercial insurance carriers have adopted this rule as their policy. Proper documentation and the use of appropriate templates can be helpful in eliminating exposure in those areas frequently challenged by the carriers (i.e. E&M levels and medical necessity). This applies whether the note relates to past medical history, present complaints, examination or treatment. While legibility may be a somewhat subjective determination, it is far better to be clear and comprehensive in your approach than to allow an outside auditing company to question whether a treatment was rendered or medically necessary, thus causing the provider to defend his or her writing in a post payment review.
Moreover, rather than take the time to try and decipher a note, or give the provider the benefit of the doubt, it is much easier for a commercial insurance carrier to deny a service where the note is illegible and wait for the provider to refute the determination. Taking a few extra minutes to document clearly and legibly can be an exercise that reaps financial benefits in the event of an audit or investigation. Time and time again, upon our review of records audited by commercial carriers, we find that the carrier did not see or ignored a note due to claimed illegibility. A report or note that reflects the treatment rendered, or the medical propriety of the treatment rendered, can result in reducing necessary defensive measures.
Specifically, with regard to documentation, providers must keep in mind that if you are billing for a high level E&M, make sure the progress notes document all required elements for such a code. For consultations, make sure that your report clearly identifies that a health care provider has requested the opinion from a specialist in your field, detailing how the provider obtained knowledge of the request (e.g. patient arrived with a scrip, primary care physician’s office called, patient’s assertion). Don’t identify a consultation as a referral, as the two terms are not synonymous when it comes to coding. Further, make sure you send the consulting report (letter) back to the referring physician. Carriers are not above demanding the patient chart from the referring physician to determine if the consulting report is in the patient chart. Finally, if you are referring the patient for a test which you, or someone in your group, will be performing, make sure that the medical necessity for the test is documented or can clearly be inferred in the progress note.
Admittedly, it can be difficult, frustrating, and time consuming to both practice medicine and run your business. However, neither the commercial carriers nor the governmental entities will be overly sympathetic to the practical realities of today’s health care provider. Remember, the health care provider is the one ultimately responsible for the office’s billing practices. The provider is the one signing off on the submission and the provider is the captain of the ship. It is the provider’s medical license under scrutiny if your billing practices are questioned and it is the provider who will receive and pay the refund demand.
When our office gets involved with a retrospective audit, we work concurrently and collaboratively with providers, ensuring the office prospectively changes any practices identified as areas of concern. You should not wait for an audit to review your coding practices. We recommend that our clients, on an annual basis, comprehensively review their billing practices to ensure compliance and appropriate documentation. For larger practices, group practices, and any provider that has uncovered systemic billing errors in one or more areas, we consistently recommend a prophylactic review of their billing and record keeping practices. These reviews, performed collaboratively by our legal staff and expert coding consultants, are economical and, in the long run, can save the provider time, grief, and money. Whether your practice or facility is the subject of an investigation or audit, or whether you are considering having a review of your billing and record keeping practices, we recommend that any coding expert be retained by your legal counsel to ensure confidentiality, thereby preventing the disclosure of any information exchanged between the provider and the consultant if litigation regarding the provider’s billing practices occur.
For any questions or concerns you may have concerning insurance carrier audits or repayment demands, large or small, please feel free to contact our Health Care Law Department for an analysis and assessment regarding your situation.
(The information presented in this article is intended for educational purposes only and does not constitute legal advice. In cases of specific legal questions, always contact an attorney.)
About the Authors:
Scott Einiger is a senior partner and Director of the New York City Health Law Department at Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Einiger, LLP, special counsel to the New York County Medical Society, General Counsel to the American Academy of Psychoanalysis and counsel to the New York Society for Gastrointestinal Endoscopy
David Verschell is the Director of the Insurance and Audit Division of the New York City Health Law Department at Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Einiger, LLP, and is a senior trial associate in the firm’s Medical Malpractice Defense Department.
 Lanny A. Breuer, Assistant Attorney General – Criminal Division, Department of Justice, Statement Before the United States Senate Committee on the Judiciary, Subcommittee on Crime and Drugs, Presented May 20, 2009.
 News Release, U.S. Department of Health & Human Services, May 20, 2009;
 Breuer, supra note 1.
 U.S. Pursues Crackdown on Healthcare Fraud, Reuters, June 24, 2009.
 31 U.S.C. § 3729-3733.
 Breuer, supra note 1.
 Department of Health and Human Services Office of Inspector General, State Medicaid Fraud Control Units Annual Report- Fiscal Year 2008.
 Breuer, supra note 1, at pg. 3; “[t]he department is committed to prosecuting all who commit health care fraud…”.
 see State of New York Insurance Department opinion letter
 New York State Medicaid Fraud Control Unit, 2008 Annual Report
 After an industry wide investigation conducted by the New York State Attorney General’s office concluded that there was a scheme to defraud consumers by manipulating the reimbursement rates for treatment rendered by “out of network” physicians, the Attorney General obtained agreements from multiple major insurance carriers to discontinue its relationship with Ingenix, the wholly owned subsidiary of United Health Care which was at the center of the scheme. See generally, Health Care Report – The Consumer Reimbursement System is Code Blue, State of New York-Office of the Attorney General, January 13, 2009.
 Breuer, supra note 1.
 Since 1997, $1.2 billion in recovered funds have gone directly to the United States Treasury. See Breuer, supra note
Are All Policies Created Equal?by Scott Einiger, Esq.
Physician Disability Income Insurance Policies – Are All Policies Created Equal?
The life and disability insurance industry is composed of two main groups: those that are profit-oriented/stockholder-owned and those that are mutual insurers. Because the latter are primarily operated for the benefit of their policy holders, this particular business orientation has allowed mutual insurers to better weather the economic storm of the past few years. With declines in equity markets and large investment losses in insurers’ portfolios, stockholder-owned life insurance firms have suffered more than mutual insurers, who tend to have higher quality capital and a longer-term focus, thus being able to stand against unexpected downturns in the economy; mutual companies tend to use more traditional approaches that survive fluctuations in market cycles and are thereby less prone to the affects of economic stressors.
As a result of all of these factors, some experts feel that mutual insurers are providing more stable and beneficial disability income insurance policies in these challenging economic times. This particularly affects physicians who understand the importance of protecting their income and practices in the event they ever become disabled. Some carriers are offering insurance options that afford injured physicians the flexibility to choose between continuing to work and receiving partial benefits or not working at all and receiving full benefits. This differs from typical “own occupation” disability insurance (contingent on the individual being employed at the time the disability occurs), which does not provide that option at the time of claim.
Research has suggested that there are great discrepancies between what physicians expect of their “own occupation” disability insurance and what it actually is in practice. Physicians are often unaware of the stipulations and restrictions found in their own insurance contracts. One of the most important factors to consider when searching for the right disability income insurance policy is the definition of “total disability.” The contractual definition of this term has a significant impact on the types of benefits you are able to receive if you ever become disabled. Different disability insurers often use different terms (for example, modified own occupation, pure own occupation and specialty own occupation) to describe their own definitions of total disability, which can add to the confusion around this important consideration.
“Total disability” is broadly defined as the inability to perform all principal duties related to your regular occupation. When considering “own occupation” definitions of total disability, you must take into consideration your ability to perform the “principal duties” of your occupation at the time of the claim. These duties include tasks and aspects of the job that you perform on a regular basis and impact your ability to earn income. Also, the definition takes into consideration the actual duties you are performing (not just your title) when determining your eligibility for total or partial benefits. For instance, if, as a physician, you examine and diagnose but also perform procedures on a patient, if you are unable to perform all of those activities, you would be considered totally disabled. However, if you are still able to examine and diagnose (but not perform procedures) or are able to examine, diagnose and perform procedures, but now only a few days a week instead of full-time, you would likely be considered only partially disabled. Note that the insurance company decides what makes up a physician’s principal duties, and physicians do not have control over these definitions.
As mentioned above, there are different terms used by insurance companies to describe total disability. These differences come into play especially if you choose to work in a different occupation when you are unable to perform the principal duties of your “regular occupation” (defined as the specific occupation you are in at the time a disability starts, e.g., certain subspecialties, neurosurgery, pediatrics, etc., not generally “practicing medicine”). Under modified own occupation, pure own occupation and specialty own occupation terms, if you are unable to work in another occupation, or even if you are able to work in another occupation but choose not to, you will receive your full disability benefit. In some cases, if you are both able and choose to work in another occupation, under modified own occupation, you can earn a percentage of your pre-disability income yet still receive your full disability benefit. If you earn more than a certain set percentage of your pre-disability income, you will receive a proportionally reduced benefit. However, under pure or specialty own occupation, you will still receive your full disability benefit, no matter if you are able or choose to work and regardless of additional income. It is important to note that it is your choice as a physician, once deemed fully disabled, whether or not to work in a new occupation. Be sure to weigh your options and realistically evaluate how important and relevant the differences are in your particular circumstances.
In the end, the definition of total disability used by the insurance carrier is an important factor to keep in mind. So too is your decision whether to work in another occupation when you are unable to perform the principal duties of your regular occupation. Be sure to pay close attention, not only to the definition of “total disability” used by the disability income insurance policy carrier, but also to all the terms of the policy as a whole when making a decision about what plan to use. Some important factors to consider are whether the carrier itself is one that is highly rated, with a consistent reputation for excellence and longevity. In its special comment, Moody’s Insurance – Revenge of the Mutuals, August 2009, Moody’s Insurance Financial Strength (IFS) Rating History provided a history of the IFS ratings for fourteen mutual insurers. 
Be sure to discuss your concerns with representatives from your carrier to address specific questions and nuances in your circumstances and match you with the best policies to guard your future interests.
For more information about physician disability income insurance policies, please contact Scott I. Einiger, Esq. at 516-477-7909 or firstname.lastname@example.org