Troubling Reimbursement Scheme Impacting Out-of-Network Providers

Reimbursement disputes between healthcare providers and plans/plan sponsors (Payers) involving Out-of-Network (OON) claims have taken a center stage in the healthcare industry as well as in the court system.  Indeed, there has been a series of lawsuits filed by providers such as plastic surgeons and ambulatory surgery centers against self-funded, ERISA-regulated health plans that have either underpaid or failed to pay providers for OON claims.  Critically, Frier Levitt has become aware of a new troubling reimbursement scheme involving Third Party Administrators (TPAs) and their subcontractors called Repricing Companies. 

As a preliminary matter, healthcare providers should have robust policies and procedures, inclusive of clear and unambiguous Assignment of Benefits (AOBs), and judiciously exhaust appeal procedures with Payers when dealing with OON claim denials.  Notwithstanding the aforesaid, the new reimbursement scheme by TPAs and Repricing Companies requires in-depth legal analysis and practical considerations.  Specifically, TPAs have been syphoning reimbursements on OON claims from Payers and the providers by not relaying millions of dollars in reimbursements to the providers.  In fact, TPAs submit billed OON claims to the Payers and draw down reimbursements from the Payers’ trust funds, often the full billed amount that is not the actual reimbursement ultimately paid to the providers, in a bank account owned and controlled by them and earn interest off of funds that are due and owing to the providers.  At the same time, TPAs hire Repricing Companies to conduct a lengthy negotiation process whereby Repricing Companies would present a grossly reduced amount to the providers.  In the end, the providers either have to accept the reduced amount or are forced to collect the remaining balance of the OON claims from the patients.  More troubling, TPAs send Explanation of Benefits (EOBs) to patient informing them that they secured discount, i.e., difference between the billed amount and the reduced amount proposed by Repricing Companies, with the providers.  Such misconducts raise various legal issues including, but not limited to, violations of Racketeer Influenced and Corrupt Organizations (RICO) Act and Employee Retirement Income Security Act (ERISA).         

How Frier Levitt Can Help

With tightening margins and reduced revenue, providers should reexamine reimbursements for OON claims and take proactive measures to ensure payments to continue servicing patients.  Frier Levitt is cognizant of challenges that OON providers face especially in the national health crisis brought by COVID-19.  If your practice is dwindled by reduced or non-payments by payers and TPAs, please feel free to contact Frier Levitt to speak with an attorney.  We may be able to review your claims and present viable options at no cost