Health Plans and Suspect Physician Practices

KenB · May 2003

Hi

I have a couple of questions. Our organization has a self-funded health plan and we have learned about some suspect practices by some physicians that many of our staff see. And I'm wondering about the legality of it and whether there are certain actions we can take.

One is that the physician offers the patient a lower fee if they pay cash vs. whether they bill the insurance, which is us. I believe some states allow doctors to do this. We are in NY and I'm wondering if anyone knows about this.

Another is that the physician offers some alternative holistic services which are not covered procedures under our plan, yet bills us as a medical consultation at a high rate. I do know that this could be insurance fraud. One of the things we are thinking of doing to stop this is to have our third party administrator suspend accepting direct billing from the physician so that they would have to collect from the patients who would then submit the claims to us in the hope that this will prevent the doctor from overbilling. If this doesn't work, we are thinking about not allowing any reimbursement to this doctor, either directly or from a claim submitted by a plan participant.

I'm curious if a plan is allowed to do either of these -- refuse direct billing from a specific doctor or to cut off any claims paid for treatment by such a doctor. Seems the first approach wouldn't affect the plan participants, though the second approach could and may not be allowable.

I'm wondering if anyone has any thoughts or insight on this and the laws governing.

Thanks.

KenB

System · May 2003

It appears the physician in question is making sure he/she gets reimbursed for the complete bill. Does your plan set forth anything regarding the cost related to holistic med treatment? You might want to review your plan and get with the administrator to change or add policy coverage or non-coverage of certain treatments. Most plans have some provision to address certain treatments and reimbursement provisions. Where do deductibles figure into your plan? Not much help here, just more issues for you to consider.

MS HR · May 2003

I'm the plan administrator for our self-funded health insurance (PPO). What I would do is see if our Third Party Administrator could take action to cancel their contract with the doctor and make him a non-preferred provider. That way if employees went to him for treatment it would be considered out of network and they would have higher deductibles, co-pays, etc. It also prevents the doctor from suing us for interfering with his practice and right to earn a living. If you have a TPA and they have a contract with the doctor you could be legally liable for any changes you make that would have an adverse effect on the doctor's practice.

KenB · May 2003

Thanks for your reply. Actually our plan has some very specific coverage of alternative holistic services and spells out what it covers, the benefit that is payable and the limit on such services. So if I understand what you're saying, the plan only has to cover those specific treatments up to the limits and if this is what the physician is performing, as opposed to general medical procedures, she should bill for those treatments and get paid according to what the plan covers. She should not be allowed to be reimbursed for her full physician time that she would bill for a medical procedure, just because she is an M.D., if she is only offering holistic treatment and in those cases should be treated equally with any other holistic practitioner.

Would you agree with that?

MS HR · May 2003

that's correct.
Analogy: If I'm an othropedic doctor and massage therapy is covered under the plan and I give a massage to a covered employee, all I am entitled to is for the massage services, not my normal $200 per hour consultation fee.
But, again, I'm not an attorney, so here's what else I would do:
1. Contact your broker if you use one. I always bounce these things off a broker who does this sort of thing for a living. It's like walking into a used car lot and trying to haggle with a salesman who does this every day for a living.
2. Bottom of the line, is that as plan administrator I personally would contact the doctor (or at least his billing people) and express my concerns.
3. Have your TPA review the EOB's in detail and give you an opinion.
In other words, unless you are the consummate professional in health care administration you need to be real careful in this area as the doctor could sue you for defaming his character and practice. As one HR guy to another, please be careful. Everyone seems to want a reason to sue someone nowadays.

NaeNae55 · May 2003

I work for a PPO network, and I can tell you that we are very particular about who we let in the network. Our applications are large and require a great deal of documentation and verifications and we are quick to check out complaints.

First, is your self-funded plan using a network? Most plans do, but not all. If you are using a network, which may or may not be associated with your TPA, I would call my broker or TPA contact and have them check this out. You may be misunderstanding what is going on, or you may be right on the money. But, it is quite possible no one at your TPA or PPO knows anything about any hanky-panky.

Case in point: I remember years ago I worked for a TPA-type outfit with their own PPO. One of the monthly reports indicated that a certain physician had a particularly high utilization and it had been growing for months. At about that time, we decided to start sending out EOB's (Explanation of Benefits...yes, it was a very long time ago). We also tried sending letters to a few of the heavy-using patients. Some had been going back every day because the doctor kept telling them to just come back tomorrow for a follow-up. One or two were able to prove they were out of town several of the days they had an office visit. We immediately stopped paying the provider and filed a lawsuit. This investigation took months though. So it may be a while before you find out if there is something illegal or unethical taking place.

Every type of office visit or treatment has a specific code (ICD-9 or CPT) which tells insurance carriers, etc, what type of treatment the patient received. There are even modifiers to help be more specific on some codes. If the physician is doing one type of treatment, but billing for a different one for more reimbursement, that is FRAUD. That should be addressed immediately. If they are asking for cash with a discount instead of billing, that would seem to back up the idea of fraud, though I am not aware of any law against it.

Call your broker or TPA right away. You need to put a stop to any provider taking advantage of your plan or your employees.

Sorry to be so long-winded. It's the only way I know how to be. x:D

Health Plans and Suspect Physician Practices

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