Callagy Law represents
several ambulatory
surgery centers (“ASCs”) in actions for PIP recoveries, and one of the most
common issues that we arbitrate for our clients is the out of network penalty
(OONP). Some insurance carriers also
call this penalty a “Vendor Utilization Network” penalty (VUN). This penalty is applied when a patient
receives medically necessary services at an ASC
which is not in-network with the carrier.
When the carrier processes the bill, they take a 30% penalty from the
amount due to the ASC,
and issue payment, along with an EOB for 70% of the balance.
The receipt of the EOB with 70% of
the balance is almost always the first time the ASCs
are informed that they might be subject to such a penalty.
While this seems like an unfair, almost ex post facto,
application of a penalty to an ASC,
the carriers do have a valid argument, in that, the first time the carrier even
knows that the ASC
is treating the patient is often when the carrier receives an ASC
bill for hosting the procedure. The
carriers argue that it would not have been possible to inform the ASC
of the penalty prior to the services being hosted.
At arbitration,
arbitrators will typically uphold the 30% penalty if the notice of the penalty
has been sent to both the patient and the treating doctor (who typically
performs the treatment at the ASC). If both of those parties have received proper
notice, the arbitrators usually rule that the carriers have done everything
they can to inform all parties of the OONP.
While this might seem like an unavoidable pitfall for the
surgery centers, it is important to note that, technically, the 30% penalty is
a co-payment penalty. This means that the ASC
is still entitled to recover the 30%, but that they have to get the money
directly from the patient. Typically, an
ASC
is not in the business of being debt collectors, but they are still entitled to
this money.
The best way for an ASC
to protect themselves in situations like this is to communicate with the
treating doctors. Ask them if they’ve received
a copy of the carrier’s Decision Point Review Plan (DPRP) (which will include
language about the penalty) and ask for a copy of the DPRP. If the DPRP does provider for the OONP, the ASC
should communicate with the patient and let them know about the co-payment up
front. Maybe even create a form or
acknowledgement that the patient will sign as part of the paperwork when they
first come into the ASC. It is much less likely that the patient will
want to send the ASC
a large lump sum payment after the fact, especially if they had no idea up
front that it might be an issue.
Of course, if the ASCs
want to host these types of procedures and take their chances with the
potential application of a 30% co-payment penalty, that is a business
decision. Knowledge, however, is power,
and ASCs
should be making such a decision with their eyes wide open to all of the
potential risks.
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