Sean Callagy - Attorney and Entrepreneur: ppo

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Tuesday, January 5, 2016

Can PPOs and PIP Coexist? | Callagy Law

The purpose of this post is to help assist healthcare providers and owners with questions they have concerning their business or relevant knowledge in the field. The Callagy Law team is knowledgeable in many law practice areas and will frequently post topics ranging from Medical Revenue Recovery, PIP, Workers Compensation, and Commercial Insurance. We hope to have this blog shed a light on many common questions.

Health care providers are all too familiar with PPO agreements. While these contracts certainly provide a benefit to providers, they ultimately cut into their reimbursement on applicable claims. An interesting question, though, is what happens in an instance where a PPO contract conflicts with a PIP Medical Fee Schedule?

Typically, insurance carriers will apply a PIP fee schedule rate regardless of whether or not an applicable PPO contract exists, provided of course that the PPO rate exceeds the fee schedule rate. If the PIP fee schedule rate exceeds the PPO rate, then the insurer will likely apply the PPO rate. In other words, in determining whether to reimburse the provider according to the PPO or according to the PIP fee schedule, insurance carriers are likely to pay the lesser amount.

While this may seem like an unfair ploy by the insurance carriers to pay out as little as possible (it is), it is not without legal basis. PPO contracts have been deemed entirely enforceable and consistent with the PIP No-Fault scheme; however, it is well understood that parties cannot contract outside of the law as such would violate public policy. Thus, insurance carriers make the case that the PIP fee schedule is a government regulation capping the rate of PIP reimbursement, and a PPO contract exceeding that rate is not enforceable.

While there is merit to this insurance friendly argument, it is open to legal dispute. Health care providers can make the argument that the parties’ freedom to contract trumps the PIP fee schedule and, on occasion, PIP arbitrators will find in the Claimant’s favor on this issue. One has an even greater chance of achieving this result if the carrier applies a PPO rate to at least part of the claim. For example, in a case where the provider bills for multiple treatment codes and not all of these codes are found on the PIP fee schedule, the carrier will likely reimburse the fee schedule rate where applicable, and the PPO rate where the fee schedule is not applicable. In such a case, the provider can argue that the carrier has effectively acknowledged the applicability of the PPO to the claim, and the entire claim should therefore be governed by the PPO contract.

To be sure, some PPO contracts specifically state that reimbursement should be rendered pursuant to the lesser of the PPO rate or any applicable State fee schedule. In such cases, the provider has little if any chance of escaping the applicability of the PIP fee schedule given the express terms of the contract. However, the fact that the drafters of these contracts find it necessary to include such language gives credibility to the argument that, absent such language, the PPO rate should stand despite the existence of the PIP fee schedule.

As for whether receiving reimbursement pursuant to the PIP fee schedule rather than at a PPO rate warrants the filing of a PIP arbitration, this is not entirely clear as this issue more often than not is decided in the insurance carrier’s favor. However, it is certainly another issue to be mindful of for cases that are already facing arbitration for an entirely different issue. The more issues a provider can raise in a given case, the more likely they are to receive an award of reimbursement.

We hope you found the information provided in this article helpful to various questions you may have had concerning the healthcare industry. For information pertaining to our services for medical providers, please click here. Please note, Callagy Law has recovered over $175,000,000 for medical providers, and that number grows daily. Please free to reach out to Sean Callagy of Callagy Law at any time for questions you may have concerning personal and business matters. Callagy Law offices are located conveniently in Paramus, NJ. Beyond the scope of information, Sean Callagy has developed multiple areas of our healthcare legal practice and business coaching. Feel free to connect with us on Facebook, Twitter or LinkedIn! Additionally you can subscribe to our daily videos on YouTube.

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Tuesday, November 3, 2015

PPO Contracts and PIP Arbitration | Callagy Law

N.J.A.C. 11:3-29.1(b) “. . . establish(s) medical fee schedules on a regional basis for the reimbursement of health care providers providing services or equipment for medical expense benefits for which payment is required to be made by automobile insurers under PIP coverage and by motor bus insurers under medical expense benefits coverage.”

However, medical providers often participate in a preferred provider organization, commonly referred to as a “PPO” agreement. Simply, medical providers participate in PPO agreements and accept discounted payments in exchange for certain benefits outlined in the contract.

Payment disputes often arise when an insurance carrier pays PIP coverage benefits in according to the PIP Fee Schedule Rates instead of according to the PPO discount rates. When an insurance carrier and a medical provider cannot settle such disputes, the medical provider may elect to have the matter resolved in binding arbitration, a forum administered by the New Jersey Department of Banking and Insurance (DOBI). Such matters are decided by a Dispute Resolution Professional (DRP).

Often, claimant medical providers argue that any improper PIP coverage payments constitute a violation of the PPO payment terms, resulting in a loss of the PPO discount. Suppose the PPO contract allows the insurance carrier to take a 20% discount of the billed charges, but payment was made per the PIP Fee Schedule. If DOBI regulations provide for payment to be made according to billed charges, then the claimant was entitled to payment at 80% of the billed charges, as outlined by the PPO contract in this scenario. In arbitration, the medical provider may seek the full amount of the billed charges, if the PPO contract allows for such redress.

Recently, a DRP agreed with this position in the matter Meadowlands Hospital a/s/o Walter Martinez v. GEICO (NJ-1540551). The DRP made the following finding:

Based upon a review of the record evidence, claimant’s argument is meritorious. . . . respondent did not pay claimant at 65% of the charges but rather inexplicably paid this facility at the New Jersey Physician’s Fee Schedule for CPT code 62310 and 62311. Clearly, this action was in violation of the terms of the PPO agreements and respondent loses the benefit of the PPO contract reduced payment rate. Claimant is awarded the balance sought for CPT codes 62310 and 62311 . . .

Similarly, in Raritan Bay Medical Center a/s/o D.H. v. GEICO (NJ-1596762), the DRP decided that the respondent insurance carrier had “failed to issue proper reimbursement . . . [, and] that the PPO Agreement states that Respondent is not permitted to apply any discount and Claimant is entitled to receive 100% of billed charges. Claimant is awarded $11,777.45 for codes 70450, 70486 and 72125.”

In NJ-1596762, the DRP construed the PPO contract as requiring the insurance carrier to issue payments within 30 days of receipt, per the contract’s payment terms. Because the insurance carrier issued payment per the PIP Fee Schedule instead of the PPO discounted rate, the DRP found contact payment terms were violated, resulting in the discount being forfeited.

Careful review of a PPO contract payment terms is essential for any medical provider participating in an binding arbitration.

We hope you have found this information helpful and interesting. Please reach out to us here with any questions or comments regarding healthcare legal matters, or if you are a medical provider that has questions regarding Medical Revenue Recovery, PIP, Workers Compensation, and Commercial Insurance.. Feel free to search us on Facebook, Twitter or LinkedIn!

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Tuesday, October 27, 2015

Beware of the Finality Clause of a PPO Agreement

The following article was written by Callagy Law’s Legal Team, and will focus on many common questions and concerns surrounding new developments, legal matters, and other procedures within the field of healthcare law Medical Revenue Recovery, PIP, Workers Compensation, and Commercial Insurance. Our mission is to answer any questions and give knowledge to many different aspects of these matters.

Under the New Jersey No-Fault laws, medical providers who treat patients injured in motor vehicle accidents can arbitrate PIP claims against No-Fault insurance carriers. Some of these medical providers have entered into PPO agreements with various insurance companies. These “preferred provider” contracts govern how the provider will be paid by the carrier. Generally speaking, the provider is willing to accept a lower reimbursement amount in exchange for faster reimbursement as well as inclusion in a network of preferred medical providers.

Unfortunately, medical providers may not be aware of some of the pitfalls in a PPO contract. One issue that can be troubling in a New Jersey PIP arbitration is what is commonly referred to as the “finality clause.” The “finality clause” is a provision in the PPO contract that typically states that the medical provider will “accept” whatever amount the insurance company pays, unless they dispute the amount in a certain period of time. We often see the dispute period as ninety-days. A typical finality provision reads something like the following:

“Neither the Medical Provider nor the Payor may dispute the amount billed or paid more than ninety (90) days after payment.”

“The payment made under this Agreement may not be disputed after ninety (90) days from payment.”

For example, suppose a provider provides a medically necessary service to a PIP patient, and then bills an insurer $1,000.00 and is entitled to that amount under the New Jersey PIP regulations. The insurer responds by issuing a payment in the amount of $500.00. Let’s say the PPO contract provides for payment at 90% of the amount billed. In such case, the provider should have been reimbursed $900.00. Let’s also say the provider does not dispute the payment, in the form of an official appeal, until six months later when it wishes to seek redress. Let’s also say that the carrier denies any additional payment as a result of the appeal. The provider then files a Demand for arbitration in New Jersey. The insurer will likely raise the finality provision as a defense against having to pay any additional money, and will argue that the provider may no longer dispute the amount paid, having waited beyond the contractual period to appeal. This defense may prove successful for the insurer.

The provider should pay attention to the provisions of its PPO contracts. If a finality clause is contained in the contract, the provider should file its objection to the amount paid in a timely basis and in accordance with any other requirements in the agreement. It is advisable to limit the defenses that may be prevent a hearing on the merits of the provider’s right to redress.

We do have arguments to make to overcome the defense of a finality provision, but the most effective arsenal we can have to prevail is an appeal (with proof of delivery) demonstrating the medical provider indeed did timely dispute the payment in accordance with the PPO contract.