OVERVIEW:

The world has not changed. Medical insurers try to maintain healthy profits by, in part, keeping reimbursements to medical providers as low as possible. On the other hand, medical providers try to get a fair shake based on their education, specialization, financial risk and hard work. Part of the insurer’s strategy is to negotiate rates with medical providers at levels that they often say is patently unfair, and therefore when the medical providers are not bound by the network contracts, they rightfully seek much higher reimbursement. Obviously the insurers bristle at the higher fees charged for out of network medical care.

This “tug-of-war” has resulted in a number of lawsuits throughout the United States that underscore the ying and yang, raise questions about the propriety of waiving co-pays and deductibles, as well as the propriety of using patients as leverage against the insurer’s.

THE NITTY GRITT

Recently, Aetna sued several California surgery centers for an alleged “fraudulent billing scheme” alleging that the surgery centers induced physicians to refer patients for surgery centers (ostensibly out-of-network centers) with promises that they would not have any financial responsibility for their coinsurance and deductibles.

Aetna claims that the charges that were thereafter submitted were artificially inflated driving up the cost of health insurance coverage.

(Presumably the allegation of inflated billing was supposed to strike a cord of public outrage which may be tempered by a Feb. 1, 2012 report in the Wall Street Journal that Aetna’s earnings rose 73% as the health insurer continued to benefit from light medical costs amid a sluggish pace of patient visits to hospitals and doctors.)

Aetna alleges that providers are liable for engaging in a fraudulent and illegal kickback scheme when they waive the patient’s coinsurance and deductibles, even if the provider bills the patient but ultimately doesn’t collect.

While I have not had the opportunity to read the California complaint, the information relayed regarding the case has been distilled from various published sources, and it is clear that the defendants have a very different view.

Defendant’s attorney, DaronTooch, a partner Hooper Lundy & Bookman, (defendant’s law firm) says that “this is a calculated move by Aetna to steer patients to contracted facilities.” He says that “the complaint is full of misstatements of fact and law.”

It appears that Aetna and other health insurers do not have standardized fees paid to network providers. Every contract is separately negotiated and apparently the major driving force in negotiating the contracts is the relative strength of the negotiating parties .

For example, if one medical organization controls the majority (or all) of the hospitals in a certain locale, and the health insurer wants to gain a foothold in that market, they do not have a strong negotiating position with the hospitals. The same obviously holds true with any independent physicians Association (IPA) that has a strong negotiating position based on its membership roll, and the specialization and geographic reach of its constituency.

To the extent this is true, the prices for which medical care is contracted are not grounded in allowing medical providers to earn a fair profit, but essentially turn into an unprincipled money grab. Doctors feel that in many (if not the vast majority of) cases they are left holding the short end of the stick. It is easy to understand why. The medical insurers are the Goliath and the doctors are generally the David, except in this case David does not necessarily conquer Goliath.

From the insurer’s perspective, out-of-network surgery centers charging many times more than the amount of the contracted rates that in network centers are allowed to charge gives the insurer’s pause.

The questions:

1. Are high out-of-network charges a natural consequence of taking unfair advantage of medical providers when insurers have the clout, and therefore when they lose that clout there is a certain understandable payback.
2. Are the insurers at least in part responsible for the out-of-network fees, to the extent that their reimbursement relates to the customary charges in a geographic locale.
3. Is it improper for medical providers to waive co-pays and deductibles, and even if it is improper, should that render the medical provider liable to disgorge the profits earned on the medical procedures for which they waived the co-pays or deductibles.
4. How far must a medical provider go in trying to collect the co-pays or deductibles before it is considered a waiver. Is one invoice enough, two invoices, collection agency intervention, or must the patient be sued and must a judgment be obtained.

There is a somewhat similar New York case that is currently pending, as well as a lawsuit against certain pharmaceutical companies for providing coupons toward the co-pays on branded drugs. However, the details of those cases are best left for another day.

In summary, what do you think?

Certitude is not the test of certainty. We have been cocksure of many things that were not so. Holmes

I was recently in India and left the television in my hotel room on through the night. There were successive commercials from Nivea promoting a cream that one makes one’s skin lighter. Apparently, the Indians are very sensitive to the fact that they have a dark complexion and they are trying to use various methods to address this issue. Oftentimes, one can observe people who cover themselves (despite the sweltering heat) to block the sun’s rays. (This is aside from those who cover themselves for religious reasons – the litmus test is how they dress when indoors or after dark)

As an American, I am used to the well-established tanning salon industry that is owes it success to the notion that fair skinned Americans seek a darker (tanned) complexion. For those Americans who are concerned about potentially harmful UV rays, spray on tans are a viable alternative.

The obvious question I had – who is right, is anyone right, what is real beauty etc. etc.

This cultural difference seems to underscore the idea that so many things in life are not absolute – despite the authoritative tone taken by many when stating issues of preference, opinion or taste.

The issues that are often hotly contested are social, financial, political or in the case of an attorney – legal.

As an attorney I often face adversaries in the litigation arena, and recognize that it is important to try to see and understand that there is another side to the story, that while I must zealously represent the interests of my client(s) and do whatever I can within ethical boundaries to win the case, many times there is another side to the story. In fact, failure to recognize the other side’s position precludes a litigator from properly preparing their own case and succeeding in litigation, arbitration or negotiating the best settlement. If an attorney’s attitude is that they can’t lose a case, they often find out that they not only can but do. On the other hand if an attorney tries to understand the other side, they are usually better prepared and that preparation usually yields positive results.

The moral of the story is that there are few absolutes.

What do you think.