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The Charity Care Act was passed to create an opportunity for low-income patients to receive quality OON coverage at a reasonable or free rate. Many Out-Of-Network physicians though make the costly mistake of offering fee forgiveness to a majority of their patients. This can be deemed as “Fee Forgiveness” and give the insurance provider the ammo to bring a successful lawsuit against your practice.
Case Example: Biomed Pharms., Inc. v. Oxford Health Plans(NY), Inc.
“Circuit Court of Appeals affirmed the S.D.N.Y. court’s dismissal of the complaint. Biomed, a provider of injectable medications, sued Oxford Health Plans (NY), Inc., under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) , after Oxford reduced payments to Biomed for services that Biomed provided to a boy suffering from hemophilia. After discovering that Biomed had waived the patient's deductible and coinsurance obligations, Oxford launched an investigation and ultimately concluded that the waivers granted by Biomed were fraudulent. Because the deductible and coinsurance obligations were unpaid and no valid waiver had been granted, Oxford stopped paying Biomed the full amount charged.
Under the relevant provision of ERISA (Section 502, codified at 29 U.S.C. § 1132), "[a] civil action may be brought . . . by a participant or beneficiary . . . to recover benefits due to him under the terms of his plan." 29 U.S.C. § 1132(a). ERISA plaintiffs are thus "required to prove their case; to establish that they were entitled to that benefit pursuant to the terms of the Contract or applicable federal law." Juliano v. Health Mgmt. Org. of N.J., Inc., 221 F.3d 279, 287-88 (2d Cir. 2000). Oxford's determination that the beneficiary had not satisfied the plan's cost-share obligations was reasonable and supported by substantial evidence. Biomed's waivers were not based on a good faith inquiry into the family's financial condition, and it appeared that Biomed granted such waivers routinely. Given the beneficiary's failure to fulfill the deductible and coinsurance obligations or to obtain an appropriately vetted waiver, it was reasonable for Oxford to pay a reduced amount. These determinations were not arbitrary and capricious, and the judgment should be affirmed.”
The Court decided to deny Biomed’s suit on Oxford Health Services since, “Oxford has not demonstrated it is entitled to summary judgment on either of the grounds raised in its motion. The Court finds that genuine issues of material fact exist with respect to whether Oxford's decision to deny Biomed's claim for additional reimbursement for covered services was arbitrary and capricious and whether administrative remedies were appropriately exhausted.”
It is perfectly acceptable for your practice to offer discounted or cheaper rates to a small percentage of your patients. Subsequently though, if performed on a regular basis it can prove very costly to your practice. All providers must have a sliding scale in place to distinguish which patients qualify for free or reduced prices and which patients do not. Make sure to examine each patients income/financial situations thoroughly and follow all guidelines to set the justified bill for all individuals.
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