Recoupment & Fee Forgiveness: How to Respond to an Insurer’s Refund Request

Recoupment & Fee Forgiveness: How to Respond to an Insurer’s Refund Request

What you should do to combat insurance providers attempts to bring costly claims against your practice!

Knowing what to do/not to do prior to receiving recoupment, fee forgiveness, or a balance billing attempts is critical.

‍Often insurance providers will bring claims against OON providers in hopes that they will simply succumb to the fears and pressures of possible further penalties. There are certain steps that all OON providers should know to perform when dealing with each of these cases!

Depending on how you initially respond to the insurance carriers claims can have a major impact on whether or not there are future attempts/claims brought against you and your practice. Physicians and centers that do yield to claims and “pay-up” are often put on what is known as an “easy-list.” This is a list of known providers that are seen as a “easy” win for insurance carriers and will pay fees if claims are brought against them.

Case Example

Arapahoe Surgery Ctr., LLC v. Cigna Healthcare, Inc., 2015 U.S. Dist. LEXIS 28375, 2015-1 Trade Cas. (CCH) P79,074 (D. Colo. Mar. 6, 2015)

“This case is against a Surgery Center and is interesting because the Surgery Center’s lead attorney was Joe Whatley, Esq. from Whatley Kallas LLP. This is a lawsuit filed by multiple Colorado-based ASCs against Cigna where Cigna has counter-sued the ASCs under ERISA, RICO, State Criminal Laws, Civil Theft, Fraud and other state law theories. This action was commenced by several OON ASC’s in Colorado District Court. Cigna pays its OON providers a “Maximum Reimbursable Charge”. Cigna claimed that it is not required to cover OON claims if the pts are not billed or are not asked to pay their applicable cost-sharing responsibility. Cigna contents that the ASCs operated a “fee- forgiving” or “dual-pricing” scheme in which ASCs promised pts that they would receive medical services at in-network rates in order to induce them to have their surgeries at the ASCs. The ASCs estimated the rates charged to pts at Medicare Rates and then billed Cigna for very inflated rates. Cigna further contends that the ASC’s waived coinsurance and deductibles. Cigna contends that the charges submitted to it by the ASCs were “phantom” charges because the ASCs never intended to collect those amounts from the pts. While the ASCs disclosed to Cigna on their claim forms that “[t]he insured’s portion of this bill has been reduced in amount so the patient’s responsibility for the deductible and copay amount is billed at in network rates,” they did not disclose how the charges were computed or that the ASCs did not charge the patients the amounts later submitted to Cigna. Cigna alleges that, in reliance on the “phantom rates” in the ASCs claims, they misled and induced Cigna into overpaying reimbursements for medical services that should have been excluded from plan coverage because the “phantom rates” were not the ASCs’ “normal charge” for that service. Cigna also alleges that the ASCs’ billing practices induced patients to breach the terms of their plans. Cigna counterclaimed for recoupment of millions of dollars of claim payments. The ASC by Joe Whatley moved to dismiss Cigna’s counterclaims and the court dismissed some counts but refused to dismiss other counts. The Court dismissed Cigna’s counter claims filed under RICO and COCCA; the Colorado Criminal Code and ERISA Section 502(a) for restitution and declaratory relief; and state law claims of fraud and misrepresentation claims as pre-empted by ERISA. Cigna’s Counterclaims continue and are not dismissed as to injunctive relief under ERISA Section 502(a) and state law claims for unjust enrichment and tortious interference with contract. This decision was made on 3/6/15. While this Anti-trust lawsuit continues, the merits of the party’s arguments have not yet been rules upon. We will report any developments”

Arapahoe Surgical Center was able to have Cigna’s counter claims dismissed. Cigna was seen to be collaborating with certain Hospitals in the area to damage the surgical center, in reaction to the suit Arapahoe had brought against them initially. This is just one example of an OON provider standing up to the large insurance carriers and knowing what to do when claims were brought against their practice.

Have a Plan To Avoid Audit Attempts

Health Plans are searching far and wide for potential audits or ways to get their paws back on your capital. They often will hit you with recoupment attempts hoping your practice will give in out of fear. Know what the steps are to avoiding paying these fees and out of the insurance carriers line of view.

Recoupment Defense:

1. Respond in writing objecting to the recoupment, take back, refund demand, or special investigation.

2. Make sure you remind the health plan in writing that they are obligated to comply with Federal ERISA Regulations by virtue of the Health Plan Action. This is essentially an “Adverse Benefit Determination” or “ABD” much like a claim denial is, as defined by ERISA.

3. Make an ERISA Demand in writing. You are entitled to anything “relevant” to the ABD, so request the health plan’s entire investigative file including any internal memos, emails, etc.

4. Take allegation of insurance fraud seriously, but determine the exact reasons that the health plan believes fraud was committed. Most times the term is used to intimidate only and there is little to no evidence of insurance fraud.

5. Do not agree to refund anything until ERISA Demands have been complied with by the health plan.

What Should I Do If I Am Potentially Going To Be Audited?

1. Send a first and second level appeal. Exhaust administrative remedies.

2. Under state law you have usually anywhere from four to six years (depending on the state) to pursue patients for balances under the theory of breach of contract.

The Patriot Group has been providing our audience and clients with tips to assist their fight of these recoupments on a regular basis.

Check out our Ebook on “The True Cost of Balance Billing & The Rise Of Audits”

The True Cost Of Balance Billing And The Rise Of Audits

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