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Expert Educational Article: ERISA, The Secret to Recover Provider Revenues

March 23rd, 2011
in Employment & Benefits, Expert Guest Blog Entries |

This expert educational article has been contributed by Lea Fowler. Lea is Co-Founder of ERISA Revenue Solutions. Her article describes how ERISA can be used to recover denials from commercial payers. According to Lea, ” ERISA truly is the secret weapon that all types of providers can use to increase their revenues with minimal impact on their current operations. There are a dozen or so innovative pioneers in the medical community currently using this process to help recover money that their internal processes were unable to do.”

You may contact Lea via email  at lfowler@erisarevenuesolutions.com

ERISA, the Secret Weapon to Recover Provider Revenues

As you will see in the rest of this article ERISA can be used to recover on denial reasons such as medical necessity, pre-authorization, excluded/non-covered, experimental and investigational, and usual, customary and reasonable. ERISA appeals focus on the contract between the employer and the employee vs. the traditional method of hospital appeals which is based on the contract between the provider and the insurance company. ERISA also allows for
the ability to go back to January 1, 2003 on denied claims and appeals.
ERISA is a federal law that was signed into effect in September 2, 1974 and reaffirmed as a vital part of the Healthcare Bill signed into law on March 23, 2010. Aetna v. Davila, June 21, 2004 a United States Supreme Court unanimous ruling confirms that ERISA supersedes state law in dealing with issues involving employee benefits such as health care insurance:

“Held: Respondents’ state causes of action fall within ERISA §502(a) (1) (B), and are therefore completely pre-empted by ERISA §502 and removable to federal court. Pp. 4—20.

(a) When a federal statute completely pre-empts a state-law cause of action, the state claim can be removed. See Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 8. ERISA is such a statute. Because its purpose is to provide a uniform regulatory regime, ERISA includes expansive pre-emption provisions, such an ERISA §502(a)’s integratedenforcement mechanism, which are intended to ensure that employee benefit plan regulation is “exclusively a federal concern,” Alessi v. Raybestos&nbhyph;Manhattan, Inc., 451 U.S. 504, 523. Any state-law cause of action that duplicates, supplements, or supplants ERISA’s civil enforcement remedy conflicts with clear congressional intent to make that remedy exclusive, and is therefore pre-empted. ERISA §502(a)’s pre-emptive force is still stronger. Since ERISA §502(a)(1)(B)’s pre-emptive force mirrors that of §301 of the Labor Management Relations Act, 1947, Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65—66, and since §301 converts state causes of actions into federal ones for purposes of determining the propriety of removal, so too does ERISA §502(a)(1)(B). Pp. 4—7.

(b) If an individual, at some point in time, could have brought his claim under ERISA §502(a)(1)(B), and where no other independent legal duty is implicated by a defendant’s actions, then the individual’s cause of action is completely pre-empted by ERISA §502(a) (1)(B). Respondents brought suit only to rectify wrongful benefits denials, and their only relationship with petitioners is petitioners’ partial administration of their ERISA-regulated benefit plans; respondents therefore could have brought §502(a)(1)(B) claims to recover the allegedly wrongfully denied benefits. Both respondents allege violations of the THCLA’s duty of ordinary care, which they claim is entirely independent of any ERISA duty or the employee benefits plans at issue. However, respondents’ claims do not arise independently of ERISA or the plan terms. If a managed care entity correctly concluded that, under the relevant plan’s terms, a particular treatment was not covered, the plan’s failure to cover the requested treatment would be the proximate cause of any injury arising from the denial. More significantly, the THCLA provides that a managed care entity is not subject to THCLA liability if it denies coverage for a treatment not covered by the plan it administers. Pp. 7—12.” (Thomas, 2004)

In addition to the fact that ERISA supersedes all state law is the fact that you can also recover on denied claims that go all the way back to January 1, 2003. Provider/Insurance Company contracts historically favor the insurance company especially when it comes to appeal restrictions placed on the provider. Generally, insurance companies allow up to 60 days after denial for providers to appeal. Under ERISA if the Explanation of Benefits (EOB) does not meet the criteria set forth in section (g) of the Federal Register then the applicable limitation found in the employee’s Summary Plan Description (SPD) does not apply until all the criteria of section (g) are met. In Spectrum Health v. Valley Truck Parts, May 30, 2008, and Solien v. Raytheon LTD Plan, June 02, 2008, the court determined that the benefit denial notification and EOB, explanation of benefits, issued to the participant were insufficient to trigger 180 days according
to DOL guidelines ERISA § 2560.503-1(g).

Medical necessity, denial of days for pre-authorization and treatments that were deemed experimental and investigational are major issues for clients I have helped in the past. This is further evidenced by research completed by the Center for American Progress article Insurers’ Black Box in which Wendell Potter, a former senior public relations executive for Cigna Corp. states:

“Claims denials are probably the most effective way the industry has to manage medical expenses.” (Paltrow, 2009)

ERISA § 2560.503-1(h) deals very effectively with these denial reasons with secondary support by each state’s utilization review statutes.

In the case of excluded/non-covered denials ERISA states if the Summary Plan Description (SPD) does not specifically list the excluded/non-covered service in the Exclusions  section then that service is payable. I personally recovered over one million dollars for an implantable device supplier using this strategy. The major reason for this out-of-network client’s denials was that as a third party supplier they could not bill for their own devices even though the hospital did not pay in advance for the devices. Two major insurance companies actually advocated fraudulent billing by the hospitals so this client would receive the money owed to them. As I am sure you are well aware, most provider contracts state that anything used in a surgical procedure is included in the payment for the surgery. There are also carve outs for implantable devices but they are becoming the exception rather than the rule. Obviously, the insurance company wants to pay less money therefore, they want the provider to bill for the device instead of the actual supplier. Unless the Summary Plan Description specifically states that the implanted device is excluded/not covered or that third party device suppliers cannot bill for their supplied equipment then the device has to be paid for per the Summary Plan Description.

In regard to out-of-network providers whose denials are primarily made up of exclusions and usual, customary and reasonable reasons ERISA has very specific requirements that the payer must fulfill in order to justify these denial reasons. I previously covered the exclusions aspect so the focus will now turn to usual, customary and reasonable. Both the Department of Labor (DOL) and ERISA specifically state that any rates, tables, methodologies, etc. used in the
determination by the payer must be supplied upon request. Payers are not inclined to release this information for “proprietary” reasons and are more willing to either pay or settle on these cases. On February 13, 2008 New York Attorney General Andrew M. Cuomo launched an industry wide investigation into a scheme by health insurers to defraud consumers by manipulating reimbursement rates. His efforts resulted in the discontinuance of Ingenix (an out-of-network repricing company) being used by several major payers in New York and a fifty million dollar
settlement by United Healthcare (UHC) to start up an independent database for usual, customaryand reasonable data.

ERISA is not the answer for every situation though, there are certain types of plans that ERISA does not cover. Medicare, Medicaid, school plans, church plans, workers compensation, military plans, governmental plans, and individual plans are not covered under ERISA. This is not to say that recovery cannot be done on some of these plans. I have successfully recovered money for clients on church, school and individual plans using non-ERISA methods. With the exceptions listed above under U.S. Code §1002 any employer who supplies health insurance asan employee benefit is subject to ERISA.

“For purposes of this subchapter:

(1) The terms “employee welfare benefit plan” and “welfare plan” mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise,

(A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits,
apprenticeship or other training programs, or day care centers, scholarshipfunds, or prepaid legal services “

This article is intended for basic education purposes so I apologize that detail was not given in how to apply the court cases or sections of ERISA referred to above. I would be happy to further educate anyone who is insightful enough to grasp these concepts in an effort to increase their revenues with little or no cost to them. My name and contact information appears below.

Tags: ACI publications, DOL, Employment Law, ERISA, Legal conferences
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