Clash over cash: Three case studies
Examples provide lessons to live by
A payer suddenly tells you it won't pay for services already rendered. It's a common and frustrating problem in the managed care era, say health care attorneys.
Hospital Home Health asked legal experts to provide some case studies of these types of clashes over payment. Here are just three examples of this growing problem:
r The case of the wrong care provider.
A home care agency in New Jersey provided high quality care to a patient, but decided to save the payer money by using LPNs instead of RNs, says Lynn S. Muller, RN, BS, JD, CDMS, an attorney and partner with Muller & Muller in Bergenfield, NJ.
"The home care company thought it was doing the right thing in trying to save money, and the RN was not necessary due to the acuity level of the case," Muller says. However, the payer was an ERISA-controlled health care policy through a union benefit, and the health policy contract clearly stated that the care must be provided by RNs. The payer refused to pay the $22,000 bill because the care was provided by LPNs, and the payer won in court.
"The home care agency was trying to save the company money, and it wasn't very wise of it," Muller explains. "If there's an unusual third party payer, agencies should ask to see the portion of the contract that relates to services they're providing."
r The case of the prior authorization.
Many insurers do not give pre-authorizations to providers, and even some insurers that do, include a disclaimer that says the authorization is dependent upon the payer reviewing the care afterward, says Mary Elizabeth Derwin, JD, MS, RN, CNAA, staff attorney with the Visiting Nurse Association Inc. in Oak Park, MI.
However, Derwin was involved in a case in which the home care agency had received a pre-authorization from a managed care organization (MCO). "The contract between the payer and provider clearly said that all services had to be prior approved," Derwin says.
The agency received written approval from the payer. However, after the services were provided, the payer notified the agency that the care was not going to be covered. The MCO acted as a broker for a self-insured subscriber group, and the group's written contract excluded the services that were authorized. The agency won this case because of the pre-authorization, Derwin says.
r The case of the missing case management.
The home care agency and payer made a series of mistakes in handling this case, or it never would have become as big of a problem as it did, says Renee Krul, RN, BSN, CCM, an independent case manager from Elizabeth, NJ, who was called upon as an expert witness in the case.
The agency's big mistake was not providing case management of what clearly would become an expensive case, Krul says. The home care agency was asked to provide 24-hour continuous care to a dying woman, who did not have high-tech needs. When the family and home care employees called the payer, a low-level claims worker assured them that the woman had adequate insurance coverage for the services.
"The family signed an agreement to pay for unpaid services, with the understanding that they expected their insurance company to pay for the home care," Krul says.
The patient's bills climbed to $60,000 before she died. Then some months later, the patient's family was sent a notice that they would have to pay for the entire bill because the insurance company rejected the claim. The insurer argued that the continuous care was not skilled nursing care, and therefore, it was not covered by the policy, Krul says.
Eventually, the home care agency sued the family for $180,000, which included interest and legal expenses. The family's attorney brought the insurer into the suit, claiming the care was skilled nursing care because skilled nurses provided it. However, that definition of skilled nursing was rejected by the court. The attorney then hired Krul to review the case.
"I looked at the case from the expectation that both the insurance company and the provider had a certain responsibility to their clients and the public to provide them with adequate knowledge and to do things proactively," Krul says. "The home care agency had reassured the family all along that they had worked with this insurance company before and there wouldn't be a problem," she says. "But that didn't mean anything. What meant something was the family had signed a contract upfront."
Krul's legal argument was that the patient's policy entitled her to case management, and although the payer had case managers who could have handled this case, none were assigned to the patient. A case manager might have referred the patient to hospice care or at least informed the family that skilled nursing care was not needed and would not be covered by the insurance plan.
"My approach was to make the payer accountable to its own process," Krul explains. The family won based on that argument, and a judge ruled that the insurance company should pay $180,000 to the family, who in turn was ordered to pay the home care provider.
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