Maryland commission investigates charges of unlawful claims denials
The Maryland Insurance Administra tion is looking into charges by the state’s hospitals that two managed care companies illegally delay or deny payment for providers’ claims for payment.
The conduct review is the most recent shot fired in Maryland providers’ battle against alleged systematic violations of professional standards and state statutes regarding payment for medical services.
In addition to the complaint by the Maryland Hospital Association, the state insurance commission also is investigating similar complaints by MedChi (the state medical society) and the Maryland chapter of the American College of Emergency Physicians (ACEP).
"Our complaint [filed] with the insurance commissioner has nothing to do with problems with the law, but rather ensuring compliance with the law," ACEP lobbyist Barbara Brocato said.
The complaint that triggered the market conduct review alleges that Mid-Atlantic Medical Services, Inc. (MAMSI) and Blue Cross/Blue Shield of Maryland repeatedly rejected legitimate claims for covered services, e.g., denied coverage for lengths of stay that were clinically justified based on the individual case history of a patient.
The consolidated complaint was filed by MHA, the Maryland Association of Hospitals and Health Systems, on behalf of the state’s 50 acute care hospitals. At this point, however, the review is limited to Blue Cross/Blue Shield of Maryland and MAMSI. The review is not expected to be complete before the end of the year.
Simply utilization management?
"The contention that we’re not paying bills for no good reason just is not valid," said Blue Cross/Blue Shield of Maryland Director of Corporate Communications Jeff Valentine. "We want to pay for appropriate care that’s provided in the right place at the right time and of the right quality. That’s the definition of utilization management."
The association estimates that 10% of hospital insurance claims in 1997 were denied payment, MHA spokeswoman Nancy Fiedler said. "Ninety percent of that is rejected with a common rejection letter saying the care is not medically necessary. We certainly believe the care is necessary." She said denials of hospital claims in Maryland of the seven largest health insurers and HMOs in the state rose from 9,617 in 1996 to 19,842 in 1997.
"This is a market conduct investigation unlike anything we’ve done before," Maryland Associate Commissioner for Life and Health Insurance Donna Imhoff said. "It took quite a bit of planning to determine even how to go about it."
Mr. Valentine partially attributes the clash between Blue Cross/Blue Shield of Maryland and the hospital association to Maryland’s hospital rate-setting system. He said the system insulates hospitals from market forces and removes incentives to increase efficiency. "In Maryland, we have a unique situation where the payors have a stake in the cost of health care and the physicians have a stake, but the hospitals are outside of the competition loop, if you will," he said.
Violations of the professional standards, which require payment for care under circumstances a prudent layperson would consider an emergency, form the basis of the complaint by the Maryland chapter of ACEP. Maryland became the first state in 1993 to incorporate the "prudent layperson" guideline into statute.
HMOs required to pay for EMTALA screenings
Maryland emergency physicians also are protected under expansions to the law passed in 1996 and 1998. Two years ago, legislators required that HMOs must pay for emergency department care when they direct a patient to such care, e.g., when a patient is told by a clinician to proceed to the emergency room after hours. Revisions in that year also require HMOs to pay for screening mandated under the federal Emergency Medical Treatment and Active Labor Act (EMTALA).
Further 1998 revisions require HMOs to pay for assessments and screenings mandated under EMTALA and give the Maryland insurance commissioner the latitude to impose fines of up to $5,000 per violation of the statute.
In the emergency physicians’ case, 15 physician groups have submitted about 1,000 complaints for review by the state, associate commissioner for consumer complaints Joy Hatchette said. "That one is obviously going to take a lot longer because of the magnitude of the complaint itself. If someone wants to give me a pot of money to hire some more people, I’d love to have it."
The focus of the complaint by Med Chi, the Maryland State Medical Society, is the interpretation of a law that prohibits health insurers and health maintenance organizations from recouping overpayments by denying current reimbursements if the original payment is more than six months old.
When does six-month window begin?
A May 1 interim order from the Maryland Insurance Administration clarified that the law’s Oct. 1, 1997, effective date applies to denials on or after that date, not merely claims. The order rejected claims by MAMSI that the law applies only to new claims from the Oct. 1 effective date and established that claims paid from April through September of 1997 are protected by the six-month window. In the second part of the case, the Maryland Insurance Administration is in the process of investigating 75 complaints of illegal retroactive collections by MAMSI under the law.
MAMSI is complying with the interim order but withholding comment on the decision until the resolution of the investigation of the 75 claims, MAMSI spokeswoman Elizabeth Sammis says. A suit in circuit court would be MAMSI’s vehicle for challenging a final order, associate commissioner Ms. Hatchette said.
A May 28 opinion from the Maryland Attorney General concurred with the interpretation of the law by the Maryland Insurance Administration. It also clarified that the legislation does not prevent payers from recouping overpayments after six months through other means, e.g., sending a demand letter or suing for payment.
Contact the MHA at (410) 321-6200; Blue Cross/Blue Shield of Maryland at (410) 998-5182; and the Maryland Office of the Attorney General at (410) 576-7003.
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