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KOMahonyLaw - Law Office of Kevin P. O'Mahony
Healthcare, Business
& Litigation Services

Healthcare Provider/Provider & Provider/Payer Disputes

At the Law Office of Kevin O’Mahony, we represent healthcare providers and businesses in both provider/provider and provider/payer disputes. Providers are the hospital or health system, physician or physician group, laboratory services provider, ambulatory care center, dentist, chiropractor, optometrist, therapist, nurse or other party that provides healthcare services and seeks payment for one or more claims from a payer.

Payers or “payors” (both spellings are often used) are the health insurance companies or other parties responsible for: (1) paying all or part of a claim relating to the rendering of healthcare services; or (2) administering the payment of such a claim for another entity. Included as payers are third parties who administer self-funded plans on the plan sponsor’s behalf. Not included are employers who sponsor benefit plans.

Disputes between providers themselves (not involving payers) can arise in multiple contexts. Many, if not all, of those contexts are discussed on the other individual Practice Area pages of this website. We invite you to review those pages, and contact us if you wish to schedule a consultation to discuss a dispute in any of those areas. But Provider/Payer disputes, which are discussed here, have some distinct characteristics, including:

  • The provider sector and the payer sector have ongoing, intertwined relationships with disputes that resurface.
  • These parties must interact with each other more than most other sectors of the healthcare industry. For example, there are patients who are members of payer plans who need ongoing services from providers such as hospitals and physicians.
  • And there are details unique to claims for payment dealing with, for instance, physician reimbursement and treatment coding, that lend themselves to more efficient and less costly handling.

Third-Party Payer & Managed Care Contracting

The United States’ third-party payer healthcare system drives most healthcare providers to enter into contracts with health insurers and managed care organizations. “Managed care” generally describes methods that are intended to lower healthcare costs and improve patient care. Theoretically, managed care delivery systems lower costs and enhance quality of care by providing financial incentives to physicians, other healthcare providers and patients to choose less expensive care options, reduce in-patient hospital stays, increase outpatient surgeries, closely monitor utilization and high-cost patient situations, and share in costs. Unfortunately, managed care also has complicated and created some new problems in our healthcare system, which make it difficult for some physicians and other providers to deliver healthcare profitably without what many consider to be unreasonable (if not unbearable) administrative burdens.

There are multiple types of managed care organizations with varying components, business structures and compensation methods. Some managed care organizations are comprised of only physicians, while others are a combination of hospitals, physicians and other healthcare providers. Specific examples are Independent Practice Associations (“IPAs”), Physician Hospital Organizations (“PHOs”), and Preferred Provider Organizations (“PPOs”) (which also include an insurer or third-party administrator).

Typically, physicians or medical groups enter into a series of contracts (directly or indirectly) with managed care organizations that require the doctors to agree to discounted fees for their services. In exchange for the physicians’ agreement to provide services at lower rates, the managed care entities are responsible for “steering” patients to the physicians or group. A physician or medical group may contract with an IPA or PHO that contracts with a PPO, health insurer or large employer in an arrangement that allows for a third-party payer (an insurer or employer health plan who pays for healthcare) to pay the provider when claims are submitted for patient care. The PPO organizes “networks” of providers that may be included in a health insurance plan pursuant to contracts called “network agreements.”

A hospital, medical group or physician may have multiple contracts in order to participate in a particular network. And a hospital, medical group or physician may participate in multiple networks to obtain additional insured patients. Hospitals, physicians and other healthcare providers may also form “alliances,” as another method of managing and (hopefully) improving care, monitoring utilization, and reducing costs.

While managed care contracts can significantly increase a healthcare provider’s patient volume, participating in networks and other managed care arrangements can be complex and pose risks for providers. Indeed, there are both business and legal risks associated with these contracts.

Providers are in the business of keeping their patients healthy. But confusing contracts filled with complicated provisions and legalese can distract providers from their core mission of improving patient outcomes. Consequently, a provider should obtain the assistance of a qualified healthcare attorney with relevant experience before signing any third-party payer or managed care contract.

Key Terms & Components of Payer Contracts Providers Should Know

Payer contracts define and explain a provider’s reimbursement arrangement for delivering healthcare services to patients covered by a specific health plan. The contracts cover everything from reimbursement rates and provider networks to medical necessity and provider credentialing.

Understanding the terms and provisions in a payer contract is essential to ensure correct and timely reimbursement, prevent claim denials, achieve a smooth revenue cycle, and keep a practice running. Knowing the ins and outs of each contract is crucial to drawing patients to the practice or facility, and being able to offer comprehensive and reimbursable healthcare services to those patients.

Despite the importance of payer contract knowledge, providers (and even their practice administrators and financial advisors) often feel less than confident going up against payer organizations with legal departments, financial analysts and advanced computer software systems. The entire process of contracting and renegotiating with payers is complex, lengthy and time-consuming. And this often causes providers to feel they are at a disadvantage.

However, knowledge is power. And the more providers and their practice administrators know about the terms used in payer contracts, the more effectively they can negotiate and renegotiate contracts to maximize reimbursement and avoid disputes.

But when disputes do arise (as they sometimes unavoidably do), our healthcare, business and litigation law firm can help. Below are some of the key terms and issues involved in contracting and resolving disputes with payers.

Allowed Amount

According to the Department of Health & Human Services (“HHS”), the “allowed amount” on a payer contract is the maximum amount that a payer will reimburse a provider for a covered healthcare service. Some contracts also refer to the allowed amount as an “eligible expense,” “payment allowance,” or “negotiated rate.”

The allowed amount is what the payer will reimburse for services defined as covered or in-network. This rate may not fully cover provider charges. And patients may be responsible for covering the balance between the allowed amount and the provider charges.

Medicare, for example, sets its allowed amounts for specific services in prospective payment systems by care setting and the Physician Fee Schedule (“PFS”). Private payers tend to use Medicare’s rates as the basis for building their own allowed amounts.

Fee Schedule

A “fee schedule” is a list of fees or payments for specific provider services or supplies, according to the Healthcare Financial Management Association (“HFMA”). Each payer contract should have a fee schedule attached, and providers should push payers to provide a complete fee schedule. The list contained in that schedule should define all covered services and the negotiated rates for each service.

The Centers for Medicare & Medicaid Services (“CMS”) manages the Physician Fee Schedule (“PFS”) for Medicare. Using the PFS, CMS reimburses for physician services under Medicare Part B. Medicare Part A, on the other hand, reimburses for hospital, skilled nursing facility, hospice and home healthcare services provided to Medicare beneficiaries.

Each Current Procedural Terminology (“CPT”) code receives a relative value unit (“RVU”), which then is adjusted for the Geographical Practice Cost Index and the national conversion factor. The result is the Medicare allowed amount for a specific covered service. And other payers (health insurers, etc.) use similar processes to determine the allowed amount for each covered service listed on their fee schedules.

Clean Claim

A “clean” claim is a claim that payers can process without needing additional information, according to HFMA. Incomplete clinical documentation and coding, incorrect patient information, missing physician approvals, and other claim errors result in reimbursement delays and claim denials. Failing to ensure a claim is complete and correct, otherwise known as “clean,” can seriously impact provider revenue.

Payer contracts define what a payer needs to ensure timely reimbursement of claims. So, to ensure financial survival and (hopefully) success, providers need to pay close attention to the terms of those contracts to ensure that their claims are clean.

Providers should also track their clean claim rate to evaluate their revenue cycle performance. Higher clean claim rates indicate that medical billing, coding and claim creation processes are running properly and revenue is being collected efficiently.

Medical Necessity

Payers only reimburse providers for services that are deemed “medically necessary.” Payers define medical necessity in their contracts. So, again, in order to ensure financial survival, providers must pay close attention to and understand what types of services will be covered under their payer agreements.

According to HHS, healthcare services or supplies that are needed to diagnose or treat a condition, illness, disease, injury or related symptoms are considered “medically necessary.” Medically necessary services also must meet generally accepted standards of medicine, according to HHS.

Medical necessity clauses may also limit the number of times providers can perform a procedure or deliver specific care in a specified time period. And for Medicare and Medicaid, the National Coverage Determinations and Local Coverage Determinations impose limits on how many times a provider can deliver a medically necessary service within a certain period.

Providers should be sure they understand each payer’s definition of medical necessity, because definitions may vary (at least slightly) by contract. And the provider’s own definition or understanding may be different than the payer’s. Being on the same page is important not only to receive reimbursement for services. It is also crucial to avoid civil liability and even criminal penalties. That is because billing payers for services that are known to be medically unnecessary can result in healthcare fraud investigations and punishment.

Providers need to keep in mind that what they may consider to be an “innocent mistake” or mere “billing error” may be characterized by the government or a private payer as “fraud.” So, careful attention to submitting clean claims for only medically necessary and appropriately delivered medical services is crucial for providers to survive financially and legally.

Network Requirements

Network requirements are another key component of payer contracts. Such provisions detail the networks in which provider organizations can participate, as well as the credentialing requirements providers must meet in order to join a network.

Providers should ensure that they join appropriate networks for their practice to generate revenue and increase patient volume. Network requirements in payer contracts are becoming even more important as the number of value-based contracts increases.

“Value-based care” (reimbursement that ties payments for care delivery to the quality of care provided and rewards efficiency and effectiveness, as opposed to fee-for-service reimbursement, which pays providers retrospectively for services delivered based on bill charges or annual fee schedules) is producing different networks for different products. And there almost always is language in contracts that pertains to credentialing criteria that providers have to meet in order to be included in a network.

However, a contract may also have language that enables the payer to pick and choose which physicians or individual providers can participate in which networks. From the provider’s perspective, a payer contract should not contain language that allows the payer to select a provider organization’s network. And network changes should be tied to legitimate credentialing criteria only and not arbitrary selection of physicians.

Unilateral Amendments

Payer contracts that contain unilateral amendments mean that payers can change contract provisions without the consent of (and sometimes without even notifying) the provider. If a contract contains unilateral amendment language, payers can change anything from reimbursement rates to clean claim definitions, and even network participation.

Most payer contracts state that the payer can amend the contract at any time. In the worst cases, they state that no approval is required from the provider at all. In even the best cases, they usually indicate that a provider has only a limited period of time, typically 10 to 30 days, to object to a proposed amendment in writing.

Otherwise, the amendment automatically goes into effect. Providers should therefore be aware of unilateral amendment language in their contracts, and attempt to negotiate with payers to exclude (or at least improve) such language in future contracts, to the extent possible.


Payer contracts should clearly define the contract’s period and the circumstances under which the provider and payer can terminate the agreement. There can be an initial “term” (typically one year) before the contract automatically expires. Or, it may automatically renew unless specifically terminated. And there usually are both termination “for cause” and termination “without cause” provisions.

With regard to terminations for cause, there normally is a “right to cure” provision, providing a limited time to remedy or fix a material breach or violation of the contract. But for serious enough breaches (such as license suspension or revocation, conviction of a crime, etc.), the termination can be automatic and immediate. Termination without cause provisions normally specify a set number of days (typically anywhere from 15 to 180 days) in which a contract can be terminated for any or no reason at all, by simply providing written notice of termination to the other party. Post-termination duties for both parties should also be specified in the contract, including obligations for the payer to pay any outstanding compensation to the physician or true-up based on a pro rata portion of the performance year, etc.

Dispute Resolution

Statistical analyses have shown that a significant percentage (up to 10% or more) of both hospital and physician charges initially result in claim denials by payers. Therefore, providers need to ensure that their payer contracts have clear dispute resolution processes. Dispute resolution language can include anything from informal resolution processes to formal litigation.

In a payer contract, dispute resolution language normally sets out at least some of the terms for mediating, arbitrating, or (if necessary) litigating in court, provider-payer disputes. In the event of a claim denial or a disputed claim, dispute resolution provisions in the payer contract will direct a provider on how to try to resolve the claim(s) in question, and (hopefully) receive reimbursement if it is owed.

Once again, as the number of value-based contracts increases, dispute resolution language is becoming even more important, because value-based reimbursement criteria often present even more opportunities for claim denials and disputes over claims. In general, providers should try to avoid or negotiate away as much as possible language in a contract that legally binds them to a specific dispute resolution process to the exclusion of others. That is because providers (more than payers) may need the leverage of litigation to get a fair resolution of a dispute.

As the American Medical Association has observed, “in contractual disagreements between physicians and payers, the aggrieved party is often the physician.” “And the absence of language stating that these [alternative dispute resolution proceedings, such as mediation and arbitration] provisions are binding [or mandatory] may give some wiggle room for this leverage. This isn’t the place, therefore, to argue for hard-nosed [mandatory] language.”

Resolving Provider-Payer Disputes & Denied Claims Litigation

In the healthcare industry, providers and payers often have claims for both underpayment and overpayment arising from ongoing contracts or other healthcare services rendered. When claims arise between a provider and a payer, they often are aggregated and combined for purposes of litigation, sometimes totaling thousands of claims in a single action. When the parties are unable to resolve the claims informally, they often become the subject of either a civil action or arbitration proceeding. In either case, the parties usually try to settle those claims and do so often in mediation. But at least occasionally, a trial and even appeals are required to resolve a dispute.

What makes provider-payer disputes unique is that there often are multiple issues or categories of issues involving decision makers from different departments within the same organization (i.e., claims people vs. contracts people vs. case administrators, etc.). Moreover, each issue group may contain hundreds or thousands of separate claims which arise under the same contractual relationship. Because the claims are individually small, the provider usually waits until it has gathered a sufficient number of claims to make filing a legal action or mediating a case pre-litigation worthwhile.

These types of claims fall into several categories, such as lack of authorization, medical necessity, usual and customary rates, and the like. Typically, they span a range of dates of service. Then during the pendency of an action, there may accrue additional claims for additional dates of service or claims that were not part of the original claim(s), but which arose under the same contractual or non-contractual relationship as the original claim(s).

At the same time, the existing contract may be expiring, may have expired, or may be in the process of being renegotiated during the pending action. So by the time of a mediation, arbitration or trial, there are “original” claims, “accrued” claims, “future” claims certain to arise from the relationship, and often contract issues that need to be addressed since the relationship between the parties is ongoing. So the sooner a dispute can be resolved, the better for both parties from a financial and risk management standpoint.

The Medicare Secondary Payer Act

Medicare Secondary Payer (“MSP”) is the term generally used when the Medicare program does not have primary payment responsibility – that is, when another entity (i.e., a health insurer or other payer) has the responsibility for paying before Medicare. When Medicare began in 1966, it was the primary payer for all beneficiaries’ claims except for those covered by Workers’ Compensation, Federal Black Lung benefits, and Veteran’s Administration benefits.

In 1980, Congress passed legislation that made Medicare the “secondary payer” to certain primary plans in an effort to shift costs from Medicare to the appropriate private sources of payment. The MSP provisions have protected Medicare Trust Funds by ensuring that Medicare does not pay for items and services that certain health insurance or coverage is primarily responsible for paying. The MSP provisions apply to situations when Medicare is not the beneficiary’s primary health insurance coverage. The Medicare statute and regulations require that all entities that bill Medicare for items or services rendered to beneficiaries must determine whether Medicare is the primary payer for those items or services.

“Primary payers” are those that have the first responsibility for paying a claim. Medicare remains the primary payer for beneficiaries who are not covered by other types of health insurance or coverage. Medicare is also the primary payer in certain instances, provided several conditions are met. CMS develops Conditions of Participation (“CoPs”) and Conditions for Coverage (“CfCs”) that healthcare organizations must meet in order to begin and continue participating in the Medicare and Medicaid programs. These health and safety standards are the foundation for improving quality and protecting the health and safety of beneficiaries. CMS also ensures that the standards of accrediting organizations recognized by CMS (through a process called “deeming”) meet or exceed the Medicare standards set forth in the CoPs / CfCs.

When there is more than one payer potentially responsible to pay a claim, coordination of benefits (“CoB”) rules decide which one pays first. The “primary payer” pays what it owes on patient bills first, and then sends the rest to the “secondary payer” to pay. In some cases, there may also be a third or “tertiary” payer. The insurance that pays first (the primary payer) pays up to the limits of its coverage. The one that pays second (the secondary payer) only pays if there are costs the primary insurer did not cover. The secondary payer (which may be Medicare) may not pay all the uncovered costs. If the insurance company does not pay the claim promptly (usually within 120 days), a provider may bill Medicare. Medicare may then make a “conditional” payment to pay the bill, but will seek to recover any payments the primary payer should have made.

In providing services to Medicare beneficiaries, providers need to keep these Medicare Secondary Payer rules in mind, to the extent the patient may have other coverage, which may be primary. And disputes over such issues are another area where we, as healthcare counsel, may be of assistance.

Medicare Provider Reimbursement Review

The Provider Reimbursement Review Board (“PRRB”) is an independent panel to which a certified Medicare provider of services may appeal if it is dissatisfied with a final determination by its Medicare contractor or by CMS. See regulations at 42 C.F.R. § 405, Subpart R.

If you have questions about filing an appeal, the status of a current appeal, etc., you can contact the PRRB via its main telephone line at 410-786-2671 or by e-mail at Or, we would be happy to assist you.

Coronavirus/COVID-19 Pandemic Reimbursement Updates

Provider Reimbursement Review Board Alert 19 Amends Procedures in Light of Coronavirus Pandemic*

On March 25, 2020, in response to the COVID-19 pandemic, the Provider Reimbursement Review Board issued Alert 19 (the numbering is entirely coincidental), which suspends what the PRRB calls “Board Set Deadlines” and provides other special instructions regarding Board procedures during the pandemic. In issuing Alert 19 “[t]he Board recognizes that the immediate focus and priorities of Providers should be on caring for their patients. Likewise, the Board wants to ensure the health and safety of all relevant parties before the Board, while continuing to operate in the most efficient manner possible.” Recognizing the fluidity of the crisis, “the Board plans to continuously reassess its response and will issue additional updates through Board Alerts, as necessary.” Providers and their representatives are well advised to review Alert 19 and, as always, to remain vigilant regarding filing deadlines. Additional details are available here.

*This update came from the American Health Law Association’s Regulation, Accreditation & Payment Practice Group and Kenneth R. Marcus of Honigman LLP.

CMS Promotes Telehealth & Expands Accelerated & Advance Payment Program & Medicare Telehealth Services Benefit

In a March 24, 2020 FAQ, CMS stated that “[t]he widespread availability and usage of telehealth services is vital to combat COVID-19” and expressed support for the promotion of telehealth by issuers, saying: “We strongly encourage all issuers to promote the use of telehealth services, including by notifying policyholders and beneficiaries of their availability, by ensuring access to a robust suite of telehealth services, including mental health and substance use disorder services, and by covering telehealth services without cost sharing or other medical management requirements.

In the individual and small group markets, CMS will permit “any service provided through telehealth that is reimbursable under applicable state law and otherwise meets applicable risk adjustment data submission standards” to be used for purposes of the risk adjustment program.” (See CMS’s Risk Adjustment FAQ on COVID-19, Apr. 27, 2020, here.) On March 28, 2020, CMS announced an expansion of its accelerated and advance payment program for Medicare participating healthcare providers and suppliers to ensure they have the resources needed to combat COVID-19. CMS’s fact sheet appears here. On April 2, 2020, CMS provided the AHA and hospitals additional details on the accelerated/advanced payment program. See the AHA advisory here for details.

On April 3, 2020, CMS released a video providing answers to common questions about the Medicare telehealth services benefit. CMS is expanding this benefit on a temporary and emergency basis under the 1135 waiver authority and Coronavirus Preparedness and Response Supplemental Appropriations Act. (See CMS’s News Alert, Apr. 6, 2020, here.) CMS provided technical guidance including the telehealth codes eligible for inclusion in risk adjustment, such as:

  • HCPCS codes G0425, G0426, G0427, G0406, G0407, G0408, G0459, G0508, and G0509;
  • Other services may be eligible for inclusion by using modifier codes such as 95, GQ, or GT, or with a place or service code “02”; and
  • Six e-visit codes will be designated to expand the use of telehealth and virtual care and valid for risk adjustment purposes—CPT Codes 99421-00423 and HCPCS codes G2061–G2063.

The AMA also continues to update its Quick Guide to Telemedicine in Practice, a resource designed to help mobilize remote care with implementation tips, as well as a reference to CPT codes for reporting telemedicine and remote care services.

Georgia Emergency Waivers & Flexibilities to Help Fight COVID-19 Approved by CMS 

On March 28, 2020, Governor Kemp and the Department of Community Health (“DCH”) submitted a request to CMS for an 1135 Medicaid waiver. Concurrently, the Georgia Hospital Association (“GHA”) submitted a request to CMS for an 1135 Medicare waiver. These waivers are intended to increase healthcare providers’ ability to care for patients as they fight COVID-19 by reducing federal regulations.

The 1135 Medicaid and Medicare waivers are a significant step toward easing administrative burdens on Georgia hospitals and healthcare providers during the public health emergency without compromising quality of care or patient safety. “Additionally, these requests would make it easier for patients to be treated at home when possible, remove any red tape to allow for transferring patients to appropriate care settings, and expedite credentialing of providers to reinforce the healthcare workforce across the state,” according to Earl Rogers, GHA’s president.

“Pending CMS consideration and approval, Georgia’s 1135 waiver is designed to provide a number of flexibilities for Medicaid and PeachCare for Kids® providers and members. Some examples of requested flexibilities include modifying the Medicaid authorizations process to enhance fee-for-service prior authorization requirements by extending certain pre-existing authorizations; expediting long-term care services and supports process for pre-admission screening and annual resident review; extending fair hearings and appeal timelines for managed care and fee-for-service enrollees; streamlining provider enrollment, recredentialing, and revalidation processes, including for out-of-state providers; modifying reporting and oversight requirements in certain healthcare facilities; and expanding provider settings to help ensure our providers can deliver care in non-traditional settings. These waiver requests, in addition to a recent expansion of telehealth options for patients and providers, will help to promote access to care during this unprecedented public health emergency,” according to DCH Commissioner Frank Berry.

By March 30, 2020, CMS had approved GHA’s 1135 Medicare waiver request. The list of approved waivers can be viewed here. On April 1, 2020, CMS approved Georgia’s section 1135 waiver request on the temporary checklist, granting the state a number of flexibilities for Medicaid and PeachCare for Kids® providers and members to combat the COVID-19 public health emergency. CMS’s “Coronavirus Waivers & Flexibilities” webpage can be accessed here. And CMS’s Medicaid Telehealth and Substance Use Disorder Prevention Guidance can be viewed here. CMS has also issued new guidance to states to allow temporary COVID-19-related modifications in provider payment methodologies and capitation rates under Medicaid managed care plans. States would be allowed to use directed payments to increase provider payments within managed care arrangements. (See the AHA bulletin.)

On May 20, 2020, CMS approved Georgia’s emergency Medicaid state plan amendment (“SPA”), which modifies certain policies and procedures under Georgia’s Medicaid state plan for the period of the national COVID-19 public health emergency (“PHE”). Among other things, the SPA suspends all copayments for individuals covered by Medicaid for the duration of the PHE; permits telehealth services that are provided via telephone to be reimbursable under Medicaid for the duration of the PHE; and provides for periodic interim payments to be made to skilled nursing facilities for the duration of the PHE.

Coverage for COVID-19 Testing/Health Insurers Temporarily Waive Treatment Cost-Sharing During Crisis

On March 30, 2020, health insurers Cigna and Humana announced that they would waive consumer costs associated with COVID-19 treatment. And just before that, CVS Health announced a more limited change — that Aetna would waive costs to patients for hospital admissions related to the coronavirus. So far, Aetna and Cigna are pledging to waive COVID-19 treatment costs through qualified medical bills that are incurred until June 1, 2020. As of this writing, Humana’s policy does not yet have an end date.

Anthem announced that effective April 1, 2020, plan members being treated for COVID-19 will have their cost sharing waived. The for-profit Blue Cross/Blue Shield insurer said the expanded coverage would continue through May 31, 2020, and it is encouraging self-funded employers to do the same. “During these challenging times, Anthem stands by our legacy and commitment to living our values and supporting those we serve,” said Anthem President and CEO Gail  Boudreaux, in a statement.

Shortly thereafter, UnitedHealthcare became the latest big-name insurer to waive members’ cost-sharing for COVID-19 treatments. UHC said it would waive the associated costs for members in its fully insured commercial, Medicare Advantage and Medicaid plans. The insurer added that it is working with interested self-funded employer plans to offer the same waivers. The UHC waivers will be available through May 31, 2020. UHC also announced that it will waive cost-sharing for in-network telehealth visits that are not for COVID-19-related needs through June 18, 2020. This is in addition to existing waivers for telehealth visits for COVID-19 testing and for virtual visits with the insurers’ preferred partners.

On April 1, 2020, Centene, the parent company of Peach State Health Plan’s Medicaid, Medicare and exchange plans, also announced that it is waiving cost shares for testing and treatment related to COVID-19. Centene also announced a number of efforts to support communities and safety net providers, including FQHCs, behavioral health and long-term care providers. And other health plans are taking similar steps.

On April 1, 2020, the American Hospital Association urged the nation’s five largest private health insurance companies – Aetna, Anthem, Humana, Cigna and UnitedHealthCare – and organizations that represent insurers to support stable cash flow, eliminate administrative processes that delay payment, provide adequate coverage and reimbursement, and expedite processing of outstanding claims. AHA’s letters to the insurers can be viewed here.

On April 11, 2020, it was reported that the Administration said “it will require health insurers to provide free antibody tests that could provide better insight into the scale of the U.S. coronavirus outbreak.” Congress has “required that all Americans, including people without health insurance, receive free diagnostic tests to determine whether they are sick with coronavirus.” The Administration “said it had authority from recent emergency rescue packages to mandate private insurers also provide antibody testing without out-of-pocket costs.”

Also on April 11, 2020, CMS, DOL and the Treasury Department issued guidance to health plans clarifying coverage requirements for private payers in the CARES Act and the FFCRA. Under the bills, commercial health plans are required to provide access to COVID-19 testing and visits for care related to the virus through doctors’ offices, urgent care centers, and emergency departments available at no cost. CMS also said that the mandates will extend to antibody testing once it is made more readily available. And in response to questions, on April 21, 2020, CMS encouraged health insurers to relax otherwise applicable utilization management processes, as permitted by state law, to ensure that staff at hospitals, clinics and pharmacies can focus their limited time and resources on care delivery.

On May 29, 2020, Bloomberg Law reported that “At least five insurers … have decided to lengthen the period for which they would waive out-of-pocket costs related to the coronavirus past the initial June 1 end date, according to America’s Health Insurance Plans (AHIP), an industry trade group.” The “insurers’ decisions on whether to continue to waive patient costs come as the nation begins to emerge from a months-long lockdown. Public health officials see widespread testing, as well as contact tracing, as critical to states being able to contain outbreaks.” An AHIP summary of how health insurers are responding to the pandemic can be accessed here.

In the wake of large anti-racism demonstrations and increased group gatherings around the country, public health officials have been encouraging protesters and more people in general to get tested for the coronavirus. However, as such precautionary testing has become more common, some health insurers are arguing they cannot pay for everyone who is concerned about their risk to get tested. While the Families First Coronavirus Response Act passed by Congress and effective April 1, 2020, requires health plans to fully pay for testing deemed “medically necessary,” as testing continues to expand to allow people without symptoms to be tested, a “gray area” has emerged. CMS’s guidance says full coverage is required “when medically appropriate for the individual, as determined by the individual’s attending health care provider in accordance with accepted standards of current medical practice.” But that guidance leaves room for argument between payers on the one hand, and providers and patients on the other.

Moreover, according to guidance released by the Trump administration on June 23, 2020, “insurers are not required to cover COVID-19 tests that employers may mandate as they bring employees back to work.” While the Families First Coronavirus Response Act required insurers to cover COVID-19 tests without patient cost-sharing, the guidance clarified that “the law only applies to tests that are deemed ‘medically appropriate’ by a healthcare provider.”

On June 19, 2020, CMS instructed Medicare Administrative Contactors and notified Medicare Advantage plans to cover COVID-19 laboratory tests for nursing home residents and patients. This instruction follows the CDC’s recent update of COVID-19 testing guidelines for nursing homes that provides recommendations for testing of nursing home residents and patients with COVID-19 symptoms, as well as for asymptomatic residents and patients who have been exposed to COVID-19. Original Medicare and Medicare Advantage plans will cover COVID-19 lab tests consistent with CDC guidance.

COVID-19 Coding Guidance & Telehealth Toolkit

The American Medical Association released two CPT codes(86328 and 86769) for reporting antibody testing for COVID-19 and revised its CPT code for SARS-CoV-2 nucleic acid tests (86318). Providers can manually upload the code descriptors into their EHR systems. (See additional guidance on the CPT codes.) And on April 23, 2020, CMS announced that the Trump Administration released a new toolkit for states to help accelerate adoption of broader telehealth coverage policies in Medicaid and CHIP during the COVID-19 pandemic. The objective “is to make it easier for Medicaid and CHIP enrollees to receive health care at home rather than at a doctor’s office or emergency room, where they could become exposed to – or pass along – the virus.”

On April 27, 2020, HHS, through the Health Resources and Services Administration (“HRSA”), launched a new COVID-19 Uninsured Program Portal, allowing healthcare providers who have conducted COVID-19 testing or provided treatment for uninsured COVID-19 individuals on or after February 4, 2020 to submit claims for reimbursement. Providers can access the portal at Providers can request reimbursement starting May 6, 2020 if they have treated or tested an uninsured patient for COVID-19, but only if they agree not to balance bill the patient.

Providers can register on HRSA’s website. The program will be administered by United Health Group, so providers must have an Optum ID to register. (See Optum’s summary of key points for claims submission.) Coding for COVID-19 testing and diagnoses answers questions about which codes will be recognized as shown in the Billing Codes section of HRSA’s website. (See the COVID-19 Uninsured Program FAQ for more information.)

Also, the American Health Information Management Association published an article explaining coding for COVID-19 testing and diagnoses that answers many questions about the codes that will be recognized as shown in the Billing Codes section of HRSA’s website. And CMS has developed two HCPCS codes that healthcare providers and laboratories can use to bill for certain COVID-19 diagnostic tests. (See more information and updates on these codes.)

CMS continues to amend and update its lengthy guidance on Medicare Fee for Service Billing as it relates to the COVID-19 pandemic. On May 27, 2020, CMS added language that addresses questions regarding the CARES Act and how it affects the Inpatient Prospective Payment System (“IPPS”). The update included information on how discharges for individuals with COVID-19 should be identified, including different diagnosis codes for discharges between January 27 and March 31, and for discharges occurring on or after April 1 through the duration of the public health emergency period. CMS also clarified that the CARES Act “directs the Secretary to increase the IPPS weighting factor of the assigned diagnosis-related group by 20 percent” for diagnosed COVID-19 patients discharged during the public health emergency period.

On June 1, 2020, CMS provided an update that clarifies when providers must use modifier CR (catastrophe/disaster related) and/or condition code DR (disaster related) when submitting claims to Medicare. The update includes a chart of blanket waivers and flexibilities that require the modifier or condition code.

In its June 2, 2020 update, CMS added or revised nine new provisions to the guidance contained in the FAQ. The revisions include clarifications regarding national coverage determinations and when telehealth may satisfy certain face-to-face requirements. CMS stated that as it continues to thoroughly assess the CARES Act, new and revised guidance will be released as implementation plans are announced. Therefore, additional updates from CMS are expected. Providers should carefully monitor the guidance contained on the COVID-19 FAQ page to evaluate the impact of new guidance on facility operations and finances.

New Regulatory Waivers and Rule Changes to Support U.S. Healthcare System During COVID-19 Pandemic

On April 30, 2020, CMS issued another round of regulatory waivers and rule changes to support healthcare providers during the COVID-19 pandemic. Changes included increased access to telehealth for Medicare and Medicaid patients and expanding at-home and community-based testing to minimize COVID-19 transmission among Medicare and Medicaid beneficiaries. (See details of the new waivers and the interim final rule.)

Under the temporary waivers and rule changes, Medicare beneficiaries can be tested for COVID-19 without a physician’s order. Instead, Medicare will cover COVID-19 tests when ordered by any healthcare professional authorized to do so under state law.

CMS also is allowing pharmacists to perform certain COVID-19 tests if they are enrolled in Medicare as a laboratory. According to CMS, the changes will open the door for more “point-of-care” testing. Medicare and Medicaid also will cover antibody tests that are authorized by the Food and Drug Administration.

Beyond its efforts to expand testing, CMS is waiving limits on the types of practitioners who can provide telehealth services and is allowing hospitals to bill Medicare as the originating site for services furnished remotely by hospital-based practitioners to registered outpatients, including when the patient is at home. CMS will now also allow nurse practitioners, clinical nurse specialists, and physician assistants to provide home health services, as mandated by the CARES Act.

On May 19, 2020, CMS authorized local Medicare Administrative Contractors (“MACs”) to set the payment amount for COVID-19 testing, both diagnostic and serology, until Medicare establishes national payment rates. CMS noted that for dates of service on or after April 14, Medicare has established a $100 payment rate for laboratory tests using high throughput technologies for rapid results.

Many services for behavioral health and patient education may now be conducted by audio-only telephone between beneficiaries and clinicians, CMS said. The agency also is increasing payments for telephone visits from the current $14-$41 to $46-$110, in line with payments for similar office and outpatient visits. The payments are retroactive to March 1, 2020.

CMS Finalizes Changes for Medicare Advantage, Part D Plans

On May 22, 2020, CMS finalized changes to the Medicare Advantage (“MA”) and Part D programs aimed at expanding access to telehealth and increasing plan options for beneficiaries in rural communities. CMS finalized only certain provisions from the February proposed rule so they would be in place before MA and Part D 2021 plan year bids, which were due on June 1. The agency plans to issue subsequent rulemaking to address the remaining proposals—including policies to lower seniors’ out-of-pocket expenses for pricey prescription drugs—which will apply no earlier than January 1, 2022.

“We understand that the entire healthcare sector is focused on caring for patients and providing coverage related to coronavirus disease 2019 (COVID-19), and we believe this approach provides plans with adequate time and information to design the best coverage for Medicare beneficiaries,” CMS said in a fact sheet.

CMS expects the changes in the final rule to reduce Medicare spending over the next ten years by an estimated $3.65 billion. The final rule was published in the June 2, 2020 Federal Register

Network Adequacy, MLR

The final rule gives MA plans more flexibility to count telehealth providers in certain specialties towards network adequacy standards. The policy is aimed at encouraging use of telehealth services and increasing plan choices for beneficiaries, particularly in rural areas.

In rural areas, CMS is reducing the required percentage of beneficiaries that must reside within the maximum time and distance standards from 90% to 85%. CMS also is giving MA plans a 10% credit towards the percentage of beneficiaries that must reside within required time and distance standards for specialty areas such as Dermatology, Psychiatry, Cardiology, Ophthalmology, Nephrology, Primary Care, Gynecology, Endocrinology, and Infectious Diseases, the fact sheet said.

CMS also finalized its proposal to allow MA organizations to broaden the definition of “incurred claims” for purposes of the medical loss ratio (“MLR”). In addition, the final rule adds a deductible-based adjustment to the MLR calculation for MA medical savings account (MSA) contracts receiving a credibility adjustment. CMS said the adjustment “removes a potential deterrent to the offering of MSAs by MA organizations that may be concerned about their inability to meet the MLR requirement as a result of random variations in claims experience, the risk of which is greater under health insurance policies with higher deductibles.”

On June 10, 2020, the Centers for Disease Control and Prevention also issued guidance entitled “Using Telehealth to Expand Access to Essential Health Services During the COVID-19 Pandemic.” It describes the landscape of telehealth services and provides considerations for healthcare systems, practices, and providers using telehealth services to provide virtual care during and beyond the COVID-19 pandemic.

COVID-19 Public Health Emergency Extension

On June 29, 2020, an HHS spokesperson indicated that HHS intends to extend the COVID-19 public health emergency that is set to expire on July 25. The extension would prolong the emergency designation by 90 days. Several payment policies and regulatory adjustments are attached to the public health emergency, so an extension is important for healthcare providers.

Several key policies linked to the public health emergency are the Medicare inpatient 20% add-on payment for COVID-19 patients, increased federal Medicaid matching rates, requirements that insurers cover COVID-19 testing without cost-sharing, and waivers of telehealth restrictions. Adjustments CMS made to the Medicare Shared Savings Program for accountable care organizations are also tied to the length of the public health emergency. The number of months the emergency lasts affects the amount of shared losses an ACO must pay back to CMS.

Even if HHS extends the public health emergency, some changes the Trump administration has made to help healthcare providers are also dependent on a separate Stafford Act national emergency declaration remaining active. These changes include CMS Medicaid waivers that allow bypassing some prior authorization requirements, temporarily enrolling out-of-state providers, delivering care in alternative settings, and pausing fair hearing requests and appeal times.

Reimbursement rules and guidance from regulators continue to evolve as the situation develops. To the extent possible, providers should stay informed and monitor for updates. Please see our Medical & Professional Licensing Board Matters webpage for additional details regarding COVID-19 Emergency Practice, Telehealth & Teleprescribing Measures. See our HIPAA, Health Information Privacy & Security Compliance webpage for details regarding HIPAA Compliance & Waivers During the COVID-19 Pandemic. And see our Stark, Anti-Kickback, Civil Monetary Penalty & False Claims Act Issues webpage for details regarding COVID-19 Fraud Enforcement & Telehealth. (A summary of CMS’s blanket waivers of certain self-referral prohibitions contained in the federal Stark Law also appears here. And a summary of all of CMS’s COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers is here.)

Audits in the Wake of COVID-19

Most payer audits have been suspended or postponed during the public health emergency. But healthcare coding and reimbursement experts predict that as soon as the pandemic is no longer raging, “audits will be coming fast and furiously.” For one thing, with spending soaring and revenue plummeting during the emergency, the government and health insurers will need money more than ever once the pandemic abates. And both reimbursement consultants and government enforcers predict that virtually all providers will be in the cross hairs.

For example, one retired HHS-OIG Senior Special Agent warned online: “CMS put out an FAQ this month advising it will stop audits during the PHE. Understand that when that is lifted, audits will commence, and likely at a feverish pace. Are providers prepared for the audits to come, particularly with some of the ‘relaxed’ telemedicine and telehealth rules? Probably not. Be proactive and do internal probe reviews to ensure compliance, so in three years you do not see an overpayment letter for hundreds of thousands of dollars. Getting the education needed to stave off a large overpayment [allegation] is a basic compliance measure.”

In short, it is never too soon to assess your risks and determine how best to mitigate those that could lead to damages (civil or criminal). Do not assume your practice won’t be a target. Be proactive and audit both retrospectively and prospectively. If you have sufficient staff to conduct internal audits, do them. If not, hire a reputable firm to help. Be sure you can fully support with adequate documentation any claims you submit for reimbursement. Adequate documentation is crucial. Even when rules seem more relaxed, documenting properly now can save you in an audit down the road. Also be sure that your audit is conducted under the supervision of an attorney, so as to protect privileged communications and work product to the extent permitted by law. (OIG’s COVID-19 FAQs can be read here.)

How We Can Help & Services We Provide

Certain provisions in third-party payer contracts and governmental rules can have a great impact upon a provider’s revenue stream and financial viability. Hospitals and physicians often write off tens of thousands – sometimes even millions — of dollars due to payers improperly denying or underpaying claims. Our healthcare and business law firm can help by:

  • Negotiating and reviewing health insurer plan documents.
  • Negotiating and reviewing IPA, PHO and PPO network agreements.
  • Negotiating and reviewing provider contracts with third-party payers.
  • Negotiating with plan sponsors regarding potentially unlawful plan terms.
  • Representing providers in disputes that arise under documents such as those listed above.
  • Representing providers in disputes with insurers, including terminations of provider agreements.
  • Evaluating denied claims against the terms of the provider-payer contract and helping clients determine the next steps in proceeding against payers’ improper denials.
  • Reviewing and evaluating fact questions like prior authorizations and legal questions like potential violations and penalties.
  • Enforcing insurer and payer compliance with preferred provider arrangements, third-party network contracts and treatment agreements.
  • Challenging payers who violate the MSP Act and other coordination of benefits rules.
  • Challenging audit findings, overpayment demands and recoupment actions issued by third-party administrators, insurers and health plans.
  • Challenging plan fiduciaries for failing to follow proper claims and appeals procedures.
  • Representing providers in mediations, arbitrations and lawsuits.
  • Helping providers recover damages caused by improperly denied or underpaid claims.

Claims denied improperly by managed care payers fall within the scope of the provider participation agreement signed by the provider and payer. Therefore, any wrongly denied claims are subject to the terms of the signed agreement, as well as applicable laws relating to contract breaches. A health plan’s breach of its own contract is subject to the dispute resolution terms of the signed contract, which allow for either an arbitration demand or a lawsuit to be filed against the payer.

Even if the contract or related provider manual contains specific terms not met by a provider, some denials may be unenforceable as illegal penalties. Therefore, healthcare providers who have rendered valuable services to a health plan’s members should not give up on improperly denied claims without first consulting legal counsel.

Our healthcare and business law firm helps healthcare providers by reviewing, negotiating and drafting contracts. We assist hospitals, physicians and physician groups in negotiating and contracting with health insurance payers, plans and managed care entities. And we represent healthcare providers in mediations, arbitrations and lawsuits when disputes arise with payers, managed care plans or entities over reimbursement or other matters. Please call or email us if you wish to schedule a consultation.

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