December 01, 2017

The Potential and Pitfalls of the Bankruptcy Court as a Forum for Provider/Payor Disputes

Matt Ferris and Jarom Yates, Haynes and Boone, LLP, Dallas, TX

Healthcare providers, like non-healthcare businesses, depend on the timely collection of their accounts receivable to fund operations.1 However, the healthcare industry is unique in that almost all of a healthcare provider’s accounts receivable will be payable from one of two sources: government payors (i.e. Medicare/Medicaid) and commercial payors (i.e. private insurance companies such as Aetna, Blue Cross Blue Shield, and Cigna).2 Consequently, a reimbursement dispute with even one payor may place a provider in severe financial distress, potentially even jeopardizing the provider’s ability to continue operating as a going concern. Complicating matters is the fact that both the Medicare Act3 and private insurance contracts impose restrictions on a provider’s ability to litigate reimbursement disputes.

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