Trends and Developments in Health Plan Coverage Disputes, Emerging Litigation in Payment over Urgent Care

Put another way, a provider’s successful claim for reimbursement could find precedent-setting coverage for a pool of claims never intended by the actuaries, with significant economic impact on whether the payor sustains an underwriting profit or loss. At the same time, a payor’s successful claim against coverage validates policy language or claim review procedures, ensuring use of the decision in subsequent claims.

The first portion of this article will explore some of the empirical data attendant to managed care cases filed since January 2014. The case data is derived from cases filed in the U.S. District Courts, whether filed as original proceedings or removed from state court. Insofar as the health plans at issue are invariably provided as employer group health benefits, the predicate for removal is usually the Employee Retirement Income Security Act of 1974 (ERISA). The discussed cases are against the five major health insurers: “Aetna,” “United Healthcare,” “Humana,” “CIGNA,” and Blue Cross Blue Shield (BCBS) Plans.¹

The second half of this article will discuss an emerging trend and upward trajectory in health plan disputes involving coverage of emergent care.² In these cases, the provider generally contends that the services were emergent in nature so as to obtain higher level of reimbursement under Emergency Services policy provisions of the applicable health plan, rather than Medical Services provisions.

II.        Case Statistics, 2014, 2015, 2016, and the first half of 2017

In 2014, there were 463 cases involving managed care disputes against BCBS Plans (165 cases), Aetna (110 cases), United Healthcare (81 cases), Humana (49 cases), and CIGNA (58 cases). Of all of those cases, 145 were filed on behalf of members, 81 were filed on behalf of physicians, 135 were filed on behalf of other service providers, and 64 were filed on behalf of facilities. There were 21 cases on behalf of plan sponsors, 11 cases involving a plan’s subrogation rights, and six cases filed by health insurers seeking repayment from provider(s).

During this period, the greatest concentration of cases was filed in the U.S. Eleventh Circuit (134), followed by the U.S. Ninth Circuit (68), and the U.S. Fifth Circuit (64).

In 2015, there were 498 cases involving managed care disputes against BCBS (234 cases), Aetna (112 cases), United Healthcare (70 cases), Humana (21 cases), and CIGNA (61 cases). Of all of those cases, 97 were filed on behalf of members, 12 were filed on behalf of physicians, 13 were filed on behalf of other service providers, and 26 were filed on behalf of facilities. There were 78 cases on behalf of plan sponsors, six cases involving a plan’s subrogation rights, and two cases filed by health insurers seeking repayment from provider(s).

During this period, the greatest concentration of cases was filed in the U.S. Sixth Circuit (113), followed by the U.S. Ninth Circuit (84), and the U.S. Fifth Circuit (59).

In 2016, there were 499 cases involving managed care disputes against BCBS Plans (216 cases), Aetna (94 cases), United Healthcare (108 cases), Humana (28 cases), and CIGNA (53 cases). Of all of those cases, 218 were filed on behalf of members, 61 were filed on behalf of physicians, 24 were filed on behalf of other service providers, and 91 were filed on behalf of facilities. There were 35 cases on behalf of plan sponsors, nine cases involving a plan’s subrogation rights, and two cases filed by health insurers seeking repayment from provider(s).

During this period, the greatest concentration of cases was filed in the U.S. Ninth Circuit (108), followed by the U.S. Tenth Circuit (65), and the U.S. Fifth and Sixth Circuits (58 each).

In the first half of 2017, there were 124 reported cases involving managed care disputes against BCBS Plans (59 cases), Aetna (28 cases), United Healthcare (24 cases), Humana (three cases), and CIGNA (10 cases). Of those cases, 32 were filed on behalf of members, six were filed on behalf of physicians, three were filed on behalf of other service providers, and 12 were filed on behalf of facilities. There was one case on behalf of a plan sponsor, four cases involving a plan’s subrogation rights, and one case filed by a health insurer seeking repayment from a provider.

During this period, the greatest concentration of cases was filed in the U.S. Fifth Circuit (24), followed by the U.S. Ninth Circuit (21), and the U.S. Tenth Circuit (21).

III.       Increased Case Filings Over Urgent Care

In emergent care cases, the provider attempts to implicate alternative policy provision(s) so as to avoid a preauthorization requirement,³ challenge the adequacy of the rate paid,⁴ or assert that state law requires emergent services to be compensated at the provider’s usual, customary, and reasonable (UCR) rate.⁵ The increased number of case filings contending that the services were “emergent care” seems to reflect a new approach by providers to prevent claim denial on other grounds.

In 2014, there were 19 cases in which the provider alleged an underpayment or no-payment involving services for emergent care. In 2015, that number more than doubled to 41 cases. In 2016, there were 56 cases where payment for allegedly emergent care was implicated, and 38 cases in the first half of 2017.

These cases are fact intensive, often necessitating close scrutiny of the medical records in order to determine whether the services were truly emergent, or are disguised as emergent in order to obtain a higher reimbursement. Unlike a dispute over coverage, however, the dispute over whether the procedure was emergent typically does not hinge on whether the procedure(s) is/are covered, but rather which portion of the health plan governs reimbursement.

To date, there have been no significant decisions on this topic. However, the increasing number of filings suggest that whether a procedure is “emergent” is becoming a hot button issue, especially if out-of-network providers can find sanctuary in a state statute mandating UCR reimbursement levels for emergent care instead of the lower reimbursements found in health plans for non-emergent care.⁶

IV.       Conclusion

The noted management consultant, Peter F. Drucker,⁷ is quoted as saying, “[t]he purposes of business is to create and keep a customer.”⁸ In the tension between the payor and provider, the “customer” is the patient. The patient would not appear to be served by her health plan when “Defendant denied without basis the air ambulance billing ... and also denied bills relating to Plaintiff's pregnancy, stating in phone calls that Plaintiff was required to give one year notice in advance of her intention to become pregnant for there to be coverage.”⁹ Conversely, a provider’s effort to obtain recovery of $39,763.16 for “emergent medical treatment for Ms. Amata’s emergent condition [severe infection that posed a potential impingement of her airway] and additional treatment for respiratory insufficiency and aspirational pneumonia” might appear to be an unduly expansive reading of the plan.¹⁰

The general effort to improve patient outcomes must encompass not only medical outcomes, but billing outcomes. Narrower networks and higher patient obligations already force members to often meter their purchase of medical care. But remembering that the patient is the customer, parting with hard earned money to contribute toward the cost of care, should be impetus for both the payor and the provider to be equally compassionate to the patient’s non-medical needs. Litigation over benefits coverage, whether initiated by the patient or the provider, is never pleasant and should only be considered as a last resort. 

1.  The terms “Aetna,” “United Healthcare,” “Humana,” and “CIGNA” are intended to be generic terms which identify with the four major health insurers.  The term “Blue Cross Blue Shield Plans” is intended to be a generic term that collectively represents the 36 independently operated Blue Cross and Blue Shield member companies.  While these are not the only health insurers, these entities collectively comprise the largest percentage of the health insurance plans (self-funded, fully funded, or administrated plans) and, concomitantly, represent the greatest collective percentage of disputes.
2.  See also Trends and Developments in Managed Care Litigation, published in the American Bar Association Health Law Section’s ABA Health eSource, Vol. 12, No. 2, October 29, 2015 (https://www.americanbar.org/publications/aba_health_esource/2015-2016/october/litigation.html) and Trends and Developments in Coverage Disputes Over Mental Health Benefits, published in the American Bar Association Health Law Section’s ABA Health eSource, Vol. 13, No. 2, October 26, 2016 (https://www.americanbar.org/publications/aba_health_esource/2016-2017/October2016/mentalhealth.html).  This article builds on the statistics covered in those prior articles and specifically examines the increased number of case filings related to procedures billed as emergent.
3.  William A. Parks v. Global Hunter Securities, LLC, et al., U.S.D.C. S.D. TX, Doc. No. 4:16-cv-03513, (filed Nov. 28, 2016). Member seeks recovery of benefits from, among others, Aetna Life Insurance Company, alleging that he “was referred on an emergency basis to the Betty Ford Center, an out-of-network provider for treatment of inpatient alcoholism and substance abuse.” Benefits were denied “on the basis that Parks had not complied with the precertification procedures” but plaintiff responds that due to the emergent nature of the admission, there was no time to obtain preauthorization.
4.  Jeffrey Farkas, M.D., LLC d/b/a Interventional Neuro Associates v. Empire Blue Cross and Blue Shield of New York, et al., U.S.D.C. E.D. NY, Doc. No. 1:17-cv-02537-RJD-VMS, (filed Apr. 27, 2017) (“[t]he rate utilized by Empire is a mere fraction of the fair and customary rate charged by Plaintiff [and] does not adequately compensate Plaintiff for its complex, emergent services ...”)
5.  Namdy Consulting, Inc. v. CIGNA Health and Life Insurance Company, et al., U.S.D.C. C.D. CA, Doc. No. 2:16-cv-02299, (filed Apr. 4, 2016) (plaintiff alleges that since services provided were emergent and were required by law to be provided, defendant was required to compensate physicians at usual, customary, and reasonable rates, as defined by California law).  See also Mid-Atlantic Surgical Associates, P.C. v. UnitedHealthcare Services, Inc., U.S.D.C. D. NJ, Doc. No. 2:17-cv-06270-JMV-JBC, (filed Aug. 18, 2017) (putative class action on behalf of out-of-network provider of emergency medical services contends that defendant “has refused to pay Plaintiff … the full amount of its billed charges for emergency services provided to United members.”  “United has systematically underpaid Mid-Atlantic for emergency medical services, which has exposed United members to liability in violation of the federal and state law.”  Plaintiff cites New Jersey statutes and the Patient Protection and Affordable Care Act along with pertinent Codes of Federal Regulations.) 
6.  See e.g. Florida Statutes, Sections 627.428, 641.28, 641.513(5); N.J.A.C. 11:4-37.3; California Health and Safety Code §1371.4(b).  The Patient Protection and Affordable Care Act generally provides that emergency services must be covered without regard to whether the provider is in-network or out-of-network and cannot impose any copayment or coinsurance that is greater than what would be imposed if the provider was in-network.  See e.g. 29 C.F.R. 2590.715-2719A.
7.  http://www.drucker.institute/about-peter-f-drucker./
8.  https://www.goodreads.com/author/quotes/12008.Peter_F_Drucker (last viewed September 6, 2017).
9.  Kimberly D. Rylant v. Health Care Service Corporation d/b/a Blue Cross and Blue Shield of Oklahoma, U.S.D.C. W.D. OK, Doc. No. 5:17-cv-00482-F, (filed Apr. 26, 2017).
10.  IHC Health Services, Inc. dba Utah Valley Regional Medical Center v. Coventry Healthcare, Inc., et al., U.S.D.C. D. UT, Doc. No. 2:16-cv-00802-BCW, (filed July 18, 2016) (Claim was denied on grounds that “dental treatment is not covered under the Plan.”)