How These Disputes Arise: A Simple Overview
A provider (hospital, physician, or other medical professional) renders care and treatment to a patient, who is usually enrolled in a health insurance plan (or is covered by a government benefits program such as Medicare or Medicaid). The provider seeks payment for its professional services by submitting a reimbursement claim to the plan. Frequently, the plan has delegated payment responsibility, in conjunction with delegation of management of the care of the plan’s enrollees, to medical groups or physician organizations (referred to in some jurisdictions as “delegated payors”).
Who bears what responsibility for payment of a patient’s care and treatment depends in large part on whether there is a contract for medical services between the provider and plan (and/or its delegated payor). It also can depend on the terms of an agreement between the plan and payor, which usually define under what circumstances a payor is financially responsible for which services. Whether between plan and provider, payor and provider, or plan and payor, these contracts typically specify which particular test(s), treatment(s), and/or medication(s) are to be reimbursed, by what entity, at what rates, and under what conditions.
While they are intended to promote certainty among two or more parties, the reality is that contracts can provoke disagreement. It should come as no surprise that, in the complex business of healthcare, disputes often emerge over which entity is responsible for paying provider(s) how much for what medical service, treatment, and/or medication that the provider(s) rendered to the plan’s member.
Many times, especially in the context of emergency services, there is no contract between the provider, on the one hand, and plan or payor, on the other hand. An individual in need of emergency care usually rushes to the nearest hospital without regard as to whether her or his health plan has a services contract with the facility. Under these circumstances in many states, the plan or payor can still be obligated to reimburse the provider for the “reasonable and customary” value of its services. Disputes exist over, among other things, the reasonable value of the services rendered and whether and, in many instances, to what extent such obligation extends to post-emergency treatment and hospitalization.
Three C’s help explain why mediation is a helpful tool to settle these disputes, regardless of if they arise in in-network or out-of-network contexts.