Managed Care Contracts: Watch Out for Definitions Section Pitfalls

Contract CWBy: Karina Gonzalez

One of the most commonly overlooked components of a managed care contract is the definitions section despite the fact that what is contained here will affect the contracted provider on a daily basis.  Contract terms that are too generic so that they are not clearly defined and understood as they relate to a particular area of practice can have a direct influence on clinical decision making.  A patient may need a higher level of care but be approved for a lower level only.  The provider knows that a patient may suffer if the level approved will not treat the illness or that the patient’s condition could deteriorate without a higher level of care.

Let’s take, for example, the definition of medical necessity in a contract. Who decides medical necessity?  Is it the provider or is it the managed care organization (MCO)?  Many contracts state that the term “medical necessity” relates only to the issue of reimbursement.  Further, that the approval or denial of a claim is “for reimbursement purposes only” and should not affect the provider’s judgment on whether treatment is appropriate to treat the illness, symptoms or complaints of the patient.   Continue reading

Audit Decisions Leading to Absurd Outcomes

healthcare businessBy: Karina Gonzalez

Commercial plans continue their audit activity in 2016 demanding many changes and adjustments yet giving little in return. The 2015 audits have not been completed for the majority of substance abuse providers in South Florida, yet the commercial plans have arbitrarily stopped paying new claims even though it takes them at least 6 months to complete a post payment audit.  If and when a provider finally gets an audit result, payors are imposing requirements that just are impossible to meet.

Payors do not appear to be paying attention to the public health crisis of substance abuse addiction and the ever growing need for treatment.   The assumption is being made by the payors that all providers in this space are over utilizing services and engaged in fraudulent practices, despite the reality that  many providers are doing just the contrary.    Continue reading

Provider Credit Balances Result in $6.8 Million Overpayment Settlement

bonus calculationBy: Karina Gonzalez

USA v. Pediatric Services of America –  settlement under the False Claims Act involving a health provider’s failure to investigate credit balances on its books to determine whether they resulted from overpayment by a federal health care program.

The U.S. Attorney for the Northern District of Georgia  announced that Pediatric Services of America Healthcare, Pediatric Services of America, Inc., Pediatric Healthcare, Inc., Pediatric Home Nursing Services (collectively, “PSA”), and Portfolio Logic, LLC agreed to pay $6.88 million ($6,882,387) to resolve allegations that PSA, a provider of home nursing services to medically fragile children, knowingly (1) failed to disclose and return overpayments that it received from federal health care programs such as Medicare and Medicaid, (2) submitted claims under the Georgia Pediatric Program for home nursing care without documenting the requisite monthly supervisory visits by a registered nurse, and (3) submitted claims to federal health care programs that overstated the length of time their staff had provided services, which resulted in PSA being overpaid.

“Participants in federal health care programs are required to actively investigate whether they have received overpayments and, if so, promptly return the overpayments,” said United States Attorney, John Horn. “This settlement is the first of its kind and reflects the serious obligations of health care providers to be responsible stewards of public health funds.” Continue reading

Medical Necessity and Payment: Who Decides?

medical necessity kpgBy: Karina Gonzalez

There is nothing readily understood about the term medical necessity.  In healthcare it is the “overarching criterion for payment”.  There is no payment for services or supplies if there is no medical necessity to support it.   Today, every provider at some time is faced with a denial because of lack of medical necessity.  Physician providers will usually hear that payors do not get in the way of the physician-patient relationship.  Payors typically state that they never tell a physician how to practice medicine and a denial based on lack of medical necessity is for purposes of payment only.  However, what provider, on a routine basis, will continue to order care and services which medically unacceptable and not supported for payment purposes?

The definition of medical necessity varies from one commercial plan to another. Federal law such as Medicare has its definition and so does state law under programs such as Medicaid.  Various medical associations such as the AMA also define medical necessity.

Generally, medical necessity refers to services or supplies which are required for the treatment of an illness, injury, diseased condition or impairment and which is consistent with a patient’s diagnosis or symptoms and are in accordance with generally accepted standards of medical practice.  Services or supplies must not be ordered only as a convenience to the patient or provider. Of course care and services which are investigational or unproven are not considered medically necessary. Continue reading