Narrow Networks and Out-of-Network Litigation - PowerPoint Presentation

1. Narrow Networks andOut-of-Network LitigationBrian R. Stimson – Partner – Alston & Bird LLPJordan Edwards – Associate – Alston & Bird LLPCaitlin Hosmer – Associate – Alston & Bird LLPAdvanced Health Care Law CLEOctober 30, 2015

2. AgendaIndustry ChangesQHP Network AdequacyGeorgia Out-of-Network Case LawRecent Out-of-Network Case Law from the 11th CircuitMA Network Adequacy

3. Industry ChangesManaged Care Enrollment Has Surged

4. Managed Care Enrollment Has SurgedIndividual and Small Group MarketHealth Insurance Marketplace (i.e., the exchanges) created by the federal Affordable Care Act (ACA) opened in 2014.Total Marketplace Enrollment in 2015: 9,949,079 members.1Medicare Advantage (MA)Almost one in three (31 %) people on Medicare (16.8 million beneficiaries) were enrolled in a MA plan in 2015 – up by more than one million beneficiaries from 2014.2Medicaid Managed Care Organizations (MCOs)In 2013, MCOs in 39 states (including DC) had a total of 44,533,642 individual enrollees, representing 71.7% of all Medicaid enrollment.3Enrollment expected to increase by 13.5 million by 2016.4

5. Managed Care Enrollment has SurgedIncreased enrollment has been accompanied by increased pressure on health plans of all types to control costs.Conflicting Perspectives:“Narrow networks have become an important feature of premium variation … as they remain one of the only remaining pieces in the insurers’ cost-containment toolbox.”5“[T]here is significant consumer and provider dissatisfaction with how many of these plans are organized, including concern about inadequate access and information. Critics say insurers have made many missteps in building adequate networks and maintaining accurate, up-to-date provider directories. In some rural areas, there are too few in-network providers, forcing plan members to travel long distances to see one.”6

6. Managed Care Enrollment Has SurgedGeorgia is at the forefront of these developments:Fifth-highest state enrollment in Health Insurance Marketplace (417,890) with 90% receiving tax credits7Highest percentage (83%) of narrow networks of any state Health Insurance Marketplace (with narrowness defined as participation by 25% of providers or less)8Robust managed Medicaid system and large MA enrollmentConflicting Perspectives:GAHP: “More employers and more consumers are choosing these plans because cost is their No. 1 concern.”MAG: “[T]he proliferation of narrow health insurance networks will exacerbate the shortage of physicians in Georgia.”9Georgia State Senate created Senate Study Committee on Consumer and Provider Protection Act (SB 158) to look at “[i]ncidence and prevalence of incorrect data related to network adequacy,” as well as other managed care issues. SR 561. Committee stands till December 1, 2015.

7. Managed Care Enrollment Has SurgedConsumers have complained to regulators and filed putative class action lawsuits. See, e.g., Felser v. Blue Cross of Cal., No. BC550739, 2014 WL 3361745 (Cal. Super. Ct. L.A. Cnty., filed July 9, 2014).Anecdotally, providers have responded by:Seeking to participate in commercial narrow networks, or integrated or value-based delivery systems.Pursuing network contracts with MA plans and Medicaid MCOs at rates that exceed FFS rates or government fee schedules.Doubling down on out-of-network payment models and pursuing higher commercial out-of-network payments (including via litigation).Pursing legislative or regulatory reforms.Negotiations still present two basic questions: Does the plan need the provider in its network, and will the plan pay more for that reason?What is an out-of-network provider’s recourse on payment?

8. QHP Network AdequacyThe federal government is making changes. Will Georgia?

9. QHP Network AdequacyFederal StandardsA Qualified Health Plan (QHP) must “ensure a sufficient choice of providers … and provide information to enrollees and prospective enrollees on the availability of in-network and out-of-network providers.” ACA § 1311(c)(1)(B) (emphasis added).Networks must be “sufficient in number and type of providers, including providers that specialize in mental health and substance abuse services, to assure that all services will be accessible without unreasonable delay.” 45 C.F.R. § 156.230(a)(2) (emphasis added).This standard allows exchanges “significant flexibility to apply this standard to QHPs in a matter appropriate to the State’s existing patterns of care … .”10 Federal Review11During QHP certification and recertification, the federal government assesses “provider networks using a ‘reasonable access’ standard in order to identify networks that fail to provide access without unreasonable delay.” The federal government uses “the issuer’s updated provider data, and any written justifications submitted as part of the certification process, in assessing whether the issuer has met the regulatory requirement prior to making the certification or recertification determination.”

10. QHP Network AdequacyFederal Requirements for QHP Provider Directories12Beginning in 2016, QHPs must make provider directories available to the exchanges for publication online. “[A] QHP issuer must publish an up-to-date, accurate, and complete provider directory, including information on which providers are accepting new patients, [as well as] the provider’s location, contact information, specialty, medical group, and any institutional affiliations, in a manner that is easily accessible … .” (emphasis added).“Up-to-date” means “updated at least monthly and easily accessible when the general public is able to view all of the current providers for a plan in the provider directory on the issuer’s public website … without having to create or access an account or enter a policy number.”Georgia RequirementsNo network adequacy requirements for QHPs.SB 158 would require all health insurers to pass network adequacy assessment by Insurance Commissioner as part of licensing process.Any willing provider statute applies only to non-profit health care corporations. O.C.G.A. §§ 33-20-5, 33-20-16.

11. Out-of-Network LitigationDisputes continue despite ongoing shift from volume to value

12. Georgia Case Law: AssignmentsAn assignment is “an absolute, unconditional, and completed transfer of all right, title, and interest in the property that is the subject of the assignment … .”  Allianz Life Ins. Co. of N. Am. v. Riedl, 264 Ga. 395, 396-97 (1994) (internal citations omitted).“[I]n the absence of a contrary intention, an assignment usually passes as incidents all ancillary remedies and rights of action which the assignor had or would have had … .”  Id. When the insurance product provides that benefits are payable to a participating provider, the DOI licensee must pay participating or preferred benefits to certain non-participating or non-preferred providers that have obtained a written assignment of benefits and given notice of the assignment to the DOI licensee.  § 33-24-54(a).A “health care insurer” must pay a provider’s claim directly if the provider certifies that it has an assignment when filing the claim. O.C.G.A. § 33-24-59.3.Anti-assignment clauses in ERISA plans are enforceable against otherwise valid assignments. Phys. Multispecialty Grp. v. Health Care Plan of Horton Homes, Inc., 371 F.3d 1291 (11th Cir. 2004).

13. Georgia Case Law: Payment“A physician in an action to recover for professional services rendered has the burden of proving the value as represented by the ordinary and reasonable fee for the services.” Bouldin v. Baum, 134 Ga.App. 484, 485 (1975)Recitation of “magic words” is not enough; some testimony is “required tending to prove [the fee’s] correctness and the fact that it is due and owing … .” McAllister v. Razook, 180 Ga.App. 585, 587 (1986); but see Johnson v. Ga. Baptist Hosp., 166 Ga.App. 571 (1983) (finding prima facie case where insurer made partial payment without objection).The Supreme Court of Georgia recently held that in-network rates and charges to the uninsured are relevant to the reasonableness issue and discoverable. Bowden v. The Med. Ctr., Inc., 297 Ga. 285, 292 (2015).

14. 11th Circuit DevelopmentsPeacock Med. Lab, LLC v. UnitedHealth Grp., Inc., No. 14-cv-81271, 2015 WL 5118122 (S.D. Fla. Sept. 1, 2015)Laboratories sued United under ERISA and breach of contract theories, alleging they were owed $2 million for drug testing services.District court dismissed ERISA claims with prejudice, finding that neither the assignment of benefits agreement nor the durable power of attorney executed by patients conferred standing upon laboratories.To resolve preemption issue, district court converted United’s motion to dismiss into motion for summary judgment; case remains pending.United Healthcare Servs., Inc. v. Sanctuary Surgical Ctr., Inc., 5 F. Supp. 3d 1350, 1353-55, 1365 (S.D. Fla. 2014)United counterclaimed against ASCs for submitting bills that arose from illegal kickbacks and fee-splitting arrangements with chiropractors and stated falsely that osteopathic physicians (and not chiropractors) provided the services.The district court found that United’s state law counterclaims were not preempted by ERISA.

15. 11th Circuit DevelopmentsLa Ley Recovery Sys.-OB, Inc. v. Blue Cross and Blue Shield of Fla., No. 14-cv-23735, 2014 WL 7525661 (S.D. Fla. Nov. 18, 2014)La Ley sued Florida Blue, claiming it was the successor-in-interest to the third-party beneficiary of Florida Blue’s contract with the insuredDistrict court dismissed action without prejudice to allow La Ley to pursue administrative remedies under ERISA MRI Scan Ctr., LLC v. Nat’l Imaging Assocs., Inc., No. 13-cv-60051, 2013 WL 1899689 (S.D. Fla. May 7, 2013)MRI Scan Center (a provider of imaging services) sued Cigna and two of its TPAs , claiming that total allowed amounts were inflated to include administrative costs paid by Cigna to TPAsDistrict court dismissed, finding that MSC did not have direct standing, or an assignment broad enough to encompass its claimsSanctuary Surgical Ctr., Inc. v. Aetna Inc., 546 F. App’x 846 (11th Cir. 2013)Sanctuary sued Aetna under ERISA for benefits due, breach of fiduciary duty, failure to perform full and fair review, and equitable estoppelDistrict court dismissed and 11th Circuit affirmed, reasoning that Sanctuary “did not plead specific facts creating a plausible inference that the [procedures] were medically necessary, and thus covered benefits, for each patient in question”

16. MA Network AdequacyAn emerging compliance focus for CY 2016

17. MA Network AdequacyMA Disclosure StandardsDisclose at the time of enrollment and annually thereafter “[t]he number, mix, and distribution (addresses) of providers from whom enrollees may reasonably be expected to obtain services … .” 42 C.F.R. § 422.111(b)(3).Make “a good faith effort to provide written notice of a termination of a contracted provider at least 30 calendar days before the termination effective date to all enrollees who are patients seen on a regular basis by the provider … .” 42 C.F.R. § 422.111(e).MA Network Adequacy Standards“Maintain and monitor a network of appropriate providers that is supported by written agreements and is sufficient to provide adequate access to covered services to meet the needs of the population served.” 42 C.F.R. § 422.112(a)(1)(i) (emphasis added).Establish written standards for “[t]imeliness of access to care and member services that meet or exceed standards established by CMS. Timeliness of access … must be continuously monitored … .” 42 C.F.R. § 422.112(a)(6)(i).The three basic CMS standards are (1) minimum number of providers/facility, (2) maximum travel time, and (3) maximum travel distance.13

18. MA Network AdequacyGAO Report (August 2015)14“MA criteria do not reflect aspects of provider availability, such as how often a provider practices at a given location.”“CMS limits its annual application of the criteria that [MAOs] … propose to enter in the upcoming year.”“CMS does little to assess the accuracy of the network data in applications that MAOs submit, even though the submissions contain the same data elements as in provider directories, which have been shown to be inaccurate.”“CMS does not require MAOs to routinely submit updated network information for review … contrary to internal control standards, CMS does not measure ongoing MAO networks against its current MA criteria.”“While CMS requires that MAOs give enrollees advance notice when a provider contract is terminated, the agency has not established information requirements for those notices … .”

19. MA Network AdequacySpecial Enrollment Periods (SEPs)15CMS will establish a SEP, if it determines “that changes to an MA plan’s provider network that occur outside the course of routine contract initiation and renew cycles are considered significant based on the affect or potential to affect current plan enrollees.”CMS Approach for Calendar Year 201616“Providers whose practices are closed or who are otherwise unavailable cannot be used to successfully meet our network adequacy standards.”“CMS may view inaccurate provider directories as an indication that the MAO may be failing established CMS access standards.”“MAOs are expected to update their online provider directories in real-time … MAOs are expected to communicate with providers monthly regarding their network status.”“MAOs are expected to establish and maintain a proactive, structured process that enables them to assess, on a timely basis, the true availability of contracted providers … .”CMS will initiate a three-pronged approach to monitor compliance: (1) direct monitoring, (2) new audit protocol, and (3) compliance or enforcement actions.

20. MA Out-of-Network RulesIf MAO has not contracted with a provider, then MAO pays what original Medicare would pay. 42 C.F.R. §§ 422.100(b)(2), 422.216(a)(2). Non-contract provider must accept that amount as payment in full. 42 C.F.R. § 422.214(a)(1).Non-contract provider may contest “MA organization determinations” regarding MA plan benefits through four-level Medicare appeals process.17 Once the four levels of the appeals process are exhausted and the amount-in-controversy threshold ($1,430.00) is met, “any party” may obtain judicial review by suing the Secretary of HHS in federal district court.18

21. Notes1Total Marketplace Enrollment and Fin. Assistance, The Henry J. Kaiser Family Foundation, available at: http://kff.org/health-reform/state-indicator/total-marketplace-enrollment-and-financial-assistance/ (last visited Oct. 28, 2015).2Medicare Advantage 2015 Spotlight: Enrollment Market Update, The Henry J. Kaiser Family Foundation, available at: http://kff.org/medicare/issue-brief/medicare-advantage-2015-spotlight-enrollment-market-update/ (last visited Oct. 28, 2015).3Total Medicaid Managed Care Enrollment, The Henry J. Kaiser Foundation, available at: http://kff.org/medicaid/state-indicator/total-medicaid-mc-enrollment/ (last visited Oct. 28, 2015).4Avalere Analysis: Medicaid Managed Care Enrollment Set to Grow by 13.5 Million, available at: http://avalere.com/expertise/managed-care/insights/avalere-analysis-medicaid-managed-care-enrollment-set-to-grow-by-13.5-milli (last visited Oct. 28, 2015).5 The Skinny on Narrow Networks in Health Insurance, Penn LDI, available at: http://ldi.upenn.edu/brief/skinny-narrow-networks-health-insurance-marketplace-plans (last visited Oct. 28, 2015).6 Bob Herman, Network squeeze: Controversies continue over narrow health plans, Modern Healthcare March 28, 2015.7Total Marketplace Enrollment and Fin. Assistance, The Henry J. Kaiser Family Foundation, available at: http://kff.org/health-reform/state-indicator/total-marketplace-enrollment-and-financial-assistance/ (last visited Oct. 28, 2015).8State Variation in Narrow Networks on the ACA Marketplace, Penn LDI, available at: http://www.rwjf.org/en/library/research/2015/08/state-variation-in-narrow-networks-on-the-aca-marketplaces.html (last visited Oct. 28, 2015).9 Narrow’ networks are the exchange norm here, Georgia Health News (Aug. 25, 2015), available at: http://www.georgiahealthnews.com/2015/08/narrow-networks-exchange-norm/ (last visited at Oct. 28, 2015).

22. Notes10Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans, 76 Fed. Reg. 41,866, 41,893 (proposed July 15, 2011) (to be codified at 45 C.F.R. pts. 155-56).11FINAL 2016 Letter to Issuers in the Federally-facilitated Marketplaces, Center for Consumer Information and Insurance Oversight (CCIIO), Centers for Medicare & Medicaid Services, at pp. 22-25 (Feb. 20, 2015), available at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2016-Letter-to-Issuers-2-20-2015-R.pdf (last visited Oct. 28, 2015).12Id.13CY2016 MA HSD Provider and Facility Specialties and Network Adequacy Guidance, at p. 1, available at: https://www.cms.gov/Medicare/Medicare-Advantage/MedicareAdvantageApps/Downloads/CY2016_MA_HSD_Network_Criteria_Guidance.pdf (last visited Oct. 28, 2015)14Medicare Advantage: Actions Needed to Enhance CMS oversight of Provider Network Adequacy, GAO-15-710 (August 2015)15Medicare Managed Care Manual, Ch. 2, § 30.4.6.16Announcement of Calendar Year (CY) 2016 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter, at Attachment VII, pp. 138-140 (Final Call Letter) (April 6, 2015), available at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents-Items/2016Announcement.html (last visited Oct. 28, 2015).17A non-contract provider may seek reconsideration of an organization determination as a representative of the enrollee. 42 C.F.R. §§ 422.582(a), (d); Medicare Managed Care Manual Ch. 13, §§ 10.4.1 – 10.4.3, 60.1, 70.1. Alternatively, a non-contract provider may seek reconsideration directly if they complete a waiver of liability statement, which provides that they will not bill the enrollee regardless of the outcome of the appeal. 42 C.F.R. §§ 422.582(a), (d); Medicare Managed Care Manual Ch. 13, §§ 60.1 – 60.1.1, 70.1. After the non-contract provider completes the waiver of liability, the enrollee ceases to have an appealable interest. Medicare Managed Care Manual Ch. 13, § 60.1.1.1842 U.S.C. §§ 1395w-22(g)(5); 42 C.F.R. §§ 405.1006, 405.1136, 422.612(a)-(c); Medicare Managed Care Manual Ch. 4, §§ 120, 121.1; 79 Fed. Reg. 57,934 (announcing increase from $1,430.00 in 2014 to $1,460.00 in 2015).