QUARTERLY NEWSLETTER - SPRING EDITION 2012 - #3
It is with deep sadness that we announce the passing of SAC SECURE our dear friend and partner, Vince Acquisto on January 19, 2012. Vince, 71 years young, was surrounded by his loving family at the conclusion of his fulfilling life. We thank our clients for being supportive during this sad time and assure you his memory will live on at SAC. We dedicate this issue to Vince’s memory and his commitment to educate his clients and warn them of the many pitfalls By Karlene J. Rogers-Aberman, Esq., VINCENT ANTHONY ACQUISTO when navigating healthcare law. and Youngsam Salmon, Operations MARCH 18, 1940 - JANUARY 19, 2012 Manager Joy & George In light of the spate of security breaches and HIPAA violations we’ve seen reported SUCCESS STORY recently, we wanted to take this opportunity to reassure our clients that SAC maintains strict security measures with respect to our clients’ confidential business records, inSAC Secures Complete Victory Against TPA After ERISA Plan Goes Bankrupt cluding medical records and patient inforofficial appeals seeking to determine why mation. By Karlene J. Rogers-Aberman, esq. the claim had been underpaid. Each time, In a recent arbitration proceeding filed on Aetna provided vague reasons, including It is SAC’s policy to comply with the Health behalf of a Northern California hospital, that the member’s plan had terminated; that Insurance Portability and Accountability Act SAC obtained full reimbursement plus al- it was no longer administering the self-fundmost four years of accrued interest against ed plan’s account; and that it was only the (HIPAA); the Health Information Technology Aetna. Aetna was the third party adminis- claims administrator and therefore had no Act (HITECH); the F.T.C.’s Red Flag Rules, trator (“TPA”) of a self-funded ERISA plan liability to the hospital for payment. In Aet- and all other applicable rules, statutes and which, unbeknownst to the hospital, had na’s sixth and final response to the hospital regulations. As such, SAC has in place filed for bankruptcy protection a few months in 2010, it finally stated that it was its un- appropriate administrative, technical and derstanding that the plan had filed for bank- physical safeguards to protect the integrity, before its member sought treatment. confidentiality and availability of both paper Typically, a hospital has little recourse ruptcy, and that Aetna had “no information and electronic protected health information against a bankrupt health plan, other than on how to contact them at this point.” to file a creditor’s claim and hope to collect Aetna’s Hospital Services Agreement with (EPHI) received from SAC’s clients and a few pennies on the dollar after all of the the hospital indicated that Aetna had no handled by SAC’s employees and other secured claims have been paid. The plan’s legal responsibility for payment on claims covered entities or personnel. TPA also often escapes liability because it for services rendered to the plan’s mem- The following are just a few examples of a is not the actual “payor” and thus has no ber. However, it also indicated that Aetna comprehensive security system in place at legal or financial obligations to the provider. agreed to “assist reasonably as appropriate SAC: Not so in this instance. In a written deci- in collecting such payments.” The arbitrator sion, the arbitrator’s written statement of agreed with the arguments made by SAC • Quarterly analysis of SAC’s firewalled decision, it was found that Aetna’s conduct that Aetna sought only to dodge its obligacomputer network is performed by a was so egregious, so “negligent” and “inde- tions and failed to offer any assistance to qualified information technology comfensible,” that it owed a duty to reimburse the hospital in obtaining payment. Aetna, pany to identify and remedy detected as the plan’s administrator, was at all times the hospital for the losses incurred. security vulnerabilities; Briefly, the ERISA plan filed for bankruptcy in the best position to know of the plan’s • Regular audits are undertaken pertainin late 2007. In February 2008, its plan ben- bankruptcy status. In fact, after the hospiing to user activity, modifications to our eficiary was admitted, via ambulance, to the tal’s claim for payment had been pending system software and to ensure that hospital which provided medically neces- for several months, the plan converted its Chapter 11 bankruptcy action to a Chapter data integrity is maintained; sary care and treatment until the patient’s discharge a month later. In accordance 7 liquidation proceeding. Ultimately, not a • Electronic transmission of EPHI is prowith its standard procedure, the hospital single one of its 531 creditor claims were tected by the use of passwords and contacted Aetna, who was administering allowed. encryption measures, and all inbound the plan, to verify coverage and obtain au- In rendering the full award plus interest in and outbound email passes through thorization. Aetna duly provided the cov- the hospital’s favor, the arbitrator acknowlspam and virus filtering software; erage information and confirmed that the edged that had the hospital been made hospital would be paid for the entire stay at aware of the plan’s status, it could have • In furtherance of its goal of becoming the contracted rate. The hospital was never made alternative arrangements with the paa completely “paperless” environment, tient. Having been deprived of its ability to told that the plan was in bankruptcy. SAC scans all incoming and outgoing paper documents into its secure netAfter submitting its claim for payment, Aet- do so as a direct result of Aetna’s conduct, work servers. The paper documents na reimbursed the hospital only a fraction Aetna was required to make the hospital are then placed in a dedicated, seof the amount owed. Over the next 2 years whole. and 10 months, the hospital contacted Aet- SAC attorney Christopher J. Hapak litigated CONT’D - Next Page na both through informal phone calls and this matter on the hospital’s behalf.
SAC Takes Security Seriously
TPA Made To Pay
Security - CONT’D
cured space for retrieval by a qualified document shredding service;
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Confidentiality agreements are executed with contracted vendors who provide on-site services or are otherwise exposed to client information;
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Specific contingency plans and corrective measures are in place in the event of emergencies or the inadvertent release of EPHI;
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Employees logged into our data management systems are automatically logged off after a predetermined period of inactivity;
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Security cameras are installed throughout SAC’s offices;
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Protective orders, confidentiality agreements, or other arrangements are entered into with opposing counsel to limit disclosure of private patient information during the course of litigation. Adversarial counsel who inadvertently violate HIPAA rules are immediately notified and advised to take corrective action;
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All SAC employees with access to EPHI are required to adhere to all applicable laws, inclusive of HIPAA, HITECH and Red Flag mandates. Violation of any laws is subject to disciplinary action, including termination.
SAC is dedicated to security. Feel free to contact us for more information regarding our policy.
Rogers Amendment Update
Supreme Court Issues Ruling That Providers Have Standing to Challenge Medicaid Rate Cuts By Karlene J. Rogers-Aberman, esq.
In memory of his father, Chuck Acquisto has written this edition’s “Pet Peeves”
THOSE PESKY DEFINITIONS Small changes to the wording in health plan agreements can make a world of difference. Here are a few to get peeved about.
CALENDAR DAYS VS. BUSINESS DAYS Most health plan contracts state that a provider has “X” amount of “calendar” days to submit a claim or file an appeal. Failure to comply with these contractual time limits can result in a non-payment to the hospital. Many of these requirements range from 45 to 90 calendar days for submission of a dispute, despite the fact the California Code of Procedures, Title 28 section 1300(d)(1) states that health plans may allow at least 365 calendar days for an appeal. I’m annoyed that health plans place different time limits on appeals, paying claims, disputed claim or even legal action. Why is that important? Often the plan states they have 30 or 45 “business” days and only the number 30/45 of days registers in the mind of the provider. 60 to 76 calendar days is more accurate since that is how long a health plan will take to review a claim and render a written decision. Once you include Federal Holidays, it may take as long as 80+ days. The breach of the timely appeal creates extremely harsh penalties for providers. A late appeal submission results in non-payment to the provider. If a health plan fails to comply with their time limits, they are slapped with a small interest payment. Many health plans ignore paying the penalty and providers are left filing a legal action or com-
plaint with DMHC (Department of Managed Health Care).
AUDIT RIGHTS Another pet peeve is clear definition in contracts of how health plans conduct an audit. Gone are the days when providers could refuse to allow an audit unless the claim was paid at least 90% and the audit took place at the provider’s place of business. Today most providers are facing one-sided claim audits being conducted away from the hospital’s business office by health-plan vendors receiving a % of monies recovered during the audit creating major conflict of interest. These audits stall reimbursement for the claim and have no time limits for completion.
THE SOLUTION
A contract requires consistency of terms for both parties. Calendar days for appeals and requesting an overpayment refund should match; likewise dispute resolution process / procedure should be consistent and provide adequate time for both parties to assert their rights. It is clear what constitutes a calendar day and it is far easier to calculate the due date. Business days should not be used in contract language as it presents more challenges to meeting timely submissions and appeals of claims. The provider should negotiate clear terms for how, where and when an audit occurs. Contract language should require a claim be paid prior to any audit taking place and the provider needs to agree to reimburse the plan any money owed, that is not in dispute within a reasonable time after the audit has taken place; it should be improper for any plan to deduct alleged overpayment from other patients or multiple gross remittances.
Back in our inaugural issue (Fall Issue 2011 #1), we reported on California’s overly expansive implementation of the Rogers Amendment. As was discussed in that article, the California Hospital Association (“CHA”) had filed a federal lawsuit to address the issues affecting providers as a result of California’s broad interpretation of the federal statute. Among other things, the lawsuit sought to invalidate the California Rogers Amendment in its entirety. The CHA’s lawsuit was put on hold so that the United States Supreme Court could first decide whether a provider even has a legal right to seek the kind of relief described in the lawsuit. On February 22, 2012, in a case entitled Douglas v. Independent Living Centers, the Supreme Court issued a ruling which will allow the CHA’s lawsuit to proceed. In a 5 to 4 decision, the Supreme Court held that beneficiaries and providers could sue the Centers for Medicare and Medicaid Services (“CMS”) under the Administrative Procedures Act to challenge CMS’ approval of significant cuts to Medi-Cal rates, which it had done without first obtaining federal approval. Based on the ruling in Douglas, the CHA should now be able to proceed with its lawsuit under the Administrative Procedures Act. The Supreme Court’s ruling also did not foreclose the possibility that providers could also sue under the Supremacy Clause of the U.S. Constitution, on the grounds that various aspects of California’s version of the Rogers Amendment are preempted by federal law. The Douglas case was remanded to the 9th Circuit Court for further proceedings. We will report further on the ultimate outcome of that case in a future issue.
Your Questions Answered By Our SAC Team of Experts RICH LOVICH Our spotlight this quarter is attorney Rich Lovich. He has been with SAC since 2005 and Rich recently received the prestigious honor of being named a Super Lawyer* in January 2012. He was nominated by his peers and joins fellow SAC attorney Ellen Kamon. We are proud to highlight Rich as a member of the SAC team.
Spotlight Q&A
What is your area of expertise within SAC? I have been a trial attorney for over 28 years, and have tried over 30 Superior Court jury trials and hundreds of binding arbitrations. Prior to joining SAC I was the managing attorney at three major insurance companies running their L.A. law offices. I supervise all trial-related case handling and serve as the lead trial attorney for the firm. I also conduct monthly lectures and exercises to train the attorneys on trial-related case handling. I am also charged with conducting file audits and evaluating attorney performance and regularly meet with the senior attorneys to conduct top to bottom reviews of files; gauging the efficiency and effectiveness of the file handling and the overall performance of the attorneys.
What one piece of sage advice can you offer to our clients that can help them in the future? The strength and weaknesses of the cases we handle can be related to one main thing - the level of documentation available. Our ability to succeed at trial or arbitration is only as strong as the hospital’s ability to document the actions they took to submit the claims. The stronger the documentation of verification of benefits, authorization of the procedure and timely submission of claims, the better our chances are to recover on the claim.
Can you talk about a recent success story of yours? What was the challenge and how were you able to overcome it? Sara Frisch, a SAC associate attorney and I recently negotiated a large settlement with one of the largest commercial payors in the country. The most satisfying aspect was that in addition to obtaining a settlement amount that was far in excess of the amount the client was seeking, we were able to make the payor back down from an iron clad, non-negotiable condition of settlement that we felt was adverse to our client’s long term interests. With our advise and the hopsital’s faith in SAC, the provider stood its ground and after a strong agruement from our team, the payor reconsidered its position, and reinstituted settlement talks. They knew we were prepared to arbitrate the case, and because of our his-
tory of success, we were able to negotiate a settlement without the negative conditions originally offered.
Do you have any hobbies or interests outside of work? I am an LA boy through and through. I live and die with the Dodgers and the Lakers, and my main interest outside of work and family, is early Hollywood. Anyone can tell by looking in my office that silent movies are my main interest; especially Lon Chaney, comedies by Charlie Chaplin, Laurel and Hardy, and the greatest of them all- Buster Keaton. This years’ crop of Oscar worthy films were quite a treat as they include The Artist and Hugo.
Do you have family and/or pets you’d like to tell us about? I am blessed with a very happy and healthy family. My lovely wife Michelle is a legal secretary with a firm in Century City as well as being a CAbi consultant which allows her to interact with people on fashion issues. She is the biggest Bruce Springsteen fan alive. My daughter Kimberly is in love with Johnny Depp and the Beatles, and is studying to be a make up artist in the film industry. She would love to be a contestant on “Face Off”, and is entirely too interested in horror movies for her own good. My youngest daughter Katie, is 7 and studies piano, loves to sing and wants someday to be cast as Elphaba in “Wicked”. My father also lives with us. He is 89 years old and religiously follows the Lakers, especially Kobe, and his Dodgers.
Do you have any guilty pleasure television shows, movies or other activities to tell us about? I love my Kindle. I was lucky enough to be given one by the firm a few years ago and I now cannot live without it. My two favorite Kindle Books are a biography of the great Sandy Koufax and Tap Room Tales by our very own Charles Acquisto. Growing in LA. in the 1960’s, Koufax was THE MAN. As far as I am concerned, he still is.
What are your favorite foods? Colors? Other favorites? My favorite foods used to be Jersey Mike’s subs, Tommy’s hamburgers, and Nathan’s hot dogs. Then I smartened up and lost 65 pounds. Now I really appreciate eating healthy foods and maintaining a healthy lifestyle. I find a creative outlet in coming up with low calorie nutritional foods that actually taste good. I also gave up diet soda in favor of iced tea, and whenever I discuss this switch, I get a look of disapproval from Barry, the poster boy for Diet Coke.
Q: What is the difference between the Medicare RAC Results letter and the Demand letter/First Request, how do we tell them apart? A: They are both issued with generic cover letters with attached “detailed” findings for one or more patients or claims. The Results letters however, contain detailed medical necessity (or other) rationale documenting why HDI (RAC contractor for California) thinks Medicare overpaid a particular claim. The “details” attached to a Demand letter/First Request only identify claims which are being “tagged” for takeback, without providing any specific reason. It also provides the information of appeal rights and to prevent a recoupment, an appeal must be filed within 30 days of the date of the letter (allowing 5 days for mailing).
Q: Must we file an appeal after we receive the Results letters from HDI? A: First, to clarify - although from the pro-
vider’s perspective the correspondence from HDI certainly looks like an argument to appeal – it really provides an opportunity for a discussion. It will prevent a take back only if a provider is successful in changing HDI’s initial determination that the claim was overpaid. There has been success in overturning an initial determination however the percentage is low. It may not be a cost benefit to do a rebuttal / discussion submission. The time to formally appeal is after the receipt of the demand letter. In other words, engaging in discussion with HDI (RAC) may be helpful, but only a timely appeal to Medicare prevents the take back from happening.
Q: How do we clock the deadline to file first level appeal to Palmetto (QIC)? A: The “clock runs” from the date on the
Demand letter/First Request letter with a rebuttable presumption, the Demand is received within 5 days). Typically, the day after the Demand date, Medicare also issues the “infamous” RAD N432, a “tag” to alert the provider that if an appeal is not filed within 30 days, a recoupment will occur. If an appeal (a Request for Redetermination) is filed within 30 days after the Demand, the repayment will not occur while the account appeals. The deadline to appeal must be clocked not from the HDI’S “Final Results” denying a “request for discussion” but from the Demand from Palmetto.
Q: Why are Medi-Cal claims being denied for an invalid sterilization consent form, when we have attached the signed consent forms? A: Medi-Cal needs to see not just any con-
CONT’D - On Back
Ask SAC - CONT’D
SAC CONGRATULATES
sent form, but specifically PM 330 form (available through the Medi-Cal website). Also check the Medi-Cal website to see if a claim satisfies an exception to the PM 330 requirement – (e.g., if the sterilization surgery was a result of an emergency - a handwritten and signed note by the physician documenting the nature of the emergency attached with claim is sufficient).
SAC Attorneys Included in 2012 SuperLawyerTM Edition
than 1 day, split the claim, so that the sterilization procedure appears only on the claim for the date of service when the procedure was performed. That claim will not get paid, however claims for the remaining days are entitled to reimbursement.
George will be presenting on the topic of “Hospitals Suing Other Hospitals Difficult & Other Sensitive Issues in Denial Management” on March 22
QUESTIONS / COMMENTS We would love to hear from you! If you have questions, comments or feedback please email us at SACReview@sacfirm.com.
WWW.SACFIRM.COM
*About Super Lawyers: Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. The selection process is multi-phased and includes independent research, peer nominations and peer evaluations.
DISCLAIMER: This newsletter is for general educational and informational purposes only. You should not act upon this information without seeking your own independent professional advice.
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HFMA Northern California Spring Conference March 21-22, 2012 Sheraton Grand Hotel - Sacramento, CA
QUARTERLY NEWSLETTER SPRING EDITION ENCLOSED
Q: An in-patient Medi-Cal claim is denied for an invalid sterilization consent form; we do not have one in the correct format and none of the exceptions apply, is there anything that can be done? A. If the patient was in the hospital for more
SAC congratulates its attorneys Rich Lovich and Ellen Kamon for being included in the 2012 Southern California SuperLawyerTM edition. They were nominated by fellow peers for their excellence in the field of healthcare law.
UPCOMING EVENTS