EDITOR’S NOTE: This article is part of an ongoing series about insurance companies under-reimbursing out-of-network providers and those companies’ attempts to compel such providers to go in-network. To read previous articles, please use the search function at www.racmonitor.com under Thomas Force.
One of the biggest problems “non-participating” or “out-of-network” providers run into is the anti-assignment provision written into most health insurance contracts. To sum it up for those unfamiliar with this provision, patients often “assign” their right to payment (and appeal) to the doctor who provided medical treatment. But health insurance companies have figured out a way in which to once again penalize the out-of-network healthcare provider. These insurers have changed their insurance policies to include an anti-assignment provision. This provision makes any attempted assignment by the patient/member void and without legal effect. The provision usually is found in the “general provisions” section of the health plan or corresponding summary plan description.
The net effect of these anti-assignment provisions is that:
- Claim checks now are sent to patients/members and not to the out-of-network healthcare provider because, as the insurer reasons, the insurer has no semblance of contract with the provider); and
- Healthcare providers no longer can sue the insurers for non-payment or low payment of out-of-network claims because, without a valid assignment of benefit, they have no standing on which to sue (i.e. they are no longer considered “third-party beneficiaries” of the benefits to which the member/patient is entitled under the health plan).
Now, the out-of-network healthcare providers must chase their patients for claim checks issued for services provided to their patients. In addition, without their patients being named as plaintiffs in civil lawsuits against the insurer, the out-of-network healthcare provider cannot maintain a lawsuit of its own against the insurer (it will be subjected to a motion to dismiss for lack of standing by the health insurer).
Maybe I am being too cynical here, but this detrimental result appears to this author to be another well-orchestrated and well-designed plan by the health insurers to penalize the out-of-network providers and compel them to go in-network at ridiculously low reimbursement rates.
Fortunately, some state courts seem to be catching on and have found that insurers can waive their rights to void assignments. While this trend has not yet spread to New York, there have been several cases in New Jersey that made great strides toward defeating the anti-assignment clause. Among the most notable is the recent summary judgment decision handed down from the U.S. District Court in New Jersey, Premier Health Center, P.C. et al. v. UnitedHealth Group, et al.1
United had moved for summary judgment in part because of lack of standing, since there was an anti-assignment clause written into the policy. The court rejected United’s argument because it was deemed to have waived its right to assert the clause.
The court relied in part on Third Circuit cases stating that, when plan participants assign providers their benefits, the providers can bring an action under §502(a) of ERISA. New Jersey found that providers have what is called “derivative standing” to bring actions to enforce their right to receive benefits.
Still, derivative standing does not overcome anti-assignment provisions unless the insurer waives them. Waiver is an “intentional relinquishment” that can be made through actions. Some examples the court gave include discussing patient coverage under healthcare policies, direct submission of claim force, direct reimbursement and engagement in the appeals process (note that many of you providers probably have done all of the above with insurers). A federal court in New Jersey found that United waived the anti-assignment provision through regular interaction with the providers before and after claims submissions – without United mentioning the anti-assignment provision. The interaction included letters, refund demands, notification of the appeals procedure, emails and telephone calls about various appeals (once again, sound familiar?)
Because of their conduct, the court found that United waived its right to enforce its anti-assignment clause, and so the providers did have standing to sue. The facts of this case probably sound eerily familiar to the out-of-network healthcare provider. You all probably have interacted directly with insurance companies only to be told later that you still have no right to enforce your rights to reimbursements.
Unfortunately, New York still hasn’t caught up on protecting out-of-network healthcare providers from insurance companies that bind them into no-win situations. The standing issue is one that comes up repeatedly in New York, with no apparent solution. What New Jersey and other states such as Florida have done is pave the way to afford providers the ability to enforce their rights. This will hopefully help New York recognize the flaws in the out-of-network reimbursement system and in insurers’ conduct. Someone will have to take this issue up with the courts.
About the Authors
Thomas J. Force, Esq., is the founder, president and chairman of the board of The Patriot Group, a full service revenue recovery company that provides billing, collections, and follow-up services as well as assistance with managed care appeals, managed care contracting, credentialing and compliance. Mr. Force is nationally recognized as an expert in revenue collection techniques, managed care contracting and appeal strategies.
Akshara Kannan, Esq., is an associate with the Force Law Firm, P.C. She earned her J.D., cum laude, from the Syracuse University College of Law where she was inducted into the Order of Barristers and Justinian Honorary Society. Ms. Kannan is admitted to practice law in the State of New York.
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1 Premier Health Center, P.C. et al. UnitedHealth Group, et al. Civ. Action No. 11-425 (ES) (D.N.J. 2012)