Private Payer Class Action Lawsuits

As a result, physician groups must scrutinize all contract language and eliminate any provisions that give carriers blanket authorization to pay based on "standard payment policies" or other, equally broad language. If these "standard payment policies" are based on bundling edits that do not recognize certain procedures coded and billed with the -25 modifier (for example, a procedure is not "separately eligible for payment" but instead is bundled into the E/M service) then the payment provisions could violate the settlement agreement.

Because failure of the health plans to recognize and reimburse procedures and E/M services coded and billed with the -25 modifier was one of the major problems cited in the original class action lawsuit, specific protections and provisions that the health plans have agreed to exist in the settlement agreements to prevent bundling based on the use of the -25 modifier.

During contract negotiations, physicians should strike any language that gives the carrier latitude to pay according to "standard bundling methodology" or any similarly vague payment parameters. Instead, the managed care contract should specifically define the codes that will be paid, including all modifiers, so there can be no disagreement regarding what is covered. If the carrier balks, the physician negotiator should point to the settlement agreement and note that the carrier has already voluntarily agreed to the stipulations the negotiator seeks.

Too often, physicians will focus only on the reimbursement rate during negotiations and assume that the remainder of the contract language is essentially boilerplate that will have no bearing on payments made by the carrier. It is only later that they realize they've inadvertently signed off the very practices the class action settlements were meant to prevent. The result can be a significant loss of practice income. In some instances, up to 20-to-30 percent of codes may be disqualified.

Dispute resolution
One of the key elements in the settlement agreement is a formalized mechanism that allows for arbitration in the event a dispute cannot be resolved amicably between the parties. The process involves a tiered approach that initially relies on a compliance dispute mediator who will attempt to bring the parties together to resolve the issue without arbitration. Failing that, the dispute is then escalated to a special master (formally known as the Compliance Dispute Review Officer or CDRO), who will either hold additional hearings or eventually make a binding arbitration agreement. In bringing complaints to the dispute resolution process, it is important for physicians to collect evidence that demonstrates a "systemic problem" and not merely isolated incidences of alleged wrong behavior.

Knowledge is power Despite the success of the settlement agreements in changing the behavior of managed care companies, physicians must not let down their guard, particularly as the settlement agreements expire. An in-depth understanding of the terms agreed to in the settlements, rigorous scrutiny of carrier behavior, and a pro-active stance during contract negotiations should ensure that physicians continue to receive payments to which they are entitled.

Edward R. Gaines, III, JD, is vice president and chief compliance officer for MMP. He can be reached at egaines@cbizmmp.com .