A class-action lawsuit has been filed against the Blue Cross Blue Shield Association and 22 BCBS insurers nationwide by three chiropractors' organizations looking to recover potentially hundreds of millions of dollars that were allegedly taken from them through ERISA and RICO violations.
In a suit filed in U.S. District Court in Chicago, the Pennsylvania Chiropractic Association, the New York Chiropractic Council, and the Association of New Jersey Chiropractors allege that the Blues misused post-payment audits to coerce repayments from providers for services that had already been provided to enrollees. The chiropractors allege that BCBSA worked with its state BCBS licensees in the recoupment efforts.
"In essence, the BCBS entities simply state there are overpayments and then just take the money from providers, without valid due process protections," says the plaintiffs' lawyer Brian Hufford, with Pomerantz Haudek Grossman & Gross LLP. "We believe this is a blatant violation of law."
Co-counsel Vincent Buttaci, of Buttaci & Leardi, says the recovery could be considerable. He adds that BCBSA announced on June 30 that its National Anti-Fraud Department had recovered nearly $350 million as a result of the anti-fraud investigations in 2008. "We believe a substantial portion of this 'recovery' falls within the improper practices we are challenging in this action," Buttaci says.
BCBSA did not immediately return calls seeking comment Friday.
The chiropractors groups claim that the post-payment audits and review process applied by the Blues violates the Employee Retirement Income Security Act, because the Blues don't have a proper appeals process or other protections required under ERISA for both self-funded and fully insured healthcare plans offered through private employers.
The suit also alleges that the Blues frequently withheld new benefit payments for unrelated services to apply toward the alleged overpayments, even where there was no validation that any sums are in fact owed by the providers. Those practices, the suit alleges, violate the Racketeer Influenced and Corrupt Organizations Act.
"We met on numerous occasions with Blues senior management in an effort to establish a fair and balanced approach to conducting post-payment reviews, but to no avail," says PCA Executive Director Gene Veno.
"The PCA elected to join this action to ensure that the rights of our members are protected."
The three chiropractor organizations filed suit on behalf of their members, while 14 individual chiropractors and one occupational therapist, located around the country, have sued as the class representatives of the putative class.
The NYCC and the ANJC had previously joined in a class-action recently filed against Aetna, Inc. for similar post-payment audit practices.
The New York Times took the pulse of several leading economists and healthcare power brokers in an attempt to identify what important considerations President Obama left out of his speech before Congress on Sept. 9. Included are former Clinton administration labor secretary and economist Robert Reich and Bush administration CMS head Mark McClellan.
Friction occurs when an object moving through space, encounters resistance, slows down, and has its forward energy diverted. In the world of healthcare, friction is a term that has become synonymous with paperwork.
Today, the U.S. spends $2.3 trillion on healthcare, and the U.S. Health Care Efficiency Index estimates that we could reduce this cost by $30 billion if we could eliminate the friction of phone-based and paper-based systems.
This is a significant savings, and the American Recovery and Reinvestment Act is an attempt to realize that savings with a very targeted focus on electronic medical records. If all of the physicians in the country used EMRs, the argument goes, we would dramatically improve the efficiency of our healthcare system. The only problem is that only 17% of physicians are using EMRs today, so we're talking about converting 83% of physicians to a computerized system for maintaining patient records, and while we absolutely must move in that direction, it is going to be a long and time-consuming process.
Low-hanging fruit
Meanwhile, a much quicker fix is not getting much attention in the current debate, and that is the savings that could be realized by full conversion to electronic healthcare claims.
Unlike EMRs, electronic claims aren't slowed down by privacy issues and other barriers that arise with business-to-human transactions. They offer billions of dollars of savings. According to the Center for Health Transformation, 90% of claim payments are still made in the form of a paper check. By eliminating these paper-based checks, the U.S. could reduce the overall cost of healthcare by $11 billion.
Every paper check that is eliminated and replaced with a wire transfer saves the payer 78 cents, according to a study by Yoo and Harner.And given the fact that a few large payers—United Healthcare, Aetna, Cigna, and BlueCross BlueShield—are responsible for a majority of claims checks written in this country, making the switch to electronic healthcare claims may be easier than you think.
How we make the switch
Making this change requires a standardized process that all participants would agree to follow, that would include several basic elements:
It would start with shared and enforced electronic standards for eligibility, authorization and claims processing for all payers and providers.
These eligibility standards would need to be clearly communicated to providers.
The next step would be establishing agreements between payers and providers on "approved" processes for complex, high-costs cases.
And finally, there would need to be a system of third-party monitoring for adherence to the standards.
Frictionless healthcare is about removing cost from the system. If we start by eliminating paper-based claims, we could achieve a significant savings success story that could actually make it easier to achieve ultimate success in the goal of healthcare reform. And saving $11 billion in the process wouldn't be a bad way to get started.
Fletcher Lance directs the national healthcare practice of North Highland, a business consulting firm. He may be reached at Fletcher.Lance@northhighland.com.For information on how you can contribute to HealthLeaders Media online, please read our Editorial Guidelines.
I have often read or heard the phrase "declare victory and move on" lately, especially regarding the fight to reform the healthcare system. Perhaps you've heard the "declaring victory" phrase before too. It's often used in the occasion of political fights of one sort or another. It's also often used as a face-saving way to get out of unpopular wars.
That ought to tell you something.
Recently, I've heard it used regarding the political brawl that has evolved from the president's call to reform healthcare through Congressional legislation. This past Wednesday night, President Obama took to the airwaves to jawbone a sluggish Congress to pass a healthcare reform bill already. Obama continued to push stringently to cover the uninsured in any legislation, while refusing to change his nonposition on the latest political hot potato, the so-called public option health plan. Yawn, but I understand his position even if I don't agree with it.
If reform goes down in flames because he insists on a public option or rejects it, there's no way victory can be declared. Fine. That's politically prudent, if not necessarily visionary leadership. But let's be honest, that's one way the status quo stays entrenched.
I don't mean to pick on him, because he didn't use the words "declaring victory," but recently, New York Rep. Michael Arcuri said a curious thing regarding healthcare reform.
"I can't tell you how comprehensive it will be, but I do believe something will get passed," Arcuri, a second-term "Blue Dog" Democrat, told the New York Times.
As if that's what's important: Getting something passed, rather than something of substance and sustainability. I don't know about you, but it sound to me as though getting something passed is much more important than passing legislation that shares sacrifice among all stakeholders in this fight. But get anything passed and the president and Congress will be able to declare victory, whether or not anything meaningful or sustainable is achieved regarding cost and access issues in any healthcare reform legislation.
Though there's been much grandstanding from both parties over the merits and shortcomings of the Democrats' approach to reform, which seems to center on the public option, there's been comparatively little attention to a key part of the healthcare debate: The unsustainable increase in costs that healthcare has experienced over the better part of the past three decades. And let's not forget that amid this brinksmanship between the two parties, that those who would secretly prefer that nothing get done are probably gleefully watching this spectacle like a football game that's rigged in their favor.
I once had a friend who would always offer this rejoinder whenever he thanked me for doing some small favor, to which I always responded, "It was the least I could do." We'd always share a laugh when he would come back with, "The least you could have done is nothing. And doing nothing is always an option."
Indeed. But sometimes doing something is worse than nothing. Ostensibly, you elect representatives to get up to Washington and DO something. They go in with big ideas, but then political reality sets in, they compromise, pass something, and declare victory.
Translation: "Voters elect us to pass laws, so we passed one. We know it may well be a boondoggle. In our heart of hearts, we think it definitely won't achieve the goals it sets out to, but you will have re-elected me by then, so who cares?" The truth is, voters elect you to lead, and passing laws is only an important part of the job of leadership.
Declaring victory, on the other hand, is cynical, political, and it sure as heck isn't leadership.
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Employment discrimination lawsuits have doubled in the last 10 years, thanks in large part to provisions of the 1991 Civil Rights Act that give juries a say in financial settlements. Among the headlines: Publix supermarkets got slapped with an $82.5 million class-action sex discrimination settlement and Coca Cola paid nearly $192.5 million in 2000 to settle a class action.
In other words, juries are ready and eager to shower aggrieved former-employees-turned-plaintiffs with millions of dollars in settlement dollars at your business's expense.
"Plaintiffs don't win a huge percentage of lawsuits, but that percentage goes up a lot if there is a jury trial. After 1991, when jury trials came into play, the percentage of plaintiffs' wins increased and the dollar amounts increased," says Michael D. Malfitano, an attorney with Constangy, Brooks & Smith, LLP (CBS).
"Most jurors are working people with family members who may have had problems with employers at some point," Malfitano says. "So, there is a natural empathy with the working person who is the plaintiff."
Malfitano says that because of their relatively small size and close working relationships, physician practices are less likely to find themselves in an employment suit than larger healthcare entities, such as hospitals and nursing homes.
So what can you do to reduce your potential liability? Malfitano and fellow CBS attorney Cherie L. Silberman have identified the 20 most common mistakes that can come back to bite employers when a jury sets its teeth. Take a look, and give your workplace an honest appraisal and see how many snafus you recognize.
Pre-employment mistakes
Let's start with what Malfitano and Silberman call "pre-employment mistakes," the errors committed during the recruiting and hiring process.
1. Failure to conduct an adequate background check on potential employees. Did you conduct a criminal background check? Did you contact the references? Did you ask about previous convictions, but not arrests? Did you check his or her driver's license?
2. Inconsistent recruiting and hiring practices. Are you thorough in the hiring process with some employees but not with others? "When employers don't apply policies consistently, it looks to a juror like they may be discriminating," Silberman says.
3. Inappropriate interview questions and comments. This is a real minefield. Although you want to be thorough in your hiring process, you also have to be careful about what questions you ask. For example, you can ask about criminal convictions, but not arrests. You cannot ask about the status of military discharge, and questions about education have to be thoroughly screened. Avoid questions related to religious or social issues, as well as those related to physical or mental health. "Where employers get in trouble is where it may not seem so harmful, say in casual chatter. If someone says they're moving into town and you ask if it's so they can be closer to their husband. The intent doesn't matter," Silberman says.
Mistakes during employment
Then there is a category of mistakes that are made during employment.
4. Failure to properly pay non-exempt employees for breaks, lunch, and overtime training. "This is a ripe area for litigation right now," Silberman says.
5. Inappropriately classifying hourly employees as salaried employees to avoid overtime and other compensation. Just because you slap an "assistant to the assistant manager" title on somebody's name tag doesn't make him or her exempt from overtime and other benefits. Juries salivate over this issue. Malfitano recommends that physician practices undertake annual or biannual audits to ensure they haven't improperly classified employees as exempt. "In medical practice, that is not an unusual situation. We have seen receptionists answering the phone classified as exempt and not getting overtime. There is no way a receptionist would be exempt," he says.
6. Failure to implement, disseminate, and follow personnel policies. What are your harassment and discrimination policies? What are your corrective action and disciplinary policies? You might have the most progressive and comprehensive personnel policies in the business, but they're useless if you don't follow them.
7. Failure to train employees. Do your employees understand the finer points of the Americans with Disabilities Act? Do they understand that harassment is not limited to sex, but can include religion, age, race, ethnicity, disability, and marital status? This training should apply to all supervisors and managers, as well as HR.
8. Failure to document promptly and accurately. Prepare every document regarding warnings, complaints, and disciplinary action as if it is being introduced at trial and you are the jury. Be objective. Get the facts, not the conclusions. The document should include the date it was created, the name and signature of the author, the name and signatures of the witnesses, when applicable, and the stated purpose of the document.
9. Failure to appropriately evaluate employee performance. Make sure your assessment of your employees is accurate. Don't fudge over the problem areas because it's difficult to refute a former employee's complaint of being wrongfully denied a promotion after a soft-hearted supervisor gave a glowing, but undeserved, appraisal. "If they make a decision adverse to that employee later on because of poor performance, but there is no documentation to support that that could look like discrimination," Silberman says.
10. Failure to adequately discipline employees. Remember, the purpose of the discipline, beyond covering your own liabilities, is to help the employee improve. Juries really dislike it when they believe that employees are blindsided with punitive actions.
11. Failure to conduct thorough investigations into employee complaints and, if necessary, take prompt remedial action. If an employee tells you he or she is being harassed, look into it immediately. Again, this is not a difficult concept, but some employers hope to avoid confrontation at all costs, and often to their own detriment. Establish ground rules for the interviews, including providing the employee with an explanation about the complaint. Don't make judgments or draw conclusions. Make sure the employee answers the questions posed, listen carefully, and take notes.
12. Failure to curtail inappropriate use of office e-mail and computers. We've all heard about or experienced the employee who forwards tasteless, racist, or other offensive humor, or who uses Playboy centerfolds as his screen saver. This could be construed as creating a hostile work environment.
13. Failure to curtail employee favoritism or inconsistent treatment of employees. We all have seen this one, the boss's pet. Beware, this breeds a lot of resentment among employees—and jurors—many of whom have had to deal with it in their own work environment.
14. Failure to correctly designate absences under the Families and Medical Leave Act. Eligible employees can take up to 12 weeks off under FMLA at companies with 50 or more employees, who must have been employed there for at least a year, including 1,250 hours in the previous 12 months. Eligible categories include the birth of a child, placing a child for adoption or foster care, caring for a close relative with a serious health condition, and the employee's own serious health condition. This probably won't affect many of the smaller physician practices, but it's still a good idea to be aware of the law.
15. Failure to prepare for foreseeable employee terminations. If you see an employee that might be a good candidate for termination, plan for it. Document your case for termination. Provide that employee with the necessary notices, releases, and waivers. Determine whether that employee is in a "protected class," which could cause problems later. Make sure you have ready the fired employee's severance and vacation pay at the time of termination, and make sure it is accurately assessed.
Post-termination mistakes
And finally, we come to what Malfitano and Silberman call the "post-termination mistakes"—those loose ends you failed to secure when you cut your ties to a troublesome employee.
16. Allowing former employees to make copies of their personnel files. "The personnel file is not their file. It's the employer's property," Malfitano says. "Once the employee ceases to be an employee, there is no benefit to the employer relationship by letting them have access to the file. The only reason why former employees want the file, in our experience, is to sue their former employers." Some states require employers to make their files available, but most don't. Check your local statutes.
17. Inappropriate or defamatory comments about former employees. We all like to chat about how nice it is since you-know-who got canned. But doing so can constitute defamation. Be particularly careful with references for other employers. Confirm the basic facts and don't offer opinions. Be careful about even positive comments. "Once you say something good about one employee and you're not making the same comment about another, that is a de facto negative comment about the one you won't comment on," Silberman says.
18. Failure to tell former employees about their right to COBRA coverage. Remember, there have been some changes to COBRA coverage under the stimulus bill passed last winter. Make sure you understand who is eligible, who pays, and what subsidies are applied.
19. Failure to prepare for unemployment compensation appeals hearings. Again, this is not rocket science. This should be foreseen.
20. Failure to think about how a jury would view your personnel decisions before you make them. This can be an interesting exercise. Imagine you're sitting in the jury box. How would you view your own actions? "The bottom line is look to see if this is fair. If you are taking someone's livelihood away, and you're going to face the jury with this decision, make sure it is something you are comfortable with and ask if this is something that six random people would agree with," Silberman says.
If you look at these 20 common mistakes, they're remarkably avoidable, with a little bit of training and self-awareness. While following Malfitano's and Silberman's advice won't guarantee that you won't end up in court, it will probably improve your chances, or at least help you build a stronger case to bring before a jury.
The government agency that enforces the HIPAA privacy and security rules has a new leader.
Georgina C. Verdugo, former deputy assistant attorney general during President Clinton's administration, will lead HHS' Office for Civil Rights (OCR), HHS announced this week.
The department is the civil rights and health privacy rights law enforcement agency. It investigates complaints filed by the public and provides technical assistance and public education for federal nondiscrimination and health information privacy laws.
Verdugo takes over at a crucial time for OCR. The agency recently inherited the role of enforcing the HIPAA Security Rule from CMS. OCR had only enforced the Privacy Rule prior to the announcement.
OCR is also responsible for carrying out the HIPAA privacy and security regulations in the HITECH Act, which calls for more stringent HIPAA enforcement, larger monetary fines, greater breach notification requirements, and increased privacy rights to patients. HHS Secretary Kathleen Sebelius appointed Verdugo, whose experience includes:
Leading the Washington, D.C. office of the Mexican American Legal Defense and Educational Fund, one of the nation's preeminent Latino civil rights organizations
Served as deputy assistant attorney general in the U.S. Department of Justice's Office of Legislative Affairs during the Clinton administration, where she directed and supervised the legislative agenda for the Division of Civil Rights and other Department Divisions
Chief of staff for Congresswoman Lucille Roybal-Allard of California
Executive director of Americans for a Fair Chance, a collaborative civil rights project
Verdugo was assistant United States attorney in the U.S. Attorney's Office in San Diego from 2002 to 2003. She worked on border crime cases and advised on civil rights matters. Beginning in 2004, she was associate counsel for the Los Angeles Unified School District, where she provided legal and policy advice, and advised the district on civil rights, First Amendment, and other issues affecting the students and the school district.
Her most recent gig was a partner in private practice in Los Angeles, in which she represented public entities.
OCR has only levied two major HIPAA fines—Providence Health & Services in July 2008 ($100,000 fine and corrective actions) and CVS in February 2009 ($2.25 million fine).
Since the HIPAA privacy compliance date in April 2003, OCR, according to its Web site, has received 44,911 HIPAA privacy complaints, of which 19.4% (8,756) led to enforcement actions (8,756).
More than half (57.5%) of the cases were closed because they were not eligible for enforcement. Another 10% of investigations led to no violations.
For CEOs, emergency management lessons learned from the September 11 terrorist attacks remain relevant.
In the eight years since that infamous day, the United States has seen other disasters, and the same lessons seem to come up over and over again—which makes the September 11 anniversary a good opportunity to review the following emergency planning concerns:
Communication failures: During the attacks in New York City, so many people went on their mobile phones that the city's cell network became overloaded and slowed down. Meanwhile, incident commanders had trouble contacting emergency responders at the World Trade Center.
Such problems continue to haunt hospitals caught in the midst of emergency response. Just last month, an extensive New York Times article illustrated how healthcare workers at Memorial Medical Center in New Orleans were isolated from the outside world after Hurricane Katrina hit the city in 2005, in part because communication ability was limited.
It bears repeating that redundant communication options must exist in hospital emergency operation plans that reach beyond telephones and two-way radios. Recently, we've seen how some hospitals use social media sites like Facebook and Twitter to keep employees and the public abreast of emergency response activities. With The Joint Commission and the Centers for Disease Control and Prevention on social media sites, can hospitals afford to ignore that medium?
Flexible emergency responses: After the World Trade Center was attacked, hospitals throughout the Northeast prepared for surges of victims. Such demands were overestimated, as many victims never made it to triage, proving that ERs must have the ability to ebb and flow with the particulars of a disaster.
Earlier this year, hospitals in New York City again braced for the worst after a US Airways jet made a splashdown in the Hudson River. Luckily, all of the passengers survived and there were relatively few injuries, so hospitals had to scale back their responses.
The incident was a good example of how hospitals must ramp up emergency response efforts when they receive word of a problem, but don't know the extent of it, Richard Morrow, administrative director of safety at St. Vincent's Medical Center in Manhattan, said at the time of the incident during an interview with HCPro's Hospital Safety Center.
It's more effective to activate the incident command center at full throttle—and then pull back efforts once you've assessed the situation—than to react moderately, Morrow said.
More recently, the H1N1 swine flu pandemic points to this same principle, as on a given day, any ER could find itself suddenly inundated should a spike in swine flu cases occur in a community.
Escalating scenarios: Emergencies often experience further complications. The September 11 demonstrates this point, as first the World Trade Center towers were attacked, U.S. flights were grounded, the towers collapsed, and part of New York City was evacuated. Each escalation potentially worsened emergency response efforts at hospitals.
Since 2001, The Joint Commission has heavily emphasized that hospitals must anticipate an escalating series of events during a catastrophe, a concept that also came true during Katrina.
President Obama's new call to impose automatic spending cuts if the healthcare overhaul adds "one dime" to federal budget deficits could help push his top domestic priority over one of the biggest hurdles in its path through Congress. But for the first time he asked Congress to mandate that future Congresses and presidents "come forward with more spending cuts if the savings we promised don't materialize." While the White House does not have a specific method in mind, health economists have suggested that one such trigger could be a limit on Medicare payments to doctors and hospitals.
A day after President Obama pitched his plan for comprehensive healthcare reform to a joint session of Congress, administration officials struggled to detail how he would achieve his goal of extending coverage to uninsured Americans without increasing the deficit. The 10-year, $900 billion proposal Obama envisions borrows from concepts circulating on Capitol Hill, but there was little evidence that the broad ideas are sufficient to break a congressional logjam, according to the Washington Post.
Economic credentialing, the practice of evaluating practitioners through a monetary lens, has had its ups and downs over the years. These days it is considered a dirty word in many medical staffs, says Robin Locke Nagele, partner in the health law division of Post & Schell, PC, in Philadelphia.
"If you're engaged in economic credentialing, you definitely must be doing something wrong, which is unfortunate, because I think it's actually a fairly accurate term that—from the hospital perspective—is necessary at times," says Nagele.
Despite its connotation, many hospitals and medical staffs engage in it through practices such as physician profiling, exclusive contracts, and conflicts credentialing.
To naysayers, economic credentialing is a greedy practice that elevates the business of medicine to a higher point than quality clinical practices. However, to its supporters, economic credentialing is a responsible practice that ensures resources are properly managed.
"What I consider to be economic credentialing is really taking the economic consequences of having physicians providing services on your medical staff into account when you're designing the services that you're going to provide," says Nagele.
Kathy Poppitt, JD, a shareholder at Cox Smith, PC, in Austin, TX, says that although at some level medical staffs want to distance themselves from the negative connotations of economic credentialing, the practice has deep roots in modern healthcare.
"Recently, there has been some speculation on whether healthcare reform will lessen the need for economic credentialing," Poppitt says. "However, the factors that have lead to economic credentialing are only increasing."
These factors include pay for performance programs, Medicare's decision not to pay for never events, such as wrong site surgeries, and rising malpractice costs.
Nagele says hospitals and medical staffs need continuing education about economic credentialing issues, not only to stay on top of trends but to help dissolve the us-versus-them mentality. She says there is a perception of hospitals and medical staffs as two divergent groups with different economic interests coming into conflict, when in fact the opposite is and should be true.
"These are two groups that need each other and have a very symbiotic relationship and need to be working on the same page to overcome the many challenges that hospital based practice is facing in this day and age both from an economic point of view and a quality point of view."
Emily Berry is an associate editor for Briefings on Credentialing and Credentialing Resource Center Connection, and manages CredentialingResourceCenter.com. You can reach her at eberry@hcpro.com.
