REASONABLENESS
It is imprudent to address “Never Events” by name in your plan document or policy. As a new issue, there is no concrete definition agreed upon by the industry. This can result in considerable confusion when determining what is payable, and what is actually a “Never Event.” Due to the uncertainty intrinsic to this topic, administrators and carriers should be more creative when addressing situations that may constitute Never Events.
The Phia Group has developed a strategy that will allow benefit plans to avoid payment of Never Event claims without confronting the ambiguity inherent in that terminology.
Unlike Usual and Customary (U&C) limitations, which relate to the amount charged, Reasonableness relates to the basis for the charge. In other words, the amount charged is irrelevant. What is relevant is the service being charged for. For some time, payers have examined charges only to determine whether the amount charged is usual and customary. While payers frequently review claims for medical necessity, and to ensure they are not excluded by the Plan, rarely if ever do payers examine claims to determine whether the service for which they are being charged is reasonable.
If a plan participant visits a hospital to undergo a treatment which, if done correctly, is an outpatient procedure costing the Plan no more than $5,000.00, but leaves the hospital a month later having incurred almost $50,000.00 in claims – does that seem reasonable? Medical providers are human beings, and like all of us, make mistakes. Unlike the rest of us, however, only Medical Providers profit from those errors. For example, if you bring your automobile to a mechanic, and the mechanic fails to fix the problem the first time, you are entitled to a second repair (within a reasonable period of time) for no charge. Only Medical Providers can exacerbate an issue and then charge for it.
Self-funded benefit plans have the right to pay only for reasonable charges and reasonable treatments. If a Medical Provider’s error causes additional treatments to become necessary, that Medical Provider should supply those additional treatments for free. In other words, Medical Providers should be expected to perform tasks without mistake, and if a mistake is made, should not benefit from that mistake by charging others fees for their costly errors.
We recently handled one case where a patient, visiting a hospital for a standard procedure, suffered a lacerated bowel – leading to additional surgeries and infection. What should have been a $10,000.00 treatment became a $90,000.00 treatment. Arguing that the Plan reasonably expected to pay $10,000.00 for the treatment for which the patient visited the hospital, and the unreasonableness of paying for provider errors, we were able to retrieve an overpayment refund.
The Phia Group is both pursuing recovery of unreasonable charges on our clients’ behalf, as well as providing our clients with new plan language that will allow them to avoid charges for unreasonable services.
Contact our legal team to discuss this issue. To set up an appointment, please call 888-986-0080 and speak to Cindy Monfils at extension 155. Ms. Monfils can be reached by email as well at cmonfils@phiagroup.com.
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