LARGE HOSPITAL CONTRACTUALLY PROHIBITS COMPETITION
All of you have undoubtedly dealt with a situation where there are only a few hospitals in a region, and they abuse that fact liberally. This dispute, which was recently settled in Texas, is titled United States of America and State of Texas v. United Regional Health Care System, 2011 WL 846762 (N.D.Tex.). You will recognize the story, as it has certainly happened to you, too!In this case, plaintiffs brought a civil antitrust action to enjoin United Regional Health Care System from entering into, maintaining, or enforcing contracts with health insurers that effectively prevented those insurers from contracting with United Regional’s competitors, in violation of the Sherman Antitrust Act.
According to the complaint, United Regional was the largest hospital in Wichita Falls, Texas. It was revealed that United Regional’s average per-day rate for inpatient hospital services sold to commercial health insurers for about 70 percent more than its closest competitor. In order to maintain a monopoly, United Regional systematically required insurers to enter into contracts that prohibited them from contracting with the hospital’s competitors, and required these insurers to pay significantly higher prices if they contracted with a nearby competing facility.
Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, remarked, “Unfettered competition among hospitals is vital to ensuring that patients receive high-quality, low-cost health care…”
A settlement has been reached which will prohibit United Regional from entering into agreements with insurers that improperly inhibit them from contracting with United Regional’s competitors. In particular, United Regional is prohibited from conditioning prices and discounts on whether those insurers contract with other providers. United Regional is also prohibited from taking any retaliatory actions against an insurer that enters into an agreement with a rival provider.
HOSPITAL SUBMITS FRAUDULENT BILLS AND NETWORK PROHIBITS AUDIT
If you think hospitals are submitting excessive charges, but you can’t know for sure because you’re handcuffed by your network agreements, this case is for you!
The matter in California involves a major healthcare services provider and preferred provider organization network, as well as a firm performing claims review services on behalf of a benefit plan and its third party administrator. The dispute, entitled The State of California ex rel. and Rockville Recovery Associates Ltd. v. MultiPlan Inc., et. al., Case No. 34-2010-00079432 has received quite a bit of media attention already, and word of its potential impact on our industry is already spreading.
The assertions described by Attorney Gene S. Woo, Senior Staff Counsel for the California Department of Insurance in his Memorandum of Points and Authorities likely strikes a chord with many benefit plan administrators, and the third party administrators that service them.
In summary, the memorandum describes fraudulent billing practices perpetrated by hospitals and other healthcare facilities, whereby these billing entities routinely submitted invoices for services that were not performed, were already paid for as part of other claims, or were simply inexcusably excessive. The memorandum identifies these practices as fraudulent, and the plaintiffs seek to pursue legal action against the billing parties.
In addition to these predatory billing practices, the memorandum goes on to accuse the applicable PPO network of aiding and abetting these fraudulent billing practices. Indeed, the network contract that bound the benefit plan in this matter, prohibited the plan from auditing the claims in question, and precluded the payer from examining the claims for inappropriate, excluded, and/or excessive charges. This is likely a scenario with which you are already familiar.
YOU CAN FIGHT BACK!
These cases are a clear indication that both the Federal and State governments are developing a new interest in provider billing practices. As it has become more evident that unconscionable billing procedures perpetrated by healthcare providers are one of the major catalysts for skyrocketing healthcare costs, authorities have become more involved in culling such behavior.
As always, we are looking at ways to utilize these developments in our defense of benefit plans and their plan participants. At this time, we are asking the industry at large to review their claims history, discuss these matters with their subcontractors and service providers, and if they have access to any evidence of similar abuses or predatory billing practices, please contact us immediately to discuss, as it may be possible to execute similar action in other States.
PLEASE CALL ADAM V. RUSSO AT 781-535-5622 OR E-MAIL ATTORNEY RUSSO AT ARUSSO@PHIAGROUP.COM. YOU MAY ALSO CONTACT ATTORNEY RON E. PECK AT 781-535-5617 OR BY E-MAIL AT RPECK@PHIAGROUP.COM.
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