Now what? Steps physicians must take after calling it quits with a health plan

Robert E. Schiller, JDYour practice successfully terminated participation in a health plan that no longer represents a good value proposition for you. Here are some things to think about as you become a non-participating provider.

The first thing to do is tell your side of the story. As with many divorces, there might be a perception battle over the split. The health plan will communicate with your patients and with other participating providers, including those that refer patients to you, in order to let them know that you no longer participate, and to steer patients to providers who are still in-network.

Even if the wording of these communications is completely innocuous, if the perception is that the health plan made the decision to terminate your contract, this may raise questions among your patients, and referring providers, as to whether some quality or other concerns led to that decision.

You will want to communicate with these same audiences. For starters, you will want to let them know that it was your decision to terminate the agreement, and you may want to provide some explanation for that decision.

Continuity of care

Patients should also be reminded of any applicable “continuity of care” rules that would permit them to continue an ongoing course of treatment with you on an in-network basis for some period of time following the termination date, and that they can still see you on an out-of-network basis, to the extent that their coverage provides out-of-network benefits. You may also wish to expressly list the health plans with which you are still participating, in case a patient has the ability to change health plans.

Tread carefully here, though. First, there may be statutes, regulations, or other administrative standards that could bear on these communications generally, or to those under specific types of programs, including government programs. Second, you will probably be subject to contract terms that pertain to these types of communications as well.

For example, some agreements may have provisions governing communications with members in the context of a termination, and may even require that you share any proposed communications with the health plan, in advance.

In addition, many provider contracts contain a “non-solicitation” or similarly-named clause prohibiting you from encouraging members to leave the health plan and obtain coverage somewhere else. At a minimum, these prohibitions are typically effective through the termination of the agreement, but often they will say that they extend for a year or more after termination. As always, review your contracts carefully.

Finally, even assuming your provider contract does not establish any specific rules for these types of communications, you need to be careful about what you say. If the health plan perceives your comments as disparaging, you may find yourself in an unwanted fight.

Filling the gap

After dealing with that perception issue, you will also have to deal with a new reality-figuring out how to make sure you continue to get paid. One of the most important benefits of “participating” with a health plan, of course, is the fact that you receive the bulk of your payment directly from the health plan (hopefully within timeframes established under applicable prompt payment laws) and only have to pursue the cost-sharing amounts from the patient. However, many health plans refuse to pay non-participating providers directly. Instead, they pay the member and require you to pursue the payment from the member. This may or may not complicate your administrative processes, but it will almost certainly slow down your cash flow. You may need to overhaul your billing processes to ensure that you are monitoring the health plan’s claims decisions and payments in a timely manner, and are taking appropriate steps to follow up with patients to collect payments, or collaborate on appeals, if necessary.

Consider regulations

You may be tempted to get creative when it comes to the collection of member cost-shares (deductibles, coinsurance, and copayments), but there are many factors you need to consider.

As a general matter, you cannot routinely waive cost-shares under government programs such as Medicare and Medicaid (including managed care plans), because this would potentially violate several federal laws.

The Office of the Inspector General of the U.S. Department of Health and Human Services has stated that you can waive cost-share charges after determining in good faith that the individual is in financial need, or that reasonable collection efforts have failed. However, this involves making an individual determination in each case; routinely waiving these amounts regardless of financial need would be problematic. Violations of the applicable federal laws could result in significant penalties, including treble damages and possible exclusion from government programs.

Rules murkier for commercial plans

The rules can be a little murkier for commercial benefit plans, because the federal prohibitions noted above would not apply. You should confirm whether there are state rules that expressly prohibit the waiver of these charges. H

However, even if there is not an express statutory or regulatory prohibition, there are other legal considerations. First and foremost is the question of whether you might be deemed to have submitted a fraudulent claim if you submit a bill that sets forth a charge that you don’t really ever expect to collect.

For example, if your charge for a service is $1,000, but you are routinely collecting only $500 and waiving the balance, you leave yourself open to allegations that your charge is really only $500, rather than the $1,000 you have been submitting.

It can be argued that proper disclosure of the waiver or reduction to the health plan would eliminate the fraud argument, since the health plan would be on notice, and it could not be said that you were attempting to conceal it. But even if true, be aware that there are other legal arguments that could be raised against you.

Some health plans have argued that a provider who waives all cost-sharing requirements and accepts the health plan’s payment as payment in full has essentially agreed to provide free care, and if a benefit plan excludes coverage of free care (as they typically do), the health plan has no obligation to make any payment on the claim.

Or, where the provider waives an applicable deductible, a health plan may argue that its obligation to make any payment only arises after the deductible has been met, so that the health plan is not obligated to make any payment if the deductible has been waived.

Health plans may also allege that the provider is tortiously interfering with the health plan’s contract with its member by circumventing its benefit design. Decisions about the waiver or reduction of cost-share amounts are tricky, and the consequences can be severe.

Dropping participation with one or more health plans is often a big decision, and should not be taken lightly, but proper planning can ease the transition and soften the financial blow.

The author is partner with Garfunkel Wild, P.C., and a member of the firm’s healthcare law and insurance regulatory groups. Send your practice management questions to medec@advanstar.com.

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