Hospital emergency room doctors, nurses and technicians are our trusted first-responders who are legally bound to treat all patients, regardless of their ability to pay. And just as ER patients count on these life-saving emergency care providers, hospitals depend on federal law to protect them from unreasonable managed care restrictions and reimbursement denials. Still, some health maintenance organizations repeatedly exploit gaps in the law to avoid paying ER bills.
The federal Emergency Medical Treatment and Active Labor Act (EMTALA) both safeguards ER patients by imposing stiff penalties on providers who fail to treat them, and waives most managed care restrictions for providers. Under EMTALA, insurers that pay emergency bills must reimburse fees for those services—in network or out. Payers generally are required to reimburse emergency services as stipulated in the contract.
Still, several recent legal cases have sought to uphold payment denials by Medicaid insurers when there is no contract between the HMO payer and the hospital emergency care provider. Typically, the reason non-participating HMOs deny claims is that only state Medicaid offices have the express ability to sanction delinquent HMOs, unless the contract is read carefully to confer an implied right on a provider to pursue payment. And even if the state imposes sanctions, the HMO likely would not pay what it is owed.
So these disputes are in the courts. In Prince George’s Hospital Center v. Advantage Healthplan Inc.—a case in the U.S. District Court for the District of Columbia for over 10 years—our client PGHC, a Maryland hospital bordering Washington, D.C., provided emergency services to patients who were D.C. residents and covered by D.C. Medicaid HMO Advantage. Advantage then failed to reimburse PGHC for emergency services rendered—including care for a sick newborn and a victim of multiple gunshot wounds—because PGHC was an out-of-network hospital and did not adhere to its rules.
PGHC argued in court that both the Medicaid patients and health care providers, especially hospitals rendering emergency services, should be paid as third-party beneficiaries to Advantage’s contract with the D.C. government. Since the Medicaid recipients are not responsible for covered charges, they would never be held responsible for payment of the denied emergency services. Thus, PGHC asserted that it had a right to sue (or cause of action) for breach of contract as a third-party beneficiary of Advantage’s Medicaid managed care organization (MCO) contract with the District.
In June 2012, the first judge assigned to the case found that while the federal Medicaid statute requires Medicaid MCOs to reimburse healthcare providers for emergency services, it is silent as to whether a provider has the right to sue to recover unpaid emergency fees. That silence, the judge decided, suggests that Congress did not intend for healthcare providers to invoke violation of the Medicaid statute as a judicial remedy. So the judge ruled that PGHC couldn’t sue Advantage on statutory grounds.
Yet the court also found in its first opinion that PGHC is a third-party beneficiary of Advantage’s contract with the D.C. government. The judge ruled that when the D.C. office responsible for Medicaid entered into its contract with Advantage, the provision in which Advantage promised to pay emergency providers created a third-party beneficiary among this class of providers. This promise, which the court found was implied if not expressly made, is consistent with traditional contract law in the District and nationwide.
Unfortunately, a new judge assigned to the case issued a second opinion in October 2013 overturning the court’s first ruling. The new judge decided that since the D.C.-Advantage contract was silent as to third-party-beneficiary status, she would look to other instructive sources.
Despite this setback, the remedy for hospitals still may lie in the courts, as other cases work through the system. Meanwhile, providers should press state Medicaid offices to clearly convey in contracts with Medicaid MCOs that third-party-beneficiary status is created for remedy in a court of law. As the PGHC v. Advantage case shows, emergency providers desperately need express contract language empowering them to be reimbursed.
Case citations:
Prince George’s Hospital Center v. Advantage Healthplan Inc., — F.Supp.2d —, Med & Med GD (CCH) P 304,654 (D.D.C., Oct. 21, 2013), Civil Action No. 03–CV–2392 (KBJ)
Prince George’s Hospital Center v. Advantage Healthplan Inc., 865 F.Supp.2d 47, Med & Med GD (CCH) P 304,047 (D.D.C., June 06, 2012) (NO. CIV.A. 03-2392 RWR)
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