Most health plans have contracts with hospitals that require billing within 180 days of the date of service. Some self-insured plans allow hospitals to submit their bills for up to a year. There are strict statutes in place to ensure these billing deadlines are upheld. Payers strictly enforce these deadlines, even when no harm is done by a brief delay. In a small number of cases, these contracts obligate the payer to allow for extenuating circumstances. In all other instances, the only recourse for a provider is to pursue legal action.
Strict enforcement of the statutes means that if the provider’s claim is late, even by a day, the health plan may refuse to pay any part of the claim—including EMTALA fees and related ancillary charges. The law, however, does not necessarily support this position, especially when it is impossible for the hospital to meet the payer’s deadline or the delay was an immaterial breach of contract.
Normally, a small billing delay is considered an immaterial breach, not a violation of a strict condition of the contract. The legal question then becomes, “How is a payer harmed by the one-day delay in billing?”
Case in point: A patient arrives at the hospital and the admitting staff determines she has coverage under Amerigroup, a Medicaid payer (MCO), making it the payer of last resort. However, the patient only presents an Amerigroup I.D. when she is admitted. The hospital performs due diligence and verifies patient eligibility, notifies Amerigroup of the admission and obtains authorization, steps required under the contract.
The hospital bills AGP and is paid. Several months later, AGP retracts payment because, in fact, Kaiser is the patient’s primary payer. The hospital then belatedly bills Kaiser, but the health plan denies its claim for lack of notification and authorization.
The denied claim makes the patient responsible for failure to provide the Kaiser I.D. card. But under Medicaid, the patient is never held responsible for payment. The result is that the hospital is left to write off the bill, despite the fact that the hospital had no way of knowing that the patient also had Kaiser insurance, either because the patient arrived unconscious or she did not give her Kaiser card upon admission. Clearly, this situation is an impossible case for the hospital because it required patient participation and corroboration.
In order to address this issue, the contracted provider must ensure that the provider services contract includes terms that offer adequate protection. Nearly all provider-payer contracts acknowledge “late” filing circumstances, as do statutes and regulations. For instance, the Model Rules endorsed by the National Association of Insurance Commissions—and adopted by many states—indicate that coordination of benefits is a permissible situation that allows for the filing of claims that would otherwise be untimely. For example, after payment of one plan, the health plans learns that the patient has coverage through another plan long after the typical 180-day filing period, and coordination of benefits may be permissible.
In cases of retroactive denial of the coordination of benefits, payers are required to acknowledge that the 180-day limitation is not strict; there are exceptions to that rule.
Nonetheless, the hospital must conduct due diligence to determine who the payers are and bill all potential payers at the beginning of the process, if possible. That includes documenting requests for coverage information made to the patient, retaining electronic copies of handwritten notes and entries made regarding these requests, and checking electronic clearinghouse database services such as HDX, FISS and Medicaid’s Electronic Verification Services.
It is important to note that a payer can retract payment because it later discovers that its member had primary coverage through another health plan. The hospital should then insist—in its provider services agreements’ express terms—that should the hospital be unable to reasonably confirm coverage at the time of admission, the deadline to file should be extended.
Regardless of exceptions in the law, hospitals should always protect themselves by billing and notifying all potential payers when the patient is first admitted.
Gustavo Matheus is a member of Anderson & Quinn, LLC, in Rockville, Maryland, representing hospitals, medical practices, nursing homes, and outpatient centers with exceptional legal and denials management services. www.andersonquinn.com.
