In the absence of a contract, health providers may balance bill the patient

Surprise? What surprise? There's no surprise! You received treatment or consultation, there's a bill and this is how much you owe. When can we expect payment?

In June of this year, Oakland, Calif.-based Kaiser Permanente filed a temporary restraining order to prevent Honolulu-based Queen's Health Systems from directly billing patients covered by Kaiser insurance plans alleging that Queen's is unfairly billing patients.

Kaiser was trying to be magnanimous with Queen's Health Systems revenues to ensure its health plan members would not receive bills directly from Queen's for costs outside of deductibles and copays. They filed in federal court asking the federal judge to allow Kaiser to pay only the "reasonable value of Queen's emergency serv-ices." Kaiser spokeswoman Laura Lott told the Star-Advertiser Kaiser wants "a fair and equitable agreement" but won't "stand by while they threaten patients with surprise bills to gain bargaining leverage."

"Unfortunately, [Queen's] continues to threaten to bill patients for the balance of any charges, above what Kaiser Permanente pays. This practice, known as balance billing, is intolerable and puts patients, who may already be dealing with serious and stressful health issues, in the middle of a contract dispute," she added.

The power of "No thanks"

In the filing, Kaiser claimed it has the unilateral right to determine how much it must pay Queen's and that Queen's had no recourse but to accept whatever Kaiser decides to pay. "Kaiser did not indicate — to the court or to Queen's — how much it planned to pay for Queen's services. Queens took the stand that it would not accept an undefined payment schedule and decided it would send Kaiser's members balance bills for the undiscounted rate on the chargemaster. Queen's asked the court for a dismissal. Its contract with Kaiser expired May 30.

Without an in force contract and favorable negotiated rate, the standard rates apply

Kaiser has done something that is very widespread across the USA, where an 11th hour play by the health plan without an acceptable resolution leads to a stalemate with the provider hoping that the provider will capitulate to a bad deal for itself out of fear of the court of public opinion.

Standing their ground is something I teach my clients to do and I teach them how to strategically analyze the marketplace - especially when the hospital has leverage as the only hospital in the area. In the case of Honolulu, there are several health systems that dot the map of Oahu. Patients and ambulances go to the hospital or health system they choose.

Further, when the rates don't cover actual "costs" of care, why should the hospital accept a disadvantaged position? There's no business case argument to accept less than costs of care. A unilateral assertion that the plan is willing to pay an arbitrary amount that in its unilateral opinion represents "reasonable value of the provider's services" is baloney. Well, actually, I was really thinking of a different word that starts with a "B" but I'll keep it professional. Any plan could argue that $1 is reasonable value... in its opinion. What's that we say about opinions....? Everyone has one? Nobody cares what the health plan's opinion is regarding reasonable value unless they have the power to negotiate that amount as the amount payable for the services. What matters is the amount that's on the contract. And if the plan won't state the fees it intends to pay - and no lesser of language - for each and every service code on the chargemaster, then the hospital should say "no thanks" and let the chips fall where they may for the health plan.

Instead, the position that Kaiser took was to blame and besmirch the health system hoping for a pity party that the nasty hospital system would bill the patients with surprise balance bills. Hey, if you can't play fair at the negotiation table, expect to be denied a contract.

And the judge sided with the hospital

In dismissing the lawsuit with prejudice Oct. 31, Judge Derrick Watson, a U.S. District judge in Hawaii, said there are "no real winners," according to the report. A dismissal with prejudice is dismissal of a case on merits after adjudication. The plaintiff is barred from bringing an action on the same claim. Dismissal with prejudice is a final judgment and the case becomes res judicata on the claims that were or could have been brought in it. At a federal level, this decision carries a wallop not only in Hawaii, but may set precedent elsewhere. Cases that are entirely based on state law may be brought in federal court under the court’s “diversity jurisdiction.” Diversity jurisdiction allows a plaintiff of one state to file a lawsuit in federal court when the defendant is located in a different state. To bring a state law claim in federal court, all of the plaintiffs must be located in different states than all of the defendants, and the “amount in controversy” must be more than $75,000. (The rules for diversity jurisdiction are much more complicated than explained here, but you get the basic idea.) Often, in managed care agreements plans are located in the state in which the provider renders services - but not always...

Res judicata (RJ) or res iudicata, also known as claim preclusion, is the term for "a matter [already] judged". In a case in which there has been a final judgment the matter is no longer subject to appeal. The legal doctrine is meant to bar (or preclude) continued litigation of a case on same issues between the same parties. In the case of res judicata, the matter cannot be raised again, either in the same court or in a different court. A court will use res judicata to deny reconsideration of a matter.

The judge's decision was as follows: "In terms of dollars and cents, eventually someone or some entity will need to pay (or be ordered to pay) for the services QMC has rendered to Kaiser's members."

Yup. No contract - no discount.

So res judicata rests the matter between Queens and Kaiser. But what happens if the next matter is between XYZ hospital and another health plan? The defense will cite this decision if the matter giving rise to the suit are essentially similar to the Kaiser v Queens case and argue precedent. If the court agrees, the matter may be easier to settle or dismiss.

The thing of it is this: don't fear saying "no" if the contract is bad for your business. Let some other health system (your competitor) have it. Send flowers if they sign. Hope they last til the funeral.

• If patients have to travel 60 miles to the next nearest hospital, that's on the plan.
• If it means the plan doesn't maintain "network adequacy" because they don't have a hospital in the county where they've sold policies, that's on the plan. The state will enjoin them from selling policies in your county and your patients will have to choose to drive someplace else or pick a different health plan with a Certificate of Authority in your county.
• Plan's aren't "entitled" to discounts that are so deep they fail to cover the cost of care. That honor is reserved for Medicare.
• You are entitled to bill your chargemaster (standard) rates and be paid in full in the absence of a contract that negotiates an "alternative rate". Your alternative rates are your prerogative. Post them and be transparent. You have nothing to hide. Your rates are your rates. If you wish to offer your own discounted bundled rates in exchange for cash or financed payment in full, that's okay too.

Your hospital need not be the bank, either. There are lenders who will loan patients the funds to pay on the date of service that feature no recourse to the provider with 25% down and 9-12 months to pay off the loan with zero interest. The one I prefer is CarePayUSA. I have a direct line to the SVP and he'll do what it takes to get you set up with their program in a matter of hours. They work with individual physicians, physical therapists, imaging providers, labs, primary care centers, health systems, ASCs and other providers. They loan from $500 to $20,000 with a soft credit pull and approve 97% of applicants who have a job. The patient must have a bank account to draw the auto-repay installments bi-weekly or monthly. CarePayUSA actually purchases the account from you for a percentage. You can load that percentage into your price if you prefer. The loan does not show up on the patient's credit report... and the provider does not need to be the bank. Once you are on the program, the patient can use their smartphone to apply on the spot and get a yes or no answer in minutes, before they leave your facility...or prior to treatment on elective services. And let's face facts here: if the patient can't qualify on these generous terms, it generally means there's a propensity not to pay. Why would your clinic or hospital extend credit on such a known risk?

Want to learn more? Want to learn how to improve your payor contracts and revenues and margins from discounted rate negotiations?

Come take my Master Classes on Managed Care Contracting. I'll teach you how to analyze the rates, the language, and the marketplace so you can develop a contracting and partnering strategy and set deal breaker indicators. But I also teach how to seek out and negotiate alternatives to contract directly with employers and offer cash rates so your hospital is in control of discounts - your fees; your decision. And remember... you can fight city hall. you just have to know how and when it makes sense to do so. That's a simple case of modeling and market assessment.

I don't teach "theory". I teach practical tactics and strategy that works and I've got thousands of references to prove my recommendations work. You don't just fold your arms across your chest and say "no" unless that's the only answer. I teach you when "no" may be the only "right answer". But I also teach you how to structure alternatives and counteroffers before you have to resort to "no".

I also work individually as a coach or mentor on an hourly basis, I analyze contract language as a consultant, and I also offer private "flat fee" (plus travel) Master Class workshops onsite at your organization. But I only have time available for one client onsite workshop per month. Remember, I work at a facility a few days a week in my home city where I roll up my sleeves each week doing what I teach as Director of Business Development. With me there are no "pie in the sky" recommendations and fantasy strategies and tactics or wishful impracticable thinking. Claim your spot for 2020 now or risk waiting until 2021 for the next available opportunity.