The landscape of health care reimbursement is consequential and frequently in flux. For once, and in one important way, it has evolved in favor of infusion providers. Over the course of the last decade, court decisions have shown an increased judicial willingness to apply state common law and statutes to hold managed care companies and commercial health plans accountable for out-of-network claims. This trend is eroding the “air of invincibility” previously enjoyed by these large insurers.
For providers such as home infusion providers, specialty pharmacies, and infusion clinics, this legal evolution is a vital lifeline. These entities often operate under a “buy and bill” model. Under this framework, providers bear the upfront cost of infusion drugs, which can range from tens of thousands to hundreds of thousands of dollars per treatment. They provide life-saving care based on the expectation that health plans will honor their coverage representations in benefits verification calls and prior authorizations.
Further, relying on commercial plans is often a necessity rather than a choice, as alternative payment sources are unavailable or problematic.
- Medicare: Medicare coverage for infusion services is fractured and limited. It does not cover the majority of infusion therapies.
- Medicaid: Medicaid coverage, although generally broader than Medicare, varies by state, often reimburses providers at or below cost, and often imposes significant risks on providers in states like New York, where strict and sometimes picayune documentation requirements and aggressive auditing tactics create the possibility of later clawbacks.
Accordingly, commercial health plans are an important means through which patients obtain necessary infusion treatment and are an important source of payment that allows infusion providers to continue their mission.
The above-mentioned evolution has developed nationwide. Decisions from California to New Jersey have demonstrated a willingness to hold commercial plans and managed care companies accountable for failing to pay legitimate claims.
- In Summit Estate, a California court recognized that prior court precedent supported a claim against a managed care plan where the provider obtained a benefits verification and authorization. Notably, the court held that even a benefits verification call could be enough to state a claim against the plan.
- In Bristol Anesthesia, a Tennessee court held that an insurer was liable to the provider for its usual and customary rate based upon the insurer’s longstanding practice of paying similar claims from the provider.
- In Caris MPS, a Texas court concluded that an established course of dealing involving authorization and payment of the provider’s prior claims was enough to state a claim against the plan.
- In Abira Medical Laboratories, a New Jersey court recognized that preauthorization can create an implied contract with a commercial plan because the authorization acts as a manifestation to the provider that the insurer will pay.
At the turn of the decade, the importance of this issue was punctuated by the Circuit Court of Appeals in Plastic Surgery Center,1 which noted that the remedies available to out-of-network providers against commercial plans are a matter of “great importance to the health care industry” writ large.
While challenges in the reimbursement process remain, providers are no longer defenseless. By implementing a rigorous strategy, beginning at patient intake and extending through litigation where necessary, infusion providers can effectively challenge stonewalling from managed care organizations and protect their fiscal bottom line and their patient care mission.
If you have any questions regarding the content of this alert, please contact Michael Scott-Kristansen, partner, at mscott@barclaydamon.com, or another member of the firm’s Pharmacy and Health Care Controversies Teams.
1This case focused on ERISA plans, but the lesson is broadly applicable.