Managed Care Payment Disputes

Over the past several years, Gjerset & Lorenz has assisted numerous hospitals with managed care contract disputes. Our success in this area is attributable to our in-depth technical knowledge of hospital financial systems and financial reporting as well as our global understanding of reimbursement, the managed care industry and the unique relationship that exists between a hospital and its payor partners. We recognize the difficulties hospitals face when trying to balance the financial need to recover amounts owed with the operational necessity of maintaining relationships and volume.

In working with hospitals to address managed care contract disputes we analyze the retrospective dispute, the concurrent relationship and the prospective implications of an action. We not only analyze the retrospective dispute to assess the strengths and weaknesses of the provider’s claim, we also work with the clients to help them understand their legal strengths and weaknesses and the likely mindset of the payor, prior to filing suit. This approach enables the client to make a fully informed business decision.

In most cases our clients continue to do business with the entity with whom the client has the dispute. Often the biggest obstacle to a favorable resolution is the tension the dispute causes on the current relationship and the prospective uncertainty if our client seems unreasonable. Put simply, it is our belief that the hospital payor relationship is symbiotic. Therefore we spend a significant amount of effort to ensure the amount in dispute is accurate and supportable prior to entering into initial resolution negotiations. Our goal is to maintain a good working relationship with the other party by clearly defining the dispute and asking for only what is rightfully due. Ultimately, we only consider a case successfully resolved if, on a go forward basis, the hospital is in a better relative position with a payor than it was before the dispute.

Recent representative cases include:

• $16 million global resolution of a dispute over the contractual provisions governing high cost pass through reimbursement, which included $4 million in cash settlement and $12 million in prospective rate adjustments.
• $10 million collected upon completion of the claimant’s case in chief. The managed care company had denied hundreds of claims arguing that the hospital was required to bundle items including stop loss reimbursement.
• $5.5 million recovery of accounts receivables following a full judgment against a large managed care company that underpaid hundreds of claims arguing the contract required daily level of care authorizations, refusal to comply with stop-loss provisions and down-coding.
• $4.5 million collected pursuant to arbitration award regarding managed care company’s denial of non-Medicare allowable charges for Medicare +Choice patients
• $4.3 million collected as full recoupment of underpaid claims from a national insurer that argued its downstream risk-bearing IPAs were responsible for the claims.
• $3.8 million judgment plus interest and penalties obtained against IPA that removed line item charges to pay stop-loss claims.
• $3.1 million recovery against a state Medicaid program for inappropriate timely filing denials.
• $1.8 million collected in a successful counterclaim against a managed care company that had sued our client for breach of contract and violation of the duty of good faith and fair dealing alleging $2.5 million in damages because the hospital had increased its charges.
• $1.5 million collected for hundreds of accounts the managed care company denied based on arguments that Medicare and Medicare+Choice claims were preempted by Federal law.
• $1.3 million collected from a managed care company that had attempted to pay emergency medical triage rates rather than room rates for certain patients.
• $1.25 million recovery against a state Medicaid fiscal intermediary for improper denials.
• $600,000 collected from a managed care company that had failed to pay a single claim, arguing that the member was not eligible for the services he had received.
• $550,000 collected for a managed care company’s denial of stop-loss claims.
• $500,000 recovery against state Medicaid program for underpayment of outpatient claims based on an erroneous interior rate calculation.