THE MEDICAL REIMBURSEMENT NEWS LETTER
Usual And Customary
Spring 1996 - - - - - - - - VOL 1, No. 1
|
We have had inquiries about insurance company denials that simply state
that the payment being made is based upon the usual and customary rates on
file with the insurer, and that the balance of the invoice is not covered as
above the usual and customary rates. We find that some operations people
accept this denial as gospel, and close the file on those invoices. That is
tantamount to making a gift to the insurer. Our office has had over 100 cases of this sort. We started suit in
every one of them, and resolved almost all of them successfully. On behalf of
one provider we were able to arrange for a national contract with an insurer.
The reason we have resolved these cases successfully is that the cases
define "usual and customary". The cases say that "usual"
refers to the usual rates of the provider rendering the treatment.
"Customary" is defined as the usual rates of the provider's
competitors in that local area. Insurers generally call in companies that
compile data on a national or state by state basis. (Anonymous v Monarch Life
Ins. 42 Misc. 2d 308, 247 NYS 2d 894; Desai v Blue Shield of NW New York, 178
AD 2d 894, 577 NYS 2d 932). ( See also Buss v Group Health Inc., 78 Misc 2d
637, 356 NYS 2d 193). Indeed, in at least one case the Court seemed to say
that "usual and customary" refers to the provider's usual and
customary charge, if the insurer fails to prove the rates of the provider's
competitors. Desai vs Blue Shield of NW New York, 178 AD 2d 894, 577 NYS 2d
932. In one instance in which we were involved, one major insurance company
had a policy of paying for drugs at the average wholesale price, and then
added $50.00 per day for the administering nurse. The total payment came out
to about 30% of the invoices. During the litigation we pointed out to the
insurance company's attorney that they had not applied the standard set up by
their own insurance policy (which agreed to pay "usual and customary").
We settled that case and the insurer ended up paying altogether 85% of
the total invoice. The reason for that was that they had no data on the
charges for that treatment made by competitors in the provider's local area.
We are not always quite as successful, but we collect additional payments in
75% to 85% of the cases, even where the insurers do have data in that
geographical area. If your company charges the same rates to each of the patients your
case is a good one because it is easy to prove. Allowances are made for
preferred provider contracts at a lower rate, especially if the insurer
steers patients to their preferred providers. But even where the insurer
brings in statistical consulting firms to show rates in the general area, the
data is usually not specific to the locality where the provider is located.
Thus, in one case where the provider was in Asheville, North Carolina, the
insurer had no data for that locality, although it had data for the state as
a whole. When an insurer issues a denial based upon usual and customary, they
expect the sophisticated providers to challenge them. If the provider does
not challenge them, the provider can sustain substantial losses. We heard of
one operations person who, when the insurer paid according to their assessment,
the operations person, without the knowledge of the CEO, made all the future
bills to that insurer at the rate they paid the prior bill. They did not
request an appeal, they did not challenge the assessment, and they certainly
did not sue. That sequence of events was very harmful to the provider,
because their "usual" rate became lower as a result, and future
challenges to insurers were hurt by this lower average rate. The
reimbursement staff was able to assure the CEO that they have no problem with
insurance reimbursements. The CEO could not understand why his company was
not profitable, until he learned how the operations people were dealing with
the insurers. Solution: Always bill at the full price. If any insurer is paying half or a third of the invoice price, have them challenged. Have the payment or the explanation of benefits appealed, and appealed immediately. If the appeal does not work, institute suit, and do so immediately. If enough cases are brought against one insurance company, the case manager for the insurance company will have to explain to someone in authority for the insurance company why the suits were precipitated. It will certainly get the attention of people on a higher level. Most of these cases are brought on a contingency basis, so if you lose it is at very little cost. If you win, or make a settlement, your net profit will increase, and the insurance company will not take liberties with your invoices. |
For more information please ca11(212) 922-9004 or E-mail to abew9@aol.com. This document and its contents are copyrighted by Abraham Wax, Esq., 750 Third Ave., NY NY 10017.