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Catastrophic Claim Carve Outs
The Latest Challenge to Hospitals and Acute Care Providers
In an ever-increasing effort to reduce hospital claim reimbursements,
HMO’s are now focusing on large dollar catastrophic claims.
A tactic which is becoming more common involves the carve out
of certain line items billed on high dollar “catastrophic” care
cases—usually with total billed charges exceeding $50,000.00.
Managed care agreements frequently incorporate “stop
loss” provisions designed to spread the risks associated
with high dollar claims. These outliers often call for the
payment of such expensive claims on a percentage of billed
charges rather than on a per diem or DRG payment rate.
In the past, only a small number of costly inpatient claims
would qualify for reimbursement under these stop loss guidelines.
However, as the number of high dollar claims billed by hospitals
has greatly increased in the last few years, HMO’s have
scrambled to hold off paying the kind of substantial sums due
under contractual stop loss provisions.
HMO’s have either revamped their internal retroactive
review departments or retained outside “cost recovery” companies
that specialize in identifying sources of recovery. The main
goal: recognize potential areas where the HMO can “carve
out” or reduce reimbursements from expensive claims.
The most frequent items targeted for reduction by reviewers
are high cost drugs and implantable devices that are usually
billed together along with other routine charges (room and
board, etc.). HMO’s can literally drive high dollar claims
below stop loss thresholds by simply backing out certain line
item charges and then re-calculating the level of reimbursement
due to the provider. Often, this can mean the difference between
a catastrophic care claim qualifying for reimbursement at stop
loss rate (such as 50% of billed charges) or being covered
at a much lower per diem or DRG reimbursement rate. When aggregated,
an HMO can recover tens of thousands of dollars in expected
reimbursement on just a handful of high dollar (over $50,000)
accounts!
The upside for any provider faced with this scenario is the
fact that few if any managed care agreements permit the HMO
to carve out line items from individual claims. While provider
contracts do allow for retroactive claim review, most do not
contain provisions that would enable the carrier to separate
individual line items from the overall claim. This, it is important
that any facility encountering reduced reimbursements on catastrophic
care cases carefully inspect the Explanation of Benefit forms
accompanying high dollar claim payments for accuracy.
If your facility cannot overturn or reverse a payment denial
or underpayment despite your best efforts to challenge and
prevail in contract and payment disputes with an HMO, we can
help.
Our full service law firm concentrates almost exclusively
in the representation of hospitals and acute care providers
in the area of collections and reimbursements. We have vast
experience in challenging, negotiating and litigating claims
denials and underpayments for some of the foremost acute care
facilities in Florida.
Whether your contractual or payment dispute involves retroactive
claims review, catastrophic claims carve outs, denials for
untimely filing, lack of pre-certification/prior authorization,
or medical necessity/pre-existing conditions, we can focus
our considerable resources and extensive experience to the
task of securing recovery on your behalf.
Our firm provides effective representation on a contingency
or hourly fee basis and we can provide a summary of our qualifications
to you upon request.
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