NN&I - May 2010
36 Nephrology News & Issues May 2010www.nephronline.comFacility Management Background Initially repricers were formed as a reaction to escalating health care costs. As more companies have entered the space, the tactics employed have become more aggres-sive and, in some cases, legally questionable. Because the repricer industry is very fragmented and has low barriers to entry, it is difficult to quantify the number of repricers or their cumulative impact on health care. Thus, research into repricing in the dialysis marketplace indicates that there are more than 30 companies that claim to provide services in the area, with at least three focused specifically on repricing claims for dialysis services. Methods and tactics of repricers While repricers may perform a variety of services for their Risky business for dialysis servicesSignificant legal liability for self-insured health care plans and third party administrators may be createdBy Joseph Schohlclientsthe self-insured health plan holder and the third-party administratorsthis article will focus on the segment of services that is designed to reduce the cost to plans for non-contracted, or out-of-network health care services. When a patient with health insurance that provides for an out-of-network benefit chooses a health care provider that does not have a contract with their insurer, the amount the insurer will reimburse for such services will depend on the agreement between the patient and the insurer. Such agree -ment is typically called the "plan document" (sometimes called a plan description, summary plan document, or a summary plan description). The plan document is a prom -ise to pay benefits on the patient's behalf in exchange for the premium paid by or on behalf of that patient. The terms governing payment rates for out-of-network services vary greatly, but are often expressed as a percentage of the usual, customary and reasonable charges (UCR charges). For self-insured health plan holders and third-party administrators who are deciding what constitutes UCR for a given service in a geographic area, four common choices are available: 1. Decide on a UCR rate arbitrarily or based on a rec-ommendation from another third-party source (such as a repricer). 2. Pay for access to the widely-used, but now discredited, Ingenix database of prevailing UCR rates. 3. Pay for access to discounted rates offered by the pro-vider through membership in a PPO network. 4. Negotiate a contracted rate with the provider (either directly or through a repricer) to remove uncertainty or the potential for later challenges of the rate. Repricers are compensated by their clientsthe plan holders and third-party administratorsbased on the amount of money they save for the plans. The more they save, the bigger the fee. And, presumably, the plan holders do not mind paying because they still believe they are com-ing out ahead. But a closer look at how the fee calculation is made suggests otherwise (see case study on page 38). Legal obligations and liability Self-insured health plan holders and third-party admin -istrators are obligated as fiduciaries to honor their com-mitments to their insured members under the Employee Retirement Income Security Act of 1974 (ERISA) or by Abstract When self-insured health plans and their third-party administrators pay an artificially low out-of-network rate for dialysis services, they could be liable for the difference between that rate and the reimbursement level provided for by their health plan. Paying a rate that the repricers advised them to pay does not relieve self-insured health plans and third-party administrators of that obliga-tion; only where the repricer has legitimately secured a negotiated con-tract rate is a lower payment justified. [Editor's note: The term "repricer" has no universally-accepted or formal definition, but it will be used here to describe those companies formed to act as middlemen between health care payerslike self-insured employer plans and TPAs working on behalf of such plansand health care providers.] Failing to adhere to this will result in lawsuits against self-insured health plans and third-party administrators where they will be forced to defend the repricers' recommended payment amounts, while the repric-ers try to get themselves dismissed. A better option for plan holders and third-party administrators would be to negotiate directly with the dialysis providers and agree upon a mutually acceptable rate. Mr. Schohl is the founder of GeneralCounselWest (www. generalcounselwest.com), a boutique law firm that provides outside general counsel services to businesses, includ-ing health care service providers. He is based in Westlake Village, Calif. Facility Management_0510_3.indd 36 4/16/10 4:55:42 PM
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