Washington Watch

Enforcing a Patient's Bill of Rights When There Is a Denial of Emergency Room Claims

by James L. Thorne, Esq.

The Congressional fight over meaningful "patients' bill of rights" legislation can seem endless to most Americans. Yet, public opinion polls clearly show that most Americans continue to want better access to affordable medical services, they want HMOs to be held accountable for the services they provide or deny, and they do want Congress to pass a national "patients' bill of rights."

Members of Congress-Republican or Democrat-also know that consistent but denied public demands for a national patients' bill of rights can certainly lead to changes in political control of our federal government. Neither political party wants to "lose" on this issue. It will pass in my opinion. Yet, even when a national bill becomes law, will it be effectively enforced?

Several state governments have patients' bill of rights legislation in place now and the State of New York, for one, is intent on enforcing its law. For example, on July 26 the New York Attorney General announced a significant agreement with a major health plan (Blue Cross and Blue Shield of the Rochester area) which requires the health plan to reimburse consumers who were erroneously billed for emergency room claims that should have been fully covered by the plan.

Consumers, hospitals and emergency physicians would do well to review how New York enforced its managed care bill of rights; the New York law's emergency care provisions; and, the agreement for remedial action recently executed between the New York Attorney General and Blue Cross and Blue Shield (the "Assurance of Discontinuance Agreement").

Background
The State of New York's Managed Care Consumer Bill of Rights (L. 1996, ch. 705) became fully effective on April 1, 1997. Further, the New York Executive Law and General Business Law authorize the State Attorney General to bring a lawsuit against any business entity, in this case health plans, which repeatedly engage in fraudulent, deceptive or illegal business activity.

The New York Managed Care Consumer Bill of Rights has three general areas the Attorney General is concerned about because of their impact on New York consumers. First, the law gives consumers certain rights to information about their health plans. Second, the law provides consumers with certain rights to access specialty, out-of-network, and emergency care. Third, consumers are given various rights to contest certain health plan decisions through mandatory grievance and utilization review procedures.

Following the proven "trust all men but make sure you cut the cards" approach, New York's Health Care Bureau conducted a survey-from January through March 1998-to determine if New York HMOs were, in fact, complying with provisions of its new Managed Care Bill of Rights.

The New York Senate's memorandum in support of the Managed Care Bill of Rights noted that the purpose of the statute was "to make available to health care consumers more detailed information concerning their health insurance coverage options." Yet, regrettably, the survey results showed that the majority of the HMOs in the state failed to comply with the law more than half of the time. For example, 18 of the 31 HMOs surveyed did not provide a plan member his/her contract at least 50% of the time.

The results of the survey seemed to set the course for constant vigilance, review and enforcement of the New York Managed Care Bill of Rights by the State Attorney General's Office. The Blue Cross matter is the latest in a series of cases in which the Attorney General's office has held health plans accountable under the state law. To many, federal officials should take a page out of New York's enforcement book.

What Emergency Care is Covered Under New York's Law?
New York law mandates health plans to provide coverage for services to treat an emergency condition in hospital facilities (Insurance Law Sections 4303 [a][2], 4322 [b][5]; Public Health Law Section 4406).

Under New York law an "Emergency condition" is defined under the prudent layperson standard as:

"a medical or behavioral condition, the onset of which is sudden, that manifests itself by symptoms of sufficient severity, including severe pain, that a prudent layperson, possessing an average knowledge of medicine and health, could reasonably expect the absence of immediate medical attention to result in

(a) placing the health of the person afflicted with such condition in serious jeopardy, or in the case of a behavioral condition placing the health of such person or others in serious jeopardy;

(b) serious impairment to such person's bodily functions;

(c) serious dysfunction of any bodily organ or part of such person; or

(d) serious disfigurement of such person.

New York law also prohibits health plans from requiring prior authorization for emergency services (Public Health Law Sections 4902 [1] [h], 4905 [13]. Accordingly, health plans are not permitted to require prior authorization for the services to treat emergency conditions or to hold a member liable for the cost of those services if a member's condition meets the prudent layperson standard ([Public Health Law Sections 4900 [3],4902 [1] [h], 4905 [13]; 10 NYCRR 98-1.5 [b][6]).

Did Excellus (d/b/a Blue Cross Blue Shield of Rochester) Follow the New York Law?
According to the agreement between the New York Attorney General's Health Care Bureau and Excellus Health Plan, Inc. (the "Assurance of Discontinuance" agreement) Excellus' subscriber contract with its members contains the same definition of "Emergency Condition" stated in the New York law. Further, under its subscriber contract Excellus agrees to "pay for care at the emergency room of a Member Hospital or a Non-member Hospital in the involved Provider Network Area, if the member's illness or condition is considered an Emergency Condition." In addition, the HMO's subscriber contract further states that members do not need prior authorization before seeking emergency room care. So, the "words" are there but what was the action? What was Blue Choice's Emergency Services Claims Review Process?

Blue Choice Emergency Services Claims Review Process
For the period of review by the Health Care Bureau (between April 1997 and November 2000), Excellus used the following claims review process in reviewing members' emergency services claims:

1. Hospitals submitted emergency services claims to Excellus electronically. The emergency services claims contained diagnosis codes but no information regarding patients' presenting symptoms.

2. Upon receipt of an emergency services claim, Excellus would check to see if the diagnosis listed on the claim matched one of the diagnoses that Excellus had determined reflected an emergency condition.

3. If the diagnosis on the claim form matched one of the diagnoses on the diagnosis list, the claim was paid. If not, Excellus would check to see if the claim was accompanied by a referral.

4. If there was a referral, the claim was paid. If not, the claim was denied.

5. Upon denial, Excellus would send a denial notice to the member and to the hospital.

6. Some of the involved hospitals, upon receipt of such denials, regularly billed Excellus' members for the amount due.

7. Following denial of a claim, Excellus/ Blue Choice took no further action unless a member complained or requested a re-review of the claim.

8. If the Blue Choice member complained or requested a re-review, the Blue Choice Medical Review Department would obtain the medical record and determine whether to pay or deny the claim.

9. If the Medical Review Department believed a denial of the emergency claim was warranted, the claim was sent to the "Prudent Layperson Committee" which would decide whether to pay or deny the claim.

The Attorney General's Investigation and Determination of the Blue Choice Claims Review Process
There were numerous complaints that Excellus/Blue Choice had improperly denied emergency services claims that met the prudent layperson standard. In response, the Attorney General examined whether Excellus' emergency services claims review process violated the state laws (1) prohibiting health plans from requiring prior authorization of emergency services and (2) mandating coverage of claims that meet the prudent layperson standard.

The Attorney General concluded that a substantial number of the claims had met the prudent layperson standard. Further, the Attorney General also found that Excellus' emergency services claims review process did not include a proper prudent layperson review because Excellus did not review presenting symptoms prior to denial for lack of a referral. Thus, according to the Assurance of Discontinuance agreement, the Attorney General found that Excellus' denials of emergency service claims on the basis of lack of referral, without reviewing medical records containing presenting symptoms, violated the statutory prohibitions against health plans requiring prior authorization for emergency services (Public Health Law Sections 4902[1][h], 4905 [13] ) and denying claims that meet the prudent layperson standard (Insurance Law Sections 4303 [a][2], 4322 [b][5]; Public Health Law Sections 4406 [1], 4900 [3]).

As is common in this and similar types of remedial action agreements, the Assurance of Disagreement does not constitute and is not deemed to be an admission by Excellus as to the accuracy or validity of the Attorney General's findings. And, according to the Assurance of Disagreement, "Excellus offers this Assurance of Discontinuance in settlement of the violations alleged.to avoid the time, expense, and distraction of litigation." Perhaps, this is as it should be because Excellus does provide needed health care coverage and the State of New York sought to change Excellus' organizational behavior not to punish it.

What Does the Enforcement Agreement (Assurance of Discontinuance) Require of the Health Plan?
It is important to note that Excellus did revise its emergency services claims review process on or about November 2000-following the commencement of the investigation but prior to any Attorney General communication to Excellus regarding the matter. The revised review process includes a prudent layperson review prior to denial based on the merits of the claim. The Attorney General has agreed that the revised emergency services claims review process generally conforms to the New York statutes. However, as stated in the Assurance of Discontinuance, the Attorney General "hereby reserves the right to investigate any aspect of the revised emergency services claims review process or any matter related thereto."

Prospectively, the Assurance of Discontinuance agreement requires Excellus to agree that it "has revoked and will never again institute any policy or practice regarding emergency services coverage that violates federal or state laws." Further, according to the agreement, "Excellus assures the Attorney General that

(1) emergency services claims review processes will include a review of presenting symptoms prior to denial based on the merits of such claims and (2) emergency services claims for emergency conditions, as determined under the prudent layperson standard, will not be subject to any prior authorization or prior approval requirements.

The Assurance of Discontinuance agreement also addressed the issue of denied claims under the prior claims review process. Pursuant to the agreement, Excellus agreed to review the emergency services claims between April 1997 and November 2000 that (1) Excellus denied, (2) the Hospitals billed to the Blue Choice member, and (3) all or part of which the Blue Choice member paid to the Hospitals. Excellus further agreed to reimburse Member Paid claims to its member in the amount the member paid to the Hospital if the member is determined to have had presenting symptoms that meet the prudent layperson standard or if a valid referral or preauthorization existed.

Under the agreement, Excellus agrees to make a determination whether to pay a resubmitted claim within 45 days of receipt. If the claim is valid under the revised criteria, Excellus will pay the claim. If Excellus determines that the claim does not meet the prudent layperson standard, and the claim is not accompanied by a referral or preauthorization, Excellus shall notify its member that the claim is denied. Members who appeal and win will receive reimbursement plus interest of six percent (6%) per annum, calculated from the date of the original claim denial.

In addition, the Assurance of Discontinuance agreement also requires Excellus to "include a notice of the assurance agreement in the first Blue Choice member newsletter or similar publication published after the effective date." of the assurance agreement (July 1, 2001). Excellus also agreed to send a notice of the assurance agreement to all involved hospitals, which were sent claim denials for the period reviewed.

Further, Excellus agreed to pay a total of $75,000 to the Attorney General's office for the costs incurred during the investigation. The payment was to be made by August 1, 2001. Last, the assurance agreement is binding upon and enforceable against any subsequent owner or operator of all or any substantial portion of Excellus' business in New York State.

Conclusion
The New York enforcement of its managed care bill of rights-and that law's emergency service treatment provisions-seems to be a practical and well thought out approach for all participants.

We want a law in place. We want the law to be followed and enforced. In this instance there was no determination that there were "bad" actors involved. However, repeated action will likely draw a stronger response.

At the federal level, much has been made of pending "patients' bill of rights" legislation and whether or not that legislation will cause a proliferation of lawsuits. Well, to this writer, lawsuits may be necessary to force health care industry participants to follow the law. In the Assurance of Discontinuance agreement with Excellus/Blue Choice, New York took a practical enforcement approach. It appears to have accomplished its purpose. Other jurisdictions, state or federal, would do well to keep this approach in mind.