The U.S. District Court for the Eastern District of Missouri issued an opinion earlier this week, Schoedinger v. United HealthCare of the Midwest, 2006 U.S. Dist. LEXIS 80956 (you can find it here in this website’s library), that is of interest. Judge Stephen N. Limbaugh dealt with allegations by an orthopedic surgeon that UHC had improperly discounted and delayed payment to him for services to UHC insured patients. The doctor had been a preferred provider in the UHC network at one time but payment problems cropped up when that PPO contract terminated. The court rejected the argument that the doctor’s submission of claims that complied with UHC’s online statement of policies and procedures established the basis for a distinct contract between UHC and the doctor above and beyond the doctor’s ability to assert a claim as assignee of the patients. The court also rejected the argument that the doctor was entitled to penalties under the Missouri Prompt Payment statute for patients covered by ERISA plans. But the court did award the Dr. Schoedinger the difference between the billed charges and the discounted amounts UHC had paid him, plus prejudgment interest and attorney fees. The court’s language about UHC’s claims processing and payment practices caught my eye. For example, with regard to Dr. Schoedinger’s complaint that UHC was improperly paying him at PPO rates after that contract terminated, “no amount of notice or complaints could convince United to remedy this problem.” Going further, the court acknowledges that “down coding” and “grouping” are sometimes warranted as cost cutting measures but that “United’s computer system often grouped and down coded procedures at inappropriate times. The computer system also suspended many claims improperly, requested unnecessary information before processing a claim, and denied claims without proper cause.” Finally, the court determined that “United’s claims processing system was flawed in many ways, denying, reducing, and improperly processing claims on a regular basis. And despite innumerable requests, United was unwilling to remedy the underlying errors in its systems. United was consistently delinquent in paying claims, the amount past due ranging from $200,000 to $600,000 at any given time. And United’s faulty processing of claims continued even after Plaintiffs filed suit.” On the whole, a fascinating discussion of the dynamics in the provider/payer process. And one, I fear, that may be all too familiar for providers.
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Don Levit 11/17/2008 01:47 PM
Brian: Thanks so much for providing this case. I have never heard of Coalition America. If I understood the case correctly, they are a clearinghouse which connects providers with various insurance companies, without the providers signing contracts. I have heard of something like this before, but was never able to put a name to any firm, or the words to how the linkage worked. It sounds like that by virtue of Coalition America having insurance company A and company B as "clients," that all the providers who have contracts with company A also have contracts with company B and vice versa. If that is the case, I wonder how a provider can have a contract without agreeing to anything? Don Levit
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Brian S. King 11/17/2008 01:47 PM
Don, I don't know much about Coalition America but if you go to their website,, you'll get more information. It sounds like CAI provides a variety of services for payers. They look to me a bit like Concentra Preferred Systems in at least some of their services. Your questions also make me wonder if CAI arranges for sharing of PPO contracts and discounts. As long as a company gets the consent of the provider to access the discount contract (and also provides the steerage the provider undoubtedly requires under the PPO contract), sharing discounts would be permissible it seems to me. The problem providers so often see is unauthorized access to discount contracts, the silent PPO problem that is so pervasive in the healthcare industry.
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