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HMO Patient Emergency Care Reimbursement

By: Bradley M. Seldin, Co-counsel Guest Contributor

Prohibitions against balance billing Health Maintenance Organization (HMO) patients have been around for more than a decade, but many non-contracted providers to HMO patients still don’t fully understand their rights to payment when it comes to collecting monies from patients and HMO’s.

HMO’s often have predetermined rates they pay to non-contracted healthcare providers; sometimes they are artificially low, do not reflect what is written in the member’s contract, or do not abide by what is required by applicable law.  As a result, these providers may end up being underpaid if they don’t have a written contract with the payor and they do not understand the payment methodology being applied to them.  This is of particular significance to emergency care providers. ER doctors and hospitals must, by law, provide emergency care without regard to whether the patient has an ability to pay for the treatment received.

Following their provision of emergency care, medical providers often question the payment obligations under the patient’s Health Maintenance Organization contract. If the emergency medical provider has a direct written contract, the reimbursement is governed by that participating provider contract’s reimbursement terms.

Confusions arises when there is no direct, written contractual relationship.  In that situation, what are the insurance company’s payment obligations for emergency services and the legal underpinnings for those obligations?  State and federal laws mandate that emergency medical providers offer services without regard to payment.
In Florida, the HMO’s payment to a non-contracted provider of emergency services is governed by Florida Statute §641.513. This statute mandates that a non-contracted provider of emergency services is entitled to reimbursement for services provided to a HMO member at the lesser of the charge “mutually agreed” upon, the provider’s charges, or the usual and customary provider charges for similar services in the community where the services were provided.

Often, the HMO will pay the non-contracted medical provider of emergency services what it has determined to be the “usual and customary provider charges for similar services in the community where the services were provided.” Many HMO’s use a blended rate based on the Medicare fee schedule, the HMO’s internal calculations, or data purchased from a third-party vendor (i.e., Ingenix). This approach may not result in a fair analysis as to what is the usual and customary rate in the community, resulting in underpayment to the emergency medical provider.
Florida Statute §641.3154 prevents the emergency service provider from balance billing (or billing the patient) when there is a dispute with respect to the sufficiency of the HMO’s payment for the emergency services. This means any legal efforts (aside from applicable co-payments and deductibles) for underpayment of emergency services must be directed at the HMO.  Said another way, when an emergency service provider feels they have been underpaid for the provision of emergency services and care to an HMO patient, the emergency medical provider’s sole legal recourse is against the HMO.