1. FOCUS Spring Conference 2014 Legal Updates on Third Party Contracting and DME for Sleep Labs Jayme R. Matchinski May 16, 2014 Orlando, Florida

2. 2 Key Regulations Which Impact Sleep Labs/Sleep DME Suppliers ■Stark Law – Stark III ■Anti-Kickback Statute ■HIPAA ■Anti-Markup Rule ■2014 Physician Fee Schedule (PFS) ■DME Regulations Key Compliance Issues: Medicare Coverage and Payment Billing and Reimbursement National Coverage Determination (NCD) Local Coverage Determination (LCD) Independent Diagnostic Testing Facilities (IDTF) OIG Work Plan for FY 2014 Expanded Enforcement Activities

3. 3 Overview ■ Administering Your Payor Agreements □ Key issues to consider during contract negotiation □ Understanding contract terms and definitions □ Fee schedules and contract attachments ■ Payment Methodologies □ Risk-Based payment □ Discount Fee-for-Service □ Global fees □ Capitation □ Percentage of premiums □ Risk pools ■ Managed Care Contract Dispute Resolution □History of prompt pay laws □Reasons claims are denied □Getting paid correctly for the services provided □Settlement agreements with Payors □Utilizing and Preserving your contract and legal remedies

4. 4 Administering Your Payor Agreements ■ Contract Negotiation □ Due Diligence □ Identify Covered Services □ Define Medical Necessity □ Clarify Financial Arrangement □ Know Your Termination Rights □ Carve Out Arrangements ■ Establish Your Deal Points Before Executing Your Payor Agreement.

5. 5 Administering Your Payor Agreements ■ Understand Key Contract Terms □ “Medical Necessity” □ “Covered Services” □ Review all fee schedules and attachments to the agreement.

6. 6 Payment Methodologies Risk-Based Payment Discount Fee for Services Per Case Rate/Global Fees Capitation Percentage of Premiums Risk Pools

7. 7 Managed Care Contract Dispute Resolution Know the specific procedures to appeal a reimbursement decision and resolve any disputes that may arise. Identify the dispute resolution mechanism available in your agreement. Define “clean claim.” Determine whether mediation or arbitration is binding or non-binding.

8. 8 Managed Care Contract Dispute Resolution Set the time frames for dispute resolution. Utilize state and federal statues to receive timely payments. Carefully chart your course when negotiating and administering your payor agreements.

9. 9 Payors Apply a Wide Variety of Tactics to Deny Providers the Appropriate Reimbursement Payors Also Deny claims Based Upon Medical Necessity on Grounds Which May Be Contrary to Current Medical Standards Make Sure You Understand Your Payor Agreement Before Signing

10. 10 History of Prompt Pay Laws Establish a timeline to pay claims. Mechanism to resolve disputes between Providers and Plans concerning what documents are reasonably necessary. Eliminate “slow pay” by payors.

11. 11 History of Prompt Pay Laws Define “clean claim.” Penalty for late payment: Full amount of billed charges submitted on the claim or Plan/Provider negotiated plus interest paid on such amount.

12. 12 Prompt Pay Laws State  49 States and the District of Columbia have prompt pay laws.  Enforced by State Department of Insurance.  Prompt pay statutes are usually under the Insurance Code.  Sanctions may include: penalties, fines and restitution.

13. 13 Prompt Pay Laws Federal  Employment Retirement Income Security Act (ERISA)  Federal Health Care Programs § 1842 (c)(2) of the Social Security Act (42 U.S.C. § 1395u(c)(2))  Patient protection legislation.

14. 14 Violations of State Prompt Pay Laws Penalties  45 States  May include interest as high as 18% per annum on unpaid/untimely paid claims. Administrative Fines  15 States  In addition to interest

15. 15 Why Claims are Denied—What Insurers Say Duplicate submission35% Lack of necessary information12% No coverage based on date of service8% Non-covered/non-network benefit or service7% Coordination of benefits5% Coverage determination4% Utilization review3% Authorization3% Preexisting condition review1% Invalid codes1% Other21% Source: America’s Health Insurance Plans 100%

16. 16 Why Claims are Denied—What Insurers Say Other reasons include: Medicare as primary provider, incorrect provider ID, no physician, ineligible physician and possible third-party liability.

17. 17 Provider Lawsuits Types of claims being asserted by Providers  Breach of Contract  Violation of State Prompt Pay Laws  Violation of Implied Duty of Good Faith and Fair Dealing  Unjust Enrichment  Common Law Fraud and Misrepresentations

18. 18 Prompt Payment: Contract Considerations ■ Several States require MCO contracts with Providers to contain prompt pay provisions. ■ Contracts may also include provisions regarding impact on various lines of business.

19. 19 Prompt Payment: HIPAA HIPAA transactions and code sets regulations establish electronic standards for specific transactions, including claims payment. (45 CFR Part 162) Covered entities must comply. No timeframes are specified for claim payment. HIPAA provision that is contrary to State law provision preempts State provision.

20. 20 Settlement Agreements With Payors Payment Terms □ Address each claim denial and set □ forth payment provisions. Billing Procedures and Practices □ Acceptance of billing documentation by facsimile.

21. 21 Settlement Agreements With Payors Billing Procedures and Practices  Identify a contact person.  Agreement to cease and desist from denying claims on the grounds of medical necessity in the absence of a review by the insurance company’s Medical Director.

22. 22 Settlement Agreements With Payors  Include language which states that in the absence of good cause shown, the payor will not engage in repeated requests for medical documentation and the Provider will be reimbursed for medical records requested beyond the initial request.

23. 23 Settlement Agreements With Payors Releases  Mutual Releases Reserve the right to pursue all available legal remedies, including administrative and judicial process. The release should not operate to bar any claims arising out of the obligations and representations set forth in the Settlement Agreement.

24. 24 Settlement Agreements With Payors Successors and Assigns  Provision which binds not only the payor to the terms of the Settlement Agreement, but also any future individuals or entities with which the payor merges or transfers or assigns ownership.

25. 25 Successfully Challenging the Payor Getting Paid Correctly for the Work You Do  Managed Care Companies v. Sleep Labs-increasing adversarial relationships Managed Care Company profits v. reimbursement at contract/usual and customary rate. Managed Care Contract – terms and interpretations.

26. 26 Successfully Challenging the Payor  Claim denial and underpayment practices  Trends  Billing companies

27. 27 Successfully Challenging the Payor  Commonly Encountered Claim Denials Downcoding Bundling of services inappropriately deemed Incidental or Integral. Delaying claims Arbitrary and repetitive appeal processes.

28. 28 Successfully Challenging the Payor  Commonly Encountered Claim Underpayment Practices Incorrect fee schedule allowance when contract exists.  Applying fee schedule for past contracts.  Applying the lowest common IPA rate.

29. 29 Successfully Challenging the Payor  Commonly Encountered Claim Underpayment Practices Applying PPO discount when contract does not exist (the Silent PPO). Reimbursing bilateral procedures as unilateral.

30. 30 Successfully Challenging the Payor  Maximize Reimbursements: Know Your Contract Terms of coverage and medical necessity. Payment and documentation terms. Certification requirements and procedures. Appeals and other administrative remedies. Dispute resolution: court vs. arbitration.

31. 31 Successfully Challenging the Payor  Maximize Reimbursements: Use Accurate Coding and Documentation Identify and comply with MCO documentation requirements. Monitor coding changes and requirements. Keep documentation in patient files for claims support. Anticipate and avoid the Carrier’s grounds for denying your claim.

32. 32 Successfully Challenging the Payor  Maximize Reimbursements: Hold Your Billing Service Accountable Make your billing company responsible for tracking claims activity.  Track submission of claims and EOB receipts.  Audit grounds for denial of claims.  Monitor for “prompt payment” underpayment and processing errors.  Conduct comparative analysis of paid claims. Pursue Administrative Appeals.

33. 33 Successfully Challenging the Payor  Challenging the Payor in Court: Three Different Approaches to Litigation Individual litigation on behalf of your sleep lab. Class Actions Arbitration

34. 34 Successfully Challenging the Payor  Challenging the Payor in Court: Benefits and Costs of Each Time Recovery Attorneys’ Fees

35. 35 Successfully Challenging the Payor  Challenging the Payor in Court: Individual Litigation Strategies Move quickly. Time is money. Use litigation aggressively to maximize the amount of recovery as quickly as possible and to discourage future bad faith practices. Choose the court system with the fastest docket. Identify legal theories that get to judgment as quickly as possible. Keep it simple.

36. 36 Successfully Challenging the Payor  Challenging the Payor in Court: Individual Litigation Goals Enforce your contractual rights. Enforce your statutory rights.  Prompt Pay Statutes  Insurance Codes  Deceptive Trade Practices Acts  ERISA

37. 37 Successfully Challenging the Payor  Challenging the Payor in Court: Individual Litigation Goals Stop unfair and deceptive practices. Establish objective standards for future claims. Recover lost dollars.

38. 38 Jayme R. Matchinski (312) 985-5940 jmatchinski@clarkhill.com