Category Waste and Abuse

Class Action alleging that a “Dummy Code” is used to “Bury” fees may result in BURIED TREA$URE for Self-insured employer sponsored group health plan clients of Aetna & OptumHealth.

On June 22, 2021, the 4th U.S. Circuit Court of Appeals reversed a ruling for Aetna and OptumHealth Care Solutions, resuscitating a potential class-action lawsuit alleging that they agreed to use a “dummy code” to bury unbillable administrative fees as billable medical treatment.

This case should serve as an alarm to all Self-insured group health plans, particularly those that give their TPA or carrier authority to pay claims benefits on their behalf because the alleged outrageous behavior by Aetna and OptumHealth raise questions as to whether all their self-insured plan clients may have unknowingly overpaid for certain claims and thus be entitled to significant recovery of Plan Assets.

According to court records:

The record on summary judgment is sufficient to sustain a finding that Aetna circumvented the Plan terms by “burying” the administrative fee it owed Optum in the dummy CPT code claims process.

Allegedly, after treating a patient, the health care provider submitted its claim to Optum for the services rendered. Optum then added a “dummy” CPT code to the claim to reflect a bundled rate fee, consisting of Optum’s administrative fee and the cost of the health care provider’s services. Optum would then forward the bundled rate fee claim to Aetna for its approval. In turn, this bundled rate fee would be paid based on the Plan’s responsibility framework.

In other words, Aetna and Optum allegedly colluded to hide administration fees by disguising them as Medical Service fees.

The court laid the groundwork for employer plan sponsors by opining, “Peters therefore withstood summary judgment on her claims for surcharge, disgorgement, and declaratory and injunctive relief under § 502(a)(1) and (3),

and for her claims on behalf of the Plan for surcharge, disgorgement, and declaratory and injunctive relief—as well as possibly restitution—under § 502(a)(2).”

Case info: Sandra M. Peters v. Aetna Inc., et al Case No.19-2085, US District Court of Appeals Fourth Circuit

The court goes on to say, “A reasonable factfinder could conclude that such action contradicted the obligations Aetna had contracted to fulfill under the terms of the Plan and the MSA,  effectively changing the terms of both without formal amendment of either….[and] that Optum was acting as a party in interest engaged in prohibited transactions” 

The judge went on to determine that “a reasonable factfinder could conclude that Aetna breached its duties based on the following four actions regarding the EOBs: (1) referring to Optum, and not the actual health care provider, as the “provider” of the medical services; (2) using “dummy codes” that did not represent actual medical services; (3)  misrepresenting the “amount billed” as including Optum’s administrative fee; and (4) describing the Optum rate, which included its administrative fee, as the amount that the Plan and its participants…owed for their claim.”

For over a decade, Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. Now with this case and the Supreme Court’s guidance on ERISA anti-fraud protection, we are ready to assist all medical providers and self-insured plans recover billions of dollars on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.

Aetna Fined $500,000 After Denying 93% of ER Claims in 2019

Aetna has been in the news quite a bit lately and it seems the insurance giant can’t get out of its own way. On August 25, 2020, the California Department of Managed Health Care (DMHC) ordered Aetna to stop improperly denying emergency claims and fined Aetna $500,000 for repeatedly failing to correct the problem after a sampling of claims from 2019 found it had denied 93% that it deemed unnecessary.

According to the DMHC’s recent press release:

This is not the first time Aetna has run into problems for questionable practices. In 2018, then Aetna Medical Director, Iinuma Jay Ken MD, admitted under oath, he never looked at patients’ records when deciding whether to approve or deny care. This revelation prompted then California Insurance Commissioner Dave Jones, to launch an investigation into Aetna’s practices.

During his videotaped deposition in October 2016, Iinuma — who signed the pre-authorization denial — said he never read Washington’s medical records and knew next to nothing about his disorder. He further said he’s not sure what the symptoms are for the disorder or what might happen if treatment is suddenly stopped for a patient. “Do I know what happens?” the doctor said. “Again, I’m not sure. … I don’t treat it.”

Just months after Aetna’s then medical director admitted he denied coverage for treatments without ever bothering to look at the patients’ medical records, an Oklahoma jury slammed Aetna with a stunning $25.5 Million verdict for recklessly denying medical coverage for proton beam therapy. The jury awarded the family of the deceased patient $15.5 million in emotional distress and another $10 million in punitive damages after denying proton beam therapy to Aetna policyholder Orrana Cunningham as being “investigational” or “experimental,” despite years of research and hundreds of medical experts who say otherwise.

The case details are very common and happen everyday across the nation: Patient pays for health insurance, patient gets sick and seeks treatment, insurer denies claim under the guise that services are deemed experimental or investigational.

According to the family’s attorney, Doug Terry,

“[this] case represents/exposes so much of what is wrong with health insurance,…This case gave the jury a look behind the curtain so they could see what goes on at a health insurance company when they deny claims.  The evidence showed Aetna’s denial of her claim involved overworked, under-qualified doctors working in the interest of their employer’s bottom line who are compensated in part based on the profitability of the company.”

Aetna was acquired by CVS Health in 2018.  The subsequent jump in CVS Health’s profits of more than 50% has been partly attributed to the fact that elective procedures Aetna health plan pays for were postponed or delayed amid the spread of the Coronavirus strain Covid-19. CVS Health’s net income soared 54% to $2.9 billion in the second quarter compared to $1.9 billion in the year-ago period, the company said in its earnings report issued Wednesday. It is not immediately clear if the emergency room denials have significantly contributed to earnings.

Avym has helped Self-Insured Health Plans recover millions from TPAs that engage in questionable practices. Avym advocates for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets on behalf of hard-working Americans. To find out more about Avym’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs contact us.

Over the years healthcare in the US has evolved into an extremely complex, non-transparent and convoluted process. For even the most informed, understanding this baffling process is nearly impossible. Avym’s mission is to help demystify the US healthcare industry. As consultants in the healthcare sector, we advocate for education, transparency and compliance.

As such, we advise – and count among our clients – all parties that interact within the healthcare industry and include both medical providers and self-insured employer health plans. We even advise patients. Truthfully, we are happy to help anyone that reaches out to us.

On occasion, we write and share opinion pieces discussing industry trends and issues. Our goal is to provide an open transparent dialogue on these issues and trends, and we encourage all perspectives in order to assist everyone in search of information on related topics.

Sometimes we write about issues presented in legal cases, and while we offer our opinion of the issues to the best of our ability, we neither endorse nor disparage the practices of any parties to the suit. Inevitably, however, some entities may not agree with our opinions. In these situations, we strive to create an environment where a transparent and open dialogue can occur, welcoming insights and perspectives that differ from ours.

Recently, we wrote an opinion article describing a particular court case in an attempt to offer insight and educate industry professionals on the many issues that concern them on a daily basis. The original opinion article, titled “Don’t Leave Fox Guarding Employer Plan” which can be found here, and here.

Unfortunately, and in spite of our best efforts, an entity who was never named in our article but who was a party to the lawsuit referenced in our article, chose to send us a letter threatening legal action. Consistent with our core values of transparency and in an effort to correct any mischaracterization of our article from factual inaccuracies in said letter, we have decided to share the letter in order to help clarify and resolve any confusion.

Here is a copy of the letter:

Our article never suggested AMPS or any other party to this particular lawsuit is, or was, acting in an unscrupulous manner. Curiously, AMPS views the article as defamatory, in-spite of the fact the article never mentions AMPS (or any of the defendants) by name.

Additionally, as mentioned before, we advise medical providers as well as self-insured employer health plans. We strive to empower self-insured health plans by espousing the importance of education on federal and state rules & regulations, trends, risks, and other valuable information in order to reduce wasteful spending while at the same time, allowing all Americans access to affordable, timely medical care.

Lastly, an important point to consider is our opinion piece does indeed make clear the final disposition of the case, where the courts ruled in favor of the defendants and against the self-insured employer plan plaintiffs.

During this historically critical time in American healthcare, where there is a lack of transparent information, we advocate for transparency to include dissemination of important information and open discourse. We are under the impression this is a mutual goal of all industry professionals and were confused as to why AMPS would choose to send a threatening letter, mischaracterizing our opinions and intent, instead of choosing to engage in a transparent, productive discussion.

Avym will continue to advocate for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets, on behalf of hard-working Americans.

Self-insured health plans nationwide should look to recover $30 to $45 billion in Plan Asset refunds from the past 10 years of successful plan assets TPA/ASO anti-fraud recoupments and managed care savings in both the public and private sector

As we have written before, ERISA as well as other federal and state regulations have continued to pave the way for providers and patients, however, these same regulations can also pave the way for self-insured employer plans as well.

As more and more industry experts and watchdogs begin to see the light, it is extremely critical for all self-insured health plans and TPAs to understand the multi-billion dollar impact TPA/ASO recoveries can have on all self-insured health plans, including state health plans.

Plans should seek to identify and recover any plan assets that have been removed from the plan trust account to pay benefits, but instead have been retained by the TPA as “hidden fees”

This includes alleged overpayments that have been recouped by the TPAs –and have not been disclosed, restored or refunded to the self-insured plan assets as required under federal statutes and fiduciary responsibilities.

On February 20, 2020, Highmark Inc. announced its Financial Investigations and Provider Review (FIPR) Department realized over $260 million in savings and recoveries related to fraud, waste and abuse in 2019. Additionally, Highmark has saved and recovered over $850 million over the past five years. Highmark Health, the parent company of Highmark Inc., recently reported $629 million in consolidated earnings through just the first two quarters of 2019.

The Highmark announcement comes a little over a month after the United States Department of Justice issued a press release announcing it had recovered $2.6 Billion from fraud and false claims in matters related to healthcare for fiscal year 2019.

In the healthcare provider arena the No. 1 health care claim denial in the country today is the overpayment recoupment and claims-offset.  Correspondingly, for self-insured health plans, the No. 1 hidden cost is overpayment recoupment and plan assets embezzlement. 

The immediate impact of the recent Highmark and Department of Justice announcements, coupled with a 2016 Supreme Court decision could be billions of dollars for self-insured health plans nationwide, as a result of the TPA industry’s potential recovery of billions of dollars in overpayment recoupments and anti-fraud campaigns over the past 10 years.

All self-insured health plans and TPAs should monitor claims data in light of these recent announcements, in view of the fact that almost every TPA for self-insured health plans has engaged in successful overpayment recoupment and offsetting from healthcare providers in today’s multibillion-dollar overpayment recovery and offset industry.

Failure to safeguard plan assets is definitely a fiduciary breach under ERISA, and now the Supreme Court, the United States Department of Justice and Highmark Inc. have given us a legal and practical formula for plan assets recovery, an accessible and legitimate resolution to today’s U.S. healthcare crisis.

As the DOL ramps up audits and enforcement actions in health plan claims and appeals, every self-insured health plan sponsor or fiduciary should keep in mind that they are required to monitor TPA/ASOs successful overpayment recoveries and managed care savings, in order to determine whether:

any of the billions of dollars of successful TPA/ASO overpayment recoupments and offsets nationwide each year are ERISA plan assets

all TPA/ASOs must refund all ERISA plan assets as ERISA prohibits all self-dealing

all self-insured plan administrators are liable for fiduciary breach in failing to safeguard or recover plan assets

The 2016 Supreme Court Montanile decision makes it perfectly clear, any alleged overpayment/lien for a claim in a fully-insured plan cannot attach to a different, self-insured plan fund or claims payment. It’s a basic principle of ERISA that a TPA for a self-insured plan is absolutely barred from converting claims payment/plan assets from the self-insured plan to pay for an alleged overpayment/lien and retain all recovery, for the TPAs own fully-insured account. As alleged in other federal courts, this can be viewed as self-dealing/embezzlement.

The only question now is whether self-insured plan fiduciaries will take immediate corrective actions to safeguard plan assets or wait till the DOL knocks on their door with an audit alert.

In combination with Highmark’s announcement, Avym Corporation offers advanced ERISA Embezzlement Recovery Programs in preparation of the forth-coming multi-billion dollar impact on self-insured health plans nationwide.  Specifically the advanced programs will examine the following issues: (1) determine if any TPA overpayment recoupments and offsets, which are in the billions of dollars nationwide, are ERISA plan assets, (2) ensure all TPA’s properly refunded ERISA plan assets as ERISA prohibits all self-dealings, (3) communicate and clarify self-insured plan administrator’s potential liability for fiduciary breach in failing to safeguard or recover plan assets.

These groundbreaking TPA/ASO auditing programs are unique and unlike any other traditional self-insured health plan overpayment auditing programs and are designed to identify and recover any plan assets that have been removed from the plan trust account to pay benefits, but instead have been retained by the TPA as “hidden fees”, including alleged overpayments that have been recouped by the TPAs –and have not been disclosed, restored or refunded to the ERISA self-insured plan assets as required under federal statutes and fiduciary responsibilities.

To learn more about Avym’s ERISA Fiduciary TPA Auditing & Plan Assets Recovery Programs or to contact us about educational programs please click HERE.

Self-Insured Employer Health Plan Administrators, Plan Sponsors, and key decision-makers would do well to heed the old adage: if it sounds too good to be true, it probably is.

In the ever-changing employer healthcare landscape, there has been an increasing group of professionals espousing “new solutions” that purport to offer substantial savings to self-insured employer health plans, particularly with out-of-network claims. One of the issues with many of these “new solutions” is that very few vendors/entities agree to accept fiduciary responsibility and the accompanying liabilities.

One of those “solutions” involves reference-based pricing (RPB). While relatively few employer plans have adopted RBP, some employers are considering this “new solution” under the impression that there are no other alternatives.

Employer health plans considering any of these “new solutions” should factor in the substantial risks before implementing any of these provisions plan wide, lest they are left facing lawsuits from their own members as well as medical providers.

This case offers a cautionary tale to self-funded employer health plans, where a self-insured employer health plan implemented a reference-based pricing mechanism. The case is Central Valley Ag Cooperative v. Leonard, No. 8:17CV379, 2019 WL 4141061, D. Neb. The plaintiffs, a self-insured health plan, Central Valley AG Cooperative Healthcare Plan and its plan sponsor and fiduciary, Central Valley, (collectively the “Plan”) filed the lawsuit against their own third party administrator and medical claim reviewers, asserting claims for breach of fiduciary duty under ERISA as well as self-dealing.

The Plan alleged that the vendors created a systematic reimbursement scheme that financially benefitted themselves at the expense of the members.

In summary, the Plan accused the vendors of cutting claims payments so low, substantially lower than contracted rates, that Plan members were hit with extremely high balance bills from medical providers that did not accept the RBP rates. This led to lawsuits against the Plan by medical providers and possible lawsuits against the plan by its own members.

Although the self-insured employer plan and plan sponsor agreed to the new pricing structure, according to court records, “claims payments to health care providers under the Plan virtually ceased. Providers complained the Plan was not paying them for services rendered to Plan participants”. The plan also alleged their own plan members were harmed and “subjected to collection efforts by physicians and other providers.” The complaint also alleged that “Several providers refused to render further services to Plan participants, their spouses, and their dependents.” Amazingly the Plan also alleged that it had “lost benefits from its stop-loss insurance carrier due to the extended claim disputes.”

Ultimately, the court ruled against the Plan, leaving the Plan on the hook for costly litigation fees.

This case serves as a very important warning to self-insured health plans regarding “new solutions” where unscrupulous vendors will promise monumental savings with no adverse effects or balance billing to Plan members.

While there are many legitimate vendors providing valuable services, RBP at its core represents a zero-sum game, in that savings to employers have to come from somewhere, in this case, either the hospital, through negotiated reductions or the employees, through balanced billing.

Consequently, key decision makers should also be aware of overreaching promises such as “universally accepted fee schedules” and “total compliance” with state and federal laws.

Ultimately, legitimate vendors should be willing to accept fiduciary responsibility and all the liability that comes with it. Self-Insured Employer Health Plan Administrators, Plan Sponsors, and key decision-makers would do well to heed the old adage: if it sounds too good to be true, it probably is.

Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets, on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs contact us.

An Oklahoma jury slammed Aetna with a $25.5 Million verdict for improperly denying medical claims, awarding the family of the deceased patient $15.5 million in emotional distress and another $10 million in punitive damages. The verdict comes just months after an Aetna medical director admitted under oath, that he never actually looked at a patient’s medical records while at Aetna because it was Aetna’s protocol, and that he based his decision off “pertinent information” provided to him by a nurse.

The case details are very common and happen everyday across the nation: Patient pays for health insurance, patient gets sick and seeks treatment, insurer denies claim under the guise that services are deemed experimental or investigational. According to the family’s attorney, Doug Terry, “[this] case represents/exposes so much of what is wrong with health insurance,” Terry said.

“This case gave the jury a look behind the curtain so they could see what goes on at a health insurance company when they deny claims.  The evidence showed Aetna’s denial of her claim involved overworked, under-qualified doctors working in the interest of their employer’s bottom line who are compensated in part based on the profitability of the company.”

Court documents showed that evidence was presented to the jury, showing that Aetna’s doctors spent just minutes reviewing her case, despite the critical nature of her condition. Ultimately, Aetna’s  medical doctors denied the coverage, saying it was experimental and investigational, though clinical expert, Dr Andrew L. Chang, argued the treatment was not new, but a well established cancer treatment for decades, and had not only been approved by the Food and Drug Administration, it but is also covered by Medicare.

Interestingly, Aetna considers the treatment appropriate for pediatric patients; and Medicare pays for the treatment in 65 year olds, which raises the question: “what is it about 22-year-olds to 64-year-olds that makes proton therapy experimental? There is no good answer for that; insurance companies call it that because they decided to deem it as such.” according to Dr. Chang.

According to multiple outlets, several jurors mentioned that they believed Aetna had “Rubber Stamped” the claim denials, based on the very limited time Aetna medical doctors spent actually reviewing the claim. Ultimately, the jury found that Aetna had “recklessly disregarded its duty to deal fairly and act in good faith with the Cunninghams.“

Astonishingly, Aetna’s  attorney John Shely said in closing arguments that Aetna was proud of the three medical directors who denied coverage, even turning to thank them as they sat in the front row of the courtroom, according to jurors and other witnesses in court.

According to a CNN article, this decision represents the largest verdict in an individual claim denial insurance case in Oklahoma history, and could have major ramifications across the country for a form of cancer treatment called proton beam therapy.

The Case info: Ron Cunningham et al. v. Aetna Life Insurance Company, et al; Case number CJ-2015-2826 in the District Court of Oklahoma County, State of OK

For nealry a decade, Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. Now with the Supreme Court’s guidance on ERISA anti-fraud protection, we are ready to assist all medical providers and self-insured plans recover billions of dollars on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.

Health Care Service Corp, dba Blue Cross Blue Shield IL, has been sued for fraud on behalf of the City of Chicago and its taxpayers, for inflating claim charges in order to skim taxpayer dollars.

As we have previously written, recent cases disputing “cross-plan offsetting” and improper cost containment activities have begun to see the light of day. While many of these cases involve private sector commercial health plans, the public sector is not immune to these questionable business practices. As more and more of these cases make their way through the courts, all self-insured health plan administrators, including public or municipal plans, charged with properly monitoring and safeguarding plan assets should do so, independent of their TPA’s own reporting. 

The lawsuit was brought by Kathleen Harper, on behalf of the City of Chicago and its taxpayers, and alleges BCBSIL inflates medical provider charges then submits the inflated charges to the City of Chicago and keeps the difference between what it collects from the City’s reimbursement and what it actually pays to medical providers. According to the amended complaint, filed on October 9, 2018:

“These representations were not true or accurate. They were in an inflated amount and rather than reflecting the actual amount HCSC paid its providers…HCSC admits that the amount HCSC bills and receives from the governmental entities ostensibly as reimbursement for payments it has made to providers on behalf of these self-insured governmental entities is substantially less than it actually pays these providers.”

The lawsuit also seeks unspecified damages and a  “full and complete accounting of said payments and receipts for the last ten years of any and all additional payments, ‘discounts’ or other sums HCSC has kept “for its own benefit” taken from the public funds taken by HCSC from one or more of the local government entities who have hired it to administer their self-insured health care plans“

Other Blue Cross Blue Shield entities have faced similar problems before for this kind of activity. Recently, Blue Cross Blue Shield Michigan was hit with a flurry of lawsuits, for skimming unauthorized fees, from their self insured health plan clients. The lawsuits, filed between Aug. 9 and 11 2017 in federal court in Michigan, accuse Blue Cross of charging hidden and unauthorized fees to the employers’ health plan assets as a means of improving its financial position without alienating customers. The lawsuits build from a 2014 appeals court decision where Blue Cross was found liable for this conduct under ERISA and upholding a $6 million judgment against the insurer.

Since that 2014 decision by the U.S. Court of Appeals for the Sixth Circuit, more than 200 ERISA cases have accused Blue Cross of charging hidden health plan fees. The employers suing Blue Cross include a car dealer, a plastics manufacturer, an auto parts maker, and a college, among others.

Other recent cases illustrate the pervasiveness of these questionable practices. In one particularly egregious case, the Department of Labor sued TPA Magnacare, allegedly for charging fees that were not disclosed to its ERISA plan clients. According to court records, the plans paid MagnaCare the “full amount, yet MagnaCare remitted the lower charges to the providers and retained the undisclosed markup” 

In this case, the complaint alleges the business model being used by BCBSIL for the City of Chicago benefit plan constitutes fraud:

“The misrepresentations described above as well as this scheme itself, one that HCSC has admitted in public is its “business model” and allowing it to profit from this scheme constitutes fraud under the Common Law of the State of Illinois”

Astonishingly, the complaint alleges that BCBSIL intentionally prohibits the City of Chicago or any of its taxpayers from seeing how much BCBSIL actually pays itself in fees or how much it contracts with providers:

“HCSC takes compensation for its services as the Third-Party Administrator under its contractual agreements with the City in an amount that is not disclosed in amount or in detail to the citizens of Chicago or to other members of the public. The amount HCSC takes for its services is also not limited to any amount on the face of its contract or available for the public in any manner whatsoever…HCSC does not disclose to the governmental entities or to the public that bears the ultimate burden of payments made by those entities the terms of these separate contracts with its providers, asserting before the Courts of Illinois that these contracts are private, privileged from disclosure or otherwise will not be made available for review by these local government entities or their taxpayers.”

The lawsuit also alleges that the City of Chicago has been aware of the practice since 1985 but has not acted to correct or change the practice. The City of Chicago is not named in the suit.

Court case info: Harper, Kathleen v. Health Care Service Corp dba Blue Cross Blue Shield IL;Case No. 2018-L-010842; Filed on 10/09/2018 in the Circuit Court of Cook County Illinois.

It’s a well-known fact from federal court documents and in healthcare industry news reports, that Billion$ of ERISA plan claims payments from self-insured plans may have been recouped or offset by self-insured plan TPA’s for the TPA’s fully-insured accounts. Additionally, many Billion$ more may have been similarly siphoned off based on “Fake PPO” discounts or  Phantom “Savings” fees. In the healthcare provider arena the No. 1 health care claim denial in the country today is the overpayment recoupment and claims-offset.  Correspondingly, for self-insured health plans, the No. 1 hidden cost is overpayment recoupment and plan assets embezzlement. 

As we have written about before, this practice of keeping the difference between amounts actually paid to the medical provider and the amounts that are removed from Plan trusts accounts, are estimated to be between 30% to 60% of all Plan claims expenditures. Simultaneously, as a result of this and other cases, including the Supreme Court’s decision to deny the BCBSM challenge of the Sixth Circuit Court decision, these same self-insured health plan administrators nationwide, should seek return of Billions in plan assets as a result of the TPA industry’s potential recovery of a billion dollars in overpayment recoupments and anti-fraud campaigns over the past 12 years.

Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets, on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs contact us.

Originally Published by By ROI-NJ, Anjalee Khemlani
Trenton | Apr 30, 2018 at 6:55 am : https://www.roi-nj.com/2018/04/30/healthcare/sarlo-in-letter-to-muoio-asks-n-j-to-look-into-details-of-health-insurance-contracts/

Budget and appropriations chair has questions about reimbursements, audits. State Sen. Paul Sarlo has asked Treasurer Elizabeth Muoio about the state heath plans’ third-party administrators. Reining In health care costs continues to be a challenge for many corporations and self-funded plans.

The story Isn’t any different for the state of New Jersey, the largest employer In the state. State Sen. Paul Sarlo (D-Wood-Ridge) is trying to find new solutions – and potentially hundreds
of millions of dollars In savings for the state – by addressing the Issue In a different way: Paying closer attention to how the state pays its contracted plan managers.

Last week, in a letter to state Treasurer Elizabeth Muoio, Sarlo asked the Department of the Treasury to determine if the health insurers are keeping any recovered funds, through savings from appeals, and if the plans are charging the state anything additional to what they pay the providers. 

Sarlo Letter to NJ Treasurer re TPA & Response

Sarlo also asked about surcharges related to out-of-state visits by plan members, and whether or not the state can cap those. 

In addition, he asked if the state is auditing Aetna and Horizon Blue Cross Blue Shield of New Jersey, the third-party administrators of the State Health Benefits Plan and School Employers’ Benefits Plan, which together cover more than 600,000 current and retired state employees and cost the state $6 billion in 2016 alone. 

The contract for both is set to expire in June, and a request for proposals with the same rules and requirements as the existing contract is currently out for bid. 

And, while the RFP adds to the timeliness of Sarlo’s request, it was not necessarily the impetus. 

Legislators began looking into the process in January after a New Jersey doctor, Rajnik “Raj” Raab, alerted them to a white paper he paid a California-based health care reimbursement recovery firm, AVYM, to produce. 

In the six-page white paper, the firm said New Jersey could save up to $1 billion annually: AVYM Transparency and Disclosure in Health Care Insurance

AVYM said such huge savings are possible because third-party administrators may not be paying back the state any savings they receive over time from claim appeals. 

Sarlo, the deputy majority leader who serves as the chair of the Senate Budget and Appropriations Committee, told ROI-NJ how such a scenario could play out. 

“Here’s what we think happens,” he said. “A public worker in town XYZ cuts his hand, severs his hand, it’s a serious accident. He incurs $50,000 worth of bills. He petitions the fund representing the town … we pay. Now they (insurers) scrutinize and, over time, after arguing back and forth, reduce it to only $40,000.” And, if the reduced amount comes after the $50,000 has already been paid to the insurers, there is no way to check or prove the extra $10,000 is returned the state. Sarlo said there is no evidence that the state has ever received a refund from the insurers. 

### 

The contract between the state of New Jersey and Aetna and Horizon, which ROI-NJ obtained through an Open Public Records Act request, shows that the practice in question is prohibited, and that the state can audit the payments at any time. 

Representatives from Horizon and Aetna declined or did not return requests for comment on the issue, pointing instead to the agreements they have with the state.  

The contract with the insurers addresses potential overpayments. 

According to the contract, the state only reimburses the insurer after the payment is made.  

“The (insurer) will be reimbursed for claim checks and electronic fund transfers to providers that have cleared the (insurer’s) bank account by the (insurer) transmitting the total amount cleared via electronic mail or facsimile machine to the Commission by 11:00 a.m., EST daily, to determine the total amount that will be funded by wire transfer to the (insurer)’s designated bank on the same day. The transmission must include a breakdown between state and local amounts,” according to the contract. 

The contract also has a provision about any overpayments or refunds: 

“(Insurer) must disclose, fully account for, and remit, to the Commission any and all funds received by it as the result of a recovery of an overpayment or incorrect payment, prescription drug rebates and other pharmaceutical revenues, or subrogation of a claim or lien. Any discounted or negotiated rates or payment arrangements, any price adjustment, or refunds, and any retroactive or supplemental payments or credits negotiated with regard to covered services received by SHBP members must be remitted to the Commission. (Administrative) fees must take into consideration this provision,” according to the contract. 

And, if the state believes there is a problem with the payments, it can audit at any time. 

“(Insurers) must cooperate in the administration of routine audits performed by the Commission or its designee, on various aspects of the administration of the Plan, including but not limited to claims processing, medical management and enrollment data.  The various audits are designed to ensure (1) contract compliance, (2) that the interface system is working properly, (3) proper payment of claims where the individual should have coverage or (4) proper rejection of claims where the individual’s coverage has terminated, and (5) correct allocation of claims according to SHBP experience groups and (6) efficient and effective medical management,” the contract said. 

“An audit may be conducted if the Commission has a reasonable and good faith belief that a situation exists that will result in harm to the Plan. Audits must encompass records held by any subcontractor or related organization and held by any entity that is a member of the contractor group of companies.” 

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AVYM co-founders Mark Flores and Vincent Flores told ROI-NJ that the organization specializes in helping providers navigate claims and has seen a number of questionable practices since its inception in 1999. 

The white paper looked at claims from a Sparta school employee’s surgery and suggested that the provider was only paid 50 percent of the amount originally claimed, and the remainder was pocketed by the insurer. 

“Based on court cases (cited in the paper), it seems apparent TPAs can and do hide ‘undisclosed’ administrative compensation fees within medical claims payments. These undisclosed fees, which can account for 30 to 60 percent of a plan sponsor’s health claims expenditures, are usually siphoned into the TPA variance account through ‘retention reallocations’ and ‘cross plan overpayment’ offsets, among other techniques. Based on industry estimates and national claims processing standards, we believe the New Jersey State Health Benefits Plan and the School Employees’ Health Benefits Plan can realize a $1 billion (per) year reduction in expenditures by rigorous monitoring of TPA practices,” the AVYM report said. 

Mark Flores said that the actions of the TPA occur in a black box and are not visible to the state. “The big issue is that there’s no way to confirm whether or not the doctor is receiving the amount the (state) is paying the TPA for the claim,” he said. And that could save the state at least 30 percent of its current medical claims expenditures. 

Sarlo said one of the reasons he is pursuing the matter is the insurers’ response to transparency legislation. 

“When I had in my bill, when I had transparency disclosure to follow the money on these claims, which include TPAs out to providers, they opposed that bill,” Sarlo said. “Aetna, Horizon and all the health insurers opposed that bill.” 

Sarlo hopes the answers from Muoio will result in, at the very least, changing language for the new contract with the insurers. 

“Greater transparency on the operations of these third-party administrators will help identify cost savings that should be passed on to the state,” Sarlo said in a statement accompanying the letter. “There needs to be an accounting of the savings that insurance companies retain as fees and commissions.  

“We must ensure that the majority of these savings flow to the state as they should. Every year, doctors and other health care providers complain of decreasing reimbursements. At the same time, health care consumers complain of rising premiums and increasing costs. The obvious question that needs to be asked is: Where is all the money going?” 

Sarlo told ROI-NJ he realizes the answer won’t be a cure-all for the state, but it’s one worth getting. 

“I’m not saying this is going to save the budget at the end of the day,” he said. “But it’s worth a look. 

“This is serious dollars. The state of New Jersey is paying $37,000 per employee. If we can find savings in those health care plans, we must do it.” 

In Unprecedented Move, DOL Exercises Authority to Issue Cease and Desist Order Under Section 521 of ERISA, Shut Down Fiduciaries Accused of Misconduct, “Healthcare Madoff” Scheme

The U.S. Department of Labor obtained a Temporary Restraining Order in the U.S. District Court for the Northern District of Illinois against Multiple Employer Welfare Arrangement (MEWA) service providers for allegedly failing to pay more than $26 million in member’s health bills while keeping a substantial amount of money for themselves, then siphoning off those funds to offshore Bermuda accounts. The court also ordered 2 banks to freeze 14 bank accounts that were alleged to have plan assets in them.

The court ordered Black Wolf Consulting, AEU Holdings and one of its subsidiaries removed and barred from serving as fiduciaries or service providers to the individual employer plans that participate in the AEU Holdings LLC Employee Benefit Plan, a Multiple Employer Welfare Arrangement (MEWA) established by the defendants.

The court’s order immediately appointed an independent fiduciary to oversee the MEWA’s operations, marshal and control the assets of the MEWA as it relates to the underlying participant plans, perform an accounting of the MEWA’s financial position, and determine the MEWA’s ability to pay outstanding participant health claims, according to the DOL.

The order comes on the heels of the DOL lawsuit filed on November 2, 2017 seeking declaratory and injunctive relief including a temporary restraining order and preliminary injunction to remove the fiduciaries. The Complaint also alleges multiple violations of ERISA including, using plan assets to pay excessive fees and expenses, assessing undisclosed fees to the contribution amounts, failing or refusing to pay approximately $16 million for member’s medical claims, then transferring unpaid monies to offshore bank accounts in Bermuda.

Black Wolf kept anywhere from 17 to 44 percent of the money employers and employees paid toward premiums, according to the DOL complaint.

At its height, the MEWA covered approximately 14,000 participants and beneficiaries. These participants worked for more than 560 employers in 36 different states. However the increased backlog of unpaid claims created significant problems for many members as doctors refused treatments because of unpaid bills and many members were sent to collections accounts, according to the DOL.  

Additionally, the DOL issued a cease and desist order that prevents sub-brokers and aggregators working on behalf of the MEWA from marketing it to prospective employers or from enrolling new employers. The Secretary has the authority to issue an ex parte cease and desist order pursuant to ERISA § 521(a), 29 U.S.C. § 1151(a), and its implementing regulation, 29 C.F.R. § 2560.521-1. This authority applies only to a MEWA, and the cease and desist order may be issued whenever the Secretary finds reasonable cause to believe, among other things, that the respondent(s) engaged in conduct that creates an immediate danger to public safety or welfare within the meaning of § 2560.521-1(b)(3).  29 C.F.R. § 2560.521-1(c)(1)(i)(B).

According to the DOL Memorandum:

“Over $15 million in processed claims from 2016 and over $11 million in processed claims for 2017 remain unpaid. During the same time period as these claims have gone unpaid, AEU and Black Wolf have enriched themselves substantially by paying themselves and other entities millions of dollars in “fees.” Meanwhile, hundreds of unsuspecting employers have joined the AEU Plan to provide affordable medical benefits for their employees, only to have their employees be saddled with thousands of dollars in unpaid medical claims-some facing escalating collections actions and others unable to obtain life-saving treatment.“

The Memorandum goes on to point out:

“This results in thousands of participants incurring additional medical claims that will never be paid. Current and former participants report being turned away by their doctors because claims have gone unpaid. They have had to forego life-saving treatments for cancer and other illnesses. Parents who have just given birth are saddled with unanticipated medical claims at the same time they are trying to care for their newborn children. Collections agencies are calling and knocking at their doors. Many fear for their family’s future financial security. Despite the over $26 million in current unpaid claims and the harm facing these participants, Defendants continue to seek out new, unsuspecting employers to feed what is to them, a very profitable enterprise.”

Original DOL Press Release

These new ERISA embezzlement cases are part of a growing trend consistent with the court’s Hi-Lex decisions and as well as other cases we have written about before.

This lawsuit in particular should serve as a warning and wake up call for all Plan Administrators to continually monitor their TPAs in accordance with the Plan Administrator’s statutory fiduciary duties and to discharge its duties with respect to a plan solely in the interest of the participants for the exclusive purpose of providing benefits to them.

For over 7 years, Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets, on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.