To summarize, the health insurance policies issued by United, like most policies, required payment at 80% of the “usual and customary rates” or “UCR” for emergency services rendered by out-of-network providers. The lawsuit alleged that United knowingly used artificially low UCRs manufactured by Ingenix in calculating its payments to its subscribers and their providers. The lawsuit led to an investigation by the New York Attorney General, which reached a separate settlement with United.
Eligibility
Pursuant to the terms of the class action settlement, eligible providers are entitled to file a claim to recover a portion of the underpayment. Claims must be filed by Oct. 5, 2010. Providers are eligible to file a claim only if: 1) they received an assignment of benefits from one or more United subscribers for covered out-of-network services rendered after March 15, 1994; 2) they submitted a claim for reimbursement to United for covered out-of-network services based on the assignment, and the claim was reimbursed or processed by United using the Ingenix database; and 3) the subscriber did not pay the full amount of the unpaid balance due. With respect to the first eligibility requirement, providers are presumed to have received an assignment if they were paid directly by United or the provider checked the “assignment” box on the claim it filed with United.
The court has preliminarily approved the settlement, with a hearing on final approval scheduled for September. Assuming the settlement is ultimately approved, as is likely, eligible providers who submit claims should be reimbursed based on their “recognized loss” as defined in the settlement agreement, subject to some caveats described below. The “recognized loss” will be either 50%, 70% or 90% of the difference between the provider’s billed charges and the total amount paid by United and the subscriber collectively. This amount will then be reduced by 20% to account for the copayment for which the subscriber was responsible, but this copayment reduction will be capped at a total of $2,000 for all of the provider’s eligible claims.
There is, however, one additional major caveat: In the event the total eligible claims filed by providers and subscribers against the settlement pool exceeds the $350 million, the amount payable on qualifying claims will be reduced pro rata. For example, in the event the eligible claims filed total $700 million, qualifying claims will reduced by 50%. Documents on file in the case indicate there could be more than 20 million claimants with claims in excess of $4 billion, so a pro rata reduction is likely.
Putting aside the possibility of a pro rata reduction, whether providers receive 50%, 70% or 90% depends on how aggressively the provider sought payment and the documentation they can provide. For example, a provider is eligible to collect 90% of the amount of the underpayment if it can demonstrate that they submitted an adjusted bill to the patient and either turned the account over to a collection agency, reported it to a credit agency or entered into a payment plan with the subscriber. If the provider has evidence it sent an adjusted bill to the subscriber, but cannot show it submitted the account to a collection agency or filed a report with a credit agency, the provider is eligible to collect only 70% of the underpayment. If the provider cannot even show it sent an adjusted bill to the subscriber, the provider is entitled to only 50% of the underpayment.
In order to receive their share of the settlement proceeds, providers must file a claim with the settlement administrator postmarked no later than Oct. 5, 2010. Many providers received settlement notices and claim forms in the mail. Providers who did not receive such forms are not necessarily ineligible to participate in the settlement, and can obtain a claim form on the Internet at www.berdonclaims.com.
The claims administrator has also established a process for obtaining information regarding the amount to which providers may be entitled for the period after Jan. 1, 2002, based on United’s records. This process requires providers to file a “Claims Information Request Authorization Form,” which is attached to the claim form received by some providers in the mail, or is available on the Internet for those providers who did not receive a claims form. Upon filing this document, the claims administrator is required to provide the requester with a copy of the claims information for services rendered after Jan. 1, 2002. As noted above, however, the settlement entitles eligible providers to file claims for underpaid services rendered back to March 15, 1994. Because United was apparently unable to go back this far on its database, providers will need to supply proof of claims and payment amounts received for services between that date and Jan. 1, 2002, rather than relying on the claims administrator’s report.
Opting out
Notably, providers have the option to “opt out” of the proposed class action settlement and to sue United independently. Providers that do so would need to demonstrate United’s liability and the amount of their damages. If successful, “opt out” providers would be entitled to damages without a pro rata reduction, as will likely occur for the settlement pool. However, the pleadings in the case reflect that there are a number of very difficult legal issues that would need to be litigated, and the cost of doing so would likely be very substantial. Therefore, although it may be feasible for a large group of providers to band together to opt out, it would be prohibitively expensive for individual providers to do so, and success is far from certain.
In addition to the $350 million settlement pool, the settlement with United requires it to fund and facilitate the establishment of an independent nonprofit database that will provide accurate and objective UCR data to United and other insurers in calculating the amounts due for out-of-network claims. United agreed to pay $50 million toward the establishment of the new database, which is expected to become operational this year.