A promise is not a guarantee. (Never underestimate the other guy’s greed.)
Pacific Shores Hospital vs. Atlas Administrators, Inc., USA Managed Care, Inc. / USA Quality Staffing Medical Benefit Plan, CV-01-1948 AHM
Pacific Shores provides treatment for eating-related disorders. The Patient was admitted for major depression, anorexia and bulimia. Upon admission, she weighed 100 lbs.; however, she stated that her minimum weight had fallen to 95lbs. She was married with their two children, ages four and one.
The patient was covered under a self-funded health plan, sponsored and funded by USA Managed Care, Inc. and/or USA Quality Staffing, administered by Atlas Administrators. Approximately three weeks before the patient’s admission to Pacific Shores, a hospital representative called Atlas for the purpose of verifying benefits available under the health Plan. An Atlas employee confirmed the patient was covered under the plan and further confirmed that inpatient psychiatric benefits were payable under the Plan at 70% of "usual reasonable and customary" (URC) charges, subject to a deductible and a 45-day calendar year limit. The Atlas employee further confirmed that physician benefits for both medical and psychiatric treatment, were payable at 70% URC. The Atlas employee further confirmed that no psychiatric benefits had been used up for that calendar year. The Atlas employee further confirmed that there was no "pre-existing condition" period applicable. He further confirmed that Group Therapy was covered and he confirmed that there was no exclusion in the plan, pertaining to the treatment of Anorexia or Bulimia, and that no referral was needed for either "Out of Network" services or for services rendered "Out of zip code area".
At the time of the patient’s admission to the hospital, the same hospital representative contacted Atlas a second time to re-confirm the information that had been previously given. The same Atlas employee verified that the information was correct. The patient was then admitted and treated. Three weeks later, she was discharged from the hospital, but then a week after that the patient presented for re-admission. At that time, her condition was described as "acutely depressed and acutely suicidal in the context of an out of control eating disorder"
The patient was thereafter hospitalized for an additional two weeks. National Utilization Management Corporation (NUMC) acted as a "managed care" agent for ATLAS and USA Managed Care, Inc. All of the treatment rendered by Pacific Shores for both courses of inpatient hospitalization were meticulously case managed and approved by NUMC. Not only were these approvals communicated verbally over the phone, but NUMC issued to Pacific Shores a series of ten separate written notices of "certification",
Total charges for both of the hospitalizations combined and follow-up day treatment were $67,731.00. A timely claim for benefits was submitted by Pacific Shores on the patient’s behalf. Atlas issued a payment to Pacific Shores in the total sum of $6,435.00. All remaining charges were denied. The Explanation of Benefits (EOB) forms that accompanying the payment references various "Discount Amounts" and "Ineligible Amounts".
It appears that Atlas sent the claim out to Medical Review Institute of America (MRIA) for an external review, the result of which was a drastic reduction in Pacific Shores’ charges. Those amounts considered, “ineligible” were said to have been for treatment that was "not medically necessary".
Pacific Shores immediately took issue with the "medical necessity" determination (which was clearly in error as the "medical necessity" of all of the treatment had been “certified” by Atlas) and emphatically advised Atlas that Pacific Shores was not a “contract provider” and, therefore, the “provider discounts” were improperly applied. (It appeared that MRIA had Pacific Shores confused with another hospital).
Both the attending physician and the Clinical Director of the hospital sent letters to Atlas, rebutting the MRIA reviewer’s remarks about the "medical necessity" of the treatment provided. In addition, a hospital representative sent a formal request for review to Atlas. Atlas then had MRIA conduct a second review, which merely rubber-stamped its first review. Atlas then issued a review decision, upholding its initial determination.
In its determination letter, Atlas stated that with regard to the written "certifications" issued by NUMC, that "NUMC does not act on behalf of, or as an agent of (Atlas)." The letter also states, “Certification (by NUMC) is not a guarantee of payment”. Accordingly, Atlas contended that it was not bound by the NUMC certifications.
A lawsuit was filed on behalf of Pacific Shores. The Complaint alleged that the underpayment was borderline fraudulent, in that:
"NUMC, ATLAS, and . . . USA Quality Staffing are not separate and distinct
entities. They are all owned and controlled by the same person . . . The 'Executive
Office' of USA Managed Care is located at the same address as ATLAS, at 916 S Capital
of Texas Hwy., Austin, TX 78746. The 'Corporate Office' of USA Managed Care is
located at the same address as NUMC at 7301 N 16th St, #201,Phoenix, AZ 85020.
At USA Managed Care’s website, http://www.usamco.com/products.html, NUMC is listed
as one of USA Managed Care's ‘products’. There is also a link at the ATLAS website,
regarding 'stop-loss' insurance and 'self-funding', which directs the reader back to the USA
Managed Care website and to a separate entity, ‘Managed Access Risk Corporation’, which
is described as an International Reinsurance Intermediary’, which is also owned by (the
As far as the contention that "Certification (by NUMC) is not a guarantee of payment", that was equally disingenuous. The certifications, issued by NUMC, all specifically stated that "As required by the insured’s plan design, medical necessity has been determined for this medical service Medical Certification is given assuming that the information provided to NUMC is complete and correct." Thus, absent a misrepresentation by Pacific Shores or some legitimate coverage issue, unrelated to "medical necessity", under no circumstance could an additional review be conducted by Atlas that would result in a retroactive withdrawal or nullification of the prior certifications given by Atlas’s own agent, NUMC. To hold otherwise would be to hold that medical "certification" is a meaningless act.
Result: A lawsuit was filed. The case was resolved satisfactorily.