Underpayment of health claim based on mysterious “pricing” information and “rate schedules”.
Pacific Shores Hospital v. Northrup Grumman Medical Plan, (Aetna) CV 07-4569 GHK
The patient’s health plan was insured by Aetna. Value Options acted as a managed care agent for Aetna and the Plan. Prior to the patient’s admission, the hospital contacted Aetna to verify benefits available under the patient’s plan. An Aetna representative confirmed that inpatient hospital benefits were payable at 50% of "usual reasonable and customary" (URC) charges, subject to an annual deductible. After reaching an "out of pocket maximum", benefits would then be paid at 100% URC up to a lifetime maximum. The hospital was told that pre-authorization was required for inpatient care, and that it should be obtained by contacting Value Options.
A claim was submitted to Aetna, but Aetna paid only only a small fraction of the total charge and neglected to pay the rest. It appeared that Aetna obtained some kind of "pricing" information from Value Options by which Value Options only "allowed" $10,500 for the inpatient charges, which were then paid at the rate of 50%, to yield a total payment amount of slightly more than $5,000.
Pacific Shores submitted an administrative appeal to Aetna, taking issue with the payment amount. Two months later it contacted Aetna and was advised that the claim was "still in processing" as Aetna was waiting for the "pricing information" from Value Options. Later that day, a conference call took place between representatives of Pacific Shores, Aetna and Value Options, during which a Value Options representative advised that Value Options only "allowed" $10,500 for the inpatient charges. Value Options had adopted a practice of "allowing" only $500 per day as constituting "usual, reasonable and customary" (URC) charges for inpatient treatment, which it then further reduced, depending on the applicable co-payment percentage of the plan (and without regard to any applicable Out of Pocket maximums). Since Pacific Shores had rendered 21 days inpatient treatment to the patient that would compute out to $10,500 at the $500 per day "allowed" amount for inpatient care.
Despite several follow-up phone calls, Pacific Shores received no further formal response from Aetna or Value Options regarding the claim or the appeal of the claim denial. The matter was referred to me. I wrote a letter to Aetna, urging payment of the claim. My letter went unanswered.
Result: A lawsuit was filed. The case was resolved satisfactorily.