When it comes to denials, physicians may feel as though insurance carriers have always have the upper hand. But this long-held belief isn’t true—especially when the claims in dispute are subject to the Employee Retirement Income Security Act (ERISA) of 1974.
ERISA is a federal law that establishes minimum requirements for employee benefit plans, including health plans. The law gives employees specific assignment of benefit protections that they can then extend to healthcare providers filing claims on their behalf.
Why is this important?
It essentially means that the patient’s policy—covered by federal law—overrules everything else, says Don Self, a medical reimbursement consultant at Don Self & Associates, Inc. and author of The Unfiltered Guide to ERISA for Medical Providers. If the policy indicates that a service or procedure is covered, it’s covered regardless of what either state law or even the provider’s own contract with the carrier dictate.
This idea is unfamiliar territory for physicians, many of whom assume they have absolutely no recourse when facing a goliath insurance company threatening to deny, withhold, or delay payment. In many cases, ERISA actually gives physicians the power to fight back, says Self.
“Doctors don’t need to let insurance carriers kick them around,” he adds.
ERISA’s far-reaching application
ERISA applies to any employer-sponsored health plan regardless of whether the plan is through a spouse’s coverage, whether the employment is full- or part-time, or whether the employee is part of a union. It also doesn’t matter whether the plan is a PPO, HMO, or POS.
However, if the employer is the government (i.e., city, county, state, or federal level) or a church, then ERISA doesn’t apply. Medicare and Medicaid claims are also exempt from ERISA.
Even despite these exemptions, ERISA covers more than 92% of non-Medicare, non-Medicaid claims, says Self.
Why ERISA is important in physician practices
Understanding ERISA is a critical part of ensuring accurate reimbursement, says Self. He provides these examples that demonstrate how ERISA helps providers:
- Timely filing requirements. A physician’s contract may specify a 90-day filing period; however, the patient’s policy allows for one year. Under ERISA, the policy takes precedence, meaning the physician may have recourse when appealing timely filing denials, Self explains.
- Medical necessity denials. Payers may cite a specific local coverage determination; however, if a patient’s policy doesn’t specify any restrictions, then the physician may be able to argue that the procedure or service is medically necessary, he says.
- Timeframe for appeals. Payers may require appeals within 30 or 60 days; however, ERISA says providers have 180 days.
- Retroactive reviews and recoupments. Some contracts specify that payers can recoup overpayments from future claims. “Doctors let them do this to the tune of millions of dollars a month at offices all over the country,” says Self. “But ERISA stops this 100% of the time. The Supreme Court has said that payers can’t go back to the provider and get the money. They have to go back to the patient.” Payers don’t typically pursue the patient because they don’t want to risk losing their contract with the employer. It’s easier to recoup from an unknowing physician, he adds.
Why do payers continue to get away with breaking a federal law?
The answer is simple, says Self. They do it because they can. That is, until someone or some entity challenges them.
That’s what happened in March 2014 when a federal ERISA court ruled against Blue Cross Blue Shield’s (BCBS) overpayment practice in a class-action lawsuit. BCBS ultimately settled for $350 million.
Even then, Self says the cost of a court settlement is far less than the money that carriers make from providers who remain ignorant of ERISA and continue to comply with their demands. “[Payers] keep doing it because they’re making a lot more than $350 million,” he says.
Using ERISA to your practice’s advantage
Self provides these tips to help practices use ERISA to fight back against insurers:
- Read through ERISA, and familiarize yourself with the minimum standards for health plans.
- Obtain a copy of each patient’s insurance policy. Consider asking new patients to bring a copy with them to their appointment.
- Cite ERISA when appealing denials. Send a copy of the patient’s policy to the carrier’s legal department, highlighting the sections that support the appeal. Self suggests including this (or similar) language in your appeal letter: “This policy belongs to the patient. As you know, the policy is protected by ERISA law and cannot be negated by a contract between the physician and carrier. Federal law supersedes all other documents.”
Self says the majority of the time, providers can use ERISA to successfully appeal denials without having to go to court.