All posts by Cliff Hoffman

An Aetna Medical Director Admitted He “Never Once” Reviewed Medical Records- What Now?

Emily Gillingham, Associate Attorney at Fotheringill & Wade, LLC

Almost every day, one of our hospital clients refers a case to our firm that has us questioning how an insurer could have reached the decision they did.

We got a unique look into the inner workings of Aetna’s utilization management department this week with the bombshell revelation, reported by CNN, that a former Aetna Medical Director, Dr. Jay Ken Iinuma admitted in a deposition that he never looked at a patient’s medical records during his time at Aetna.

What’s worse? Dr. Iinuma further testified that this was what he was instructed to do in Aetna’s training for the position.

The State of California’s insurance commissioner has launched an investigation into the practice, and we expect other states to follow. Not only does this practice raise serious questions about the plan’s adherence to member agreements to cover medically necessary care, but it may run afoul of state regulations requiring that utilization review be performed by a qualified medical professional.

What should medical professionals do with this information? It is a good practice to have a robust denials management system in place at your practice or facility. Take advantage of peer-to-peer review rights and file appeals. Keep an eye on timeframes, as a lot of contracts take away an opportunity to challenge even egregious denials after these timeframes pass.

At Fotheringill & Wade, some effective strategies we employ include:

  • Checking the credentials of the person at the insurer who made the decision. Was it a medical professional? Does the contract or state law provide for a doctor versus a nurse to issue the denial? Can we discount the insurer’s position by noting that the reviewer has no experience in the patient’s condition?
  • Finding the insurers’ clinical policy and referring directly to it. It is effective, though time-consuming, to match medical record citations with clinical policy prongs. Did the insurer use the correct policy for the patient’s condition to issue its denial? Assume (and now we have reason to!) that the doctor isn’t taking even a cursory glance at the medical records.
  • Pushing back when a denial is egregious. Complain! Take the matter to your provider representative; talk to the plan’s compliance department or legal counsel. Take advantage of external appeals. Don’t take “no” for an answer when the plan seems to be ignoring the words on the page.

As with all things, experience counts. We have a great track record of helping our hospital clients with insurance denials. If you are struggling with insurance denials, you aren’t alone! Contact us to discuss your insurance denial management.

CMS Announces New and Expanded Appeal Settlement Initiatives

On Friday, November 3, 2017 CMS announced that it will make available a new settlement option for eligible providers and suppliers with a low volume of Medicare Part A and B claim appeals pending at OMHA and/or the Medicare Appeals Council. CMS also announced that OMHA will be expanding the Settlement Conference Facilitation Process for certain appellants that are not eligible for the LVA option.

Low Volume Appeals

The low volume appeals settlement option (LVA) will be limited to appellants with a low volume of appeals pending at OMHA and the Council. Specifically, appellants with fewer than 500 Medicare Part A or Part B claim appeals pending at OMHA and the Council, combined, as of November 3, 2017, with a total billed amount of $9,000 or less per appeal could potentially be eligible, if certain other conditions are met. CMS will settle eligible appeals at 62% of the net allowed amount. The announcement is posted on the CMS website.

Settlement Conference Facilitation (SCF) Expansion

SCF is an alternative dispute resolution process at OMHA and gives certain providers and suppliers an opportunity to resolve their eligible Part A and Part B appeals. Additional information on SCF can be found on the OMHA website.

American Hospital Association Calls on CMS to Address ‘flaws and inaccuracies’ in OIG Audits

In a letter dated October 2nd, the American Hospital Association has called on CMS to take a more active role regarding hospital compliance reviews conducted by the Office of Inspector General (OIG). Citing fundamental flaws and inaccuracies, both in the OIG’s understanding and application of Medicare payment rules and in the procedures used to conduct the audits, the AHA asserts that the flaws “result in vastly overstated repayment demands, unwarranted reputational harm, and diversion of hospital and physician leaders’ time from their core mission of caring for patients.” The AHA further asserts that the OIG’s mistaken legal interpretations result in uneven application of Medicare payment rules and that there is a lack of consistency in the appeals process.

Due to the OIG’s extrapolation of findings to all claims in an audit period the AHA asserts that the negative effects of the audits are “exacerbated.” Hospitals are forced to appeal each claim, creating a severe financial and reputational impact that continues long after the OIG’s errors are corrected on appeal. The AHA letter expressed concern that, based on information relayed in their meeting, the OIG now plans to extrapolate in every single hospital audit, despite the legal and statistical limitations on extrapolation and the significant concerns about the OIG’s sampling and extrapolation methodologies.

The AHA letter reiterates the following suggestions to improve the accuracy and fairness of the OIG audits, that were provide to CMS during their meeting:

  1. Extrapolate only if there is a significant error rate
  2. Delay extrapolation until the appeals process is complete.
  3. Allow rebelling of denied inpatient claims regardless of the usual timely filing period.
  4. Provide feedback to the OIG to facilitate issuance of an amended audit report and improvements in audits.
  5. Review and address legal issues raised by hospitals before an audit is performed or before a repayment demand is issued.

The full AHA letter can be found here.

CMS proposes removing total knee replacements from inpatient-only list

In the 2018 OPPS proposed rule, CMS is moving ahead with a proposal to remove total knee replacements under CPT code 27477 (arthroplasty, knee, condyle and plateau; medial and lateral components with or without patella resurfacing (total knee arthroplasty)) from the inpatient-only list. If finalized, the procedure would be added to comprehensive APC (C-APC) 5115 (Level 5 Musculoskeletal Procedures) and assigned status indicator J1 (hospital Part B services paid through a C-APC).

The agency solicited comments from the public on whether total knee arthroplasty (TKA) should be removed from the inpatient only list in the 2017 OPPS proposed rule. In making the decision to officially propose removal of TKA from the IPO list the agency indicates that they have reviewed (1) the clinical characteristics of the TKA procedure and related evidence, including current length-of-stay (LOS) data for inpatient TKA procedures, (2) peer-reviewed literature related to outpatient TKA procedures, (3) input from the comment solicitation and (4) the professional opinions of orthopedic surgeons and CMS clinical advisors. CMS also indicated that they had taken into account the recommendation from the summer 2016 Advisory Panel on Hospital Outpatient Payment (HOP Panel) meeting that this procedure be removed from the IPO list. Based on their review and evaluation of the above, CMS has determined that the TKA procedure would be an appropriate candidate for removal from the IPO list.

CMS indicated that they “expect providers to carefully develop evidence based patient selection criteria to identify patients who are appropriate candidates for an outpatient TKA procedure as well as exclusionary criteria that would disqualify a patient from receiving an outpatient TKA procedure.” CMS believes that the subset of Medicare beneficiaries who meet patient selection criteria for performance of the TKA procedure on an outpatient basis may have the procedure performed safely in the outpatient setting.

CMS said removing the procedure from the inpatient-only list does not prohibit providers from performing it in an inpatient setting; it simply allows for Medicare coverage and payment for the procedure when performed in either the inpatient or outpatient setting. CMS reiterated that the decision regarding the most appropriate care setting for a given surgical procedure is a complex medical judgment made by the physician based on the beneficiary’s individual clinical needs and preferences and on the general coverage rules requiring that any procedure be reasonable and necessary. The agency indicated that it will prohibit Recovery Audit Contractor (RAC) review for patient status for total knee replacements in the inpatient setting for two years to allow time and experience for these procedures under this setting:

We would not want hospitals to err on the side of inappropriately performing the procedure on an outpatient basis due to concerns about the possibility of an inpatient total knee replacement claim being denied for patient status. That is, given that this surgical procedure would be newly eligible for payment under either the IPPS or the OPPS, RAC denial of a hospital claim for patient status would be prohibited.

In addition to total knee replacements, CMS is soliciting comment on removing partial and total hip replacements from the inpatient-only list. This proposal would affect procedures described by CPT codes 27125 (hemiarthroplasty, hip, partial [e.g., femoral stem prosthesis, bipolar arthroplasty]) and 27130 (arthroplasty, acetabular and proximal femoral prosthetic replacement [total hip arthroplasty], with or without autograft or allograft]). Specifically, CMS has requested comments addressing the following questions:

  • Are most outpatient departments equipped to provide PHA and/or THA to some Medicare beneficiaries?
  • Can the simplest procedure described by CPT codes 27125 and 27130 be performed in most outpatient departments?
  • Are the procedures described by CPT codes 27125 and 27130 sufficiently related to or similar to other procedures we have already removed from the IPO list?
  • How often is the procedure described by CPT codes 27125 and 27130 being performed on an outpatient basis (either in an HOPD or ASC) on non-Medicare patients?
  • Would it be clinically appropriate for some Medicare beneficiaries in consultation with his or her surgeon and other members of the medical team to have the option of either a PHA or THA procedure as a hospital outpatient, which may or may not include a 24-hour period of recovery in the hospital after the operation?

The agency is also soliciting comment on whether to add total knee replacements to the list of ambulatory surgical center-covered surgical procedures.   Comments on the proposed rule are due by September 11th.

“Grace Period” Coverage Under Exchange Plans: How Federal Regulations Can Alter Eligibility Determinations for Providers

By Matthew Horton, Fotheringill & Wade, LLC

The Affordable Care Act (ACA, or commonly referred to as Obamacare) altered the landscape for individual and small group insurance plans. ACA altered this market with two important provisions: (1) the creation of Qualified Health Plans (QHPs, also referred to as Exchange Plans) and (2) establishing Exchanges (also called health care marketplaces), such as the Federal Exchange, With the creation of QHPs under the ACA, there are a litany of new federal requirements health insurers must follow; one such requirement is the “grace period,” and providers should be aware if a patient is in the grace period because of the potential for denied claims.

Issue: With QHPs sold on the Exchange, there is a federally mandated three-month grace period where health insurers cannot cancel the policies of members who do not pay their premiums. During a portion of the grace period, the member will be eligible under the plan, but the health insurer may pend any claims submitted for healthcare services during this time until the member pays his or her premium. If the member’s premium remains unpaid, the health insurer may deny claims that were pended during the grace period. How are providers supposed to know when this grace period is in effect, and what can they do to avoid pended or denied claims?


  • Providers need to be aware of the required notice health insurers must provide when a member has not paid their premiums.
  • Consider establishing a specific process for identifying QHPs during verification at the time of registration and creating system alerts for patients who are in a grace period.
  • Consider specifically asking the health insurer if the patient is in a grace period.
  • Once a patient is confirmed as in a grace period, take notes of the verification process and document any available reference numbers, tracking numbers, etc.
  • Determine the manner in which QHP insurers provide notice of potential nonpayment of pended claims. It could range from a reason code on your remittance to calling the provider services line of the plan when determining eligibility.
  • Paying the premium for patients who are in the grace period to ensure claims will be paid would seem to be one solution. However, there are multiple legal and compliance issues that must be considered and appropriately addressed. Consultation with an experienced in-house counsel or attorney will be necessary.


The ACA has led to multiple new federal requirements health insurers must follow in the individual and small group health insurance marketplace. One such requirement applicable to health plans is the three-month “grace period.” This federal requirement is not applicable to all QHPs or Exchange plans. In general, if the patient you are treating meets the following, then the grace period provision likely applies:

  • Enrolled in a QHP through an Exchange;
  • Receives an advance payment of the premium tax credit; and,
  • Pays at least one full month’s premium during the benefit year.

The grace period requires QHP insurers to provide three consecutive months coverage, even though their member (your patient) is not paying premiums, prior to terminating the member’s coverage. The crux of the issue lies in determining responsibility for payment of the member’s health care services during the three-month grace period. Federal regulations requires QHP insurers to pay claims during the first month of the three-month grace period. During the second and third month, however, the QHP insurer may pend claims until the member has paid his or her premium. If no premium payments are made, then the insurer can retroactively terminate the member’s coverage and deny the claims that were in pended status. It is also a possibility that QHP insurers could pay claims and later retract if the overdue premiums are not paid, so long as the required notice to providers was met.

For providers, a patient, the QHP member, may appear to be eligible and covered for health care services during this grace period, but there exists substantial risk of denied claims if the patient falls within the grace period. The two examples below provide simple scenarios where the grace period applies.

Example 1:

John Doe enrolls in a QHP through an Exchange in January and receives advance payment of premium tax credits. He paid his first month’s premium for the month of January but stops paying his premiums. John comes to you for healthcare services to be performed in February. Patient Access verifies his coverage and that he has not yet paid his February payment, but that January was paid.

In this example, John qualifies for the three-month grace period since he enrolled in a QHP through an Exchange and receives an advance payment of the premium tax credit. John paid his first month’s premium but did not pay February. The month of February begins the three-month grace period. You, as the provider, will be rendering healthcare services during the first month of the three-month grace period. The regulation states QHP insurers must pay for these services rendered during the first month of the grace period, even if the premium for February is never paid.

Example 2:

Same facts as Example 1, except John comes to you for healthcare services performed in March (the second month of the grace period).

Since John has still not paid his premiums, he is now in the second month of the grace period during the month of March. The QHP insurer may pend the claim until premium payments are received. If John does not pay the outstanding balance to the QHP insurer by the end of April, the QHP insurer can retroactively terminate John’s policy. Further, your claim for healthcare services provided to John during the month of March will most likely be removed from pended status and processed as a denial.

Notice Requirement

Within the federal regulations, there is a notice requirement QHP insurers must provide to providers when there is a possibility for denied claims during the second and third months of the grace period. However, the regulations are silent on how QHP insurers must provide notice to healthcare providers. It could vary from reason codes on a remittance advice post-service, to being notified verbally during eligibility determinations. It is important for providers to determine how their payors plan to comply with the federal notice requirement because the regulations do not state the manner of the required notice. Since the notice requirement is a new and developing issue, some payors may provide notice only post-service on the remittance advice.

There are arguments available to overcome notice only provided on the remittance advice, but the important concern for providers is to know how payors are planning to comply with the notice requirement.

Some plans, such as UnitedHealthcare, have published guidance on the notice requirement for providers.[1] Once a provider knows a payor will be handling the notice requirement in a certain manner, they can then work to establish processes to avoid unnecessary claim denials.


With the increasing enrollment numbers of QHPs, providers can expect to treat more patients that are subject to the grace period provisions. Additionally, it is unclear how the grace period provision is interpreted with other federal provisions, such as redeterminations and reenrollments in QHPs. With this in mind, providers can expect a difficult environment for determining coverage for patients with QHPs who fall within the grace period provision and should be aware of the required notice QHP insurers must provide during the grace period when claims potentially could be denied.

Additionally, for patients falling within the grace period, providers may be considering paying the premiums to avoid pended and, ultimately, denied claims. However, the legal intricacies of the fraud and abuse laws and tax laws requires consultation with experienced attorneys, in-house counsel, and hospital executives. Following articles will touch on these legal and compliance issues of third-party payment of premiums by providers.

Do you have questions regarding the topics covered in this article?

Contact the author, Matthew Horton, at 410-296-1552, ext. 169, or fill out the contact form available under the “contact us” tab.

[1] UnitedHealthcare, Health Insurance Exchanges: Three-Month Grace Period