If actually adjudicated the penalty could be lower or not levied at all and the hospital might be found not have violated the Act. However, there is the possibility a judge could levy these penalties, thus creating the need to make a business decision on these type of cases. Also beware: consumer ad-vocate attorneys hoping for a big pay day, try to identify opportunities for filing class action suits. If the hospital’s normal billing procedure is as described in the example, potentially thousands of patients could be combined through the use of the class ac-tion device. If so, an individual claim of a few hundred dollars could be turned into a very large and expensive suit.The solution? Whenever pursuing co-pay, deductibles or any patient liability, hospitals should clearly define itself as a creditor and avoid falling into the definition of a debt col-lector.

Legally, it probably does not. However, if the amount being sought is $1500, and the patient obtains a lawyer who asserts the Act under these circumstances, the hospital is faced with an economic decision. If the hospital is found to be a debt collector, its technical violation of the Act (such as hav-ing automated form letters sent to the pa-tient directly after the attorney has written to the hospital indicating he/she is represent-ing the patient and all communications are to go to him/her), could result in the patient recovering $1000 for each letter sent by the hospital plus attorney’s fees.

QUARTERLY NEWSLETTER - SUMMER EDITION 2012 - #4

Debt Collection Quandary Payors Avoiding Co-Pays & Deductibles Through Abuse of Fair Debt Collection Practices Act and What You Need to Know By Richard Lovich, Esq.

As if hospitals didn’t have enough trouble collecting from contracted payors, a new tactic has now arisen on behalf of patients seeking to escape responsibility for co-pays and deductibles. In order to avoid this from happening, it is important to understand how it is being done.Known in California as the Rosenthal Fair Debt Collection Practices Act, (California Civil Code 1788, et seq.,) and federally as The Fair Debt Collection Practices Act, 15 USC 1600, et., seq.) (the “Act”), the Act started from a laudable goal. Seeking to tame aggressive debt collectors and pro-hibiting midnight dunning calls would be something just about everyone would sup-port. However, as with most legislation, in practice the Act can allow patients to place a hospital in a position where, because of potential penalties, it may become eco-nomically unfeasible to collect on a co-pay or deductible. The potential penalties for violation of the Act are $1,000.00 per viola-tion, plus reasonable attorney’s fees. Actual damages do not have to be proven in order to recover the penalty amount. Let’s look at a set of facts illustrating the issue: Patient is billed for a $1,500 co-pay/deductible related to treatment provided at a fictional hospital, “Main Street Medical Center”. Main Street is owned by a fictional corporate parent “California Hospitals, Inc.”The bill is sent on a letterhead reading “California Hospital, Inc., Main Street Medi-cal Center”. Sounds common, right? Here is the problem:Under the Act, a “creditor” is defined as a person or entity to whom a debt is owed. Designation as a creditor does not neces-sarily subject that entity to the provisions (penalties) under the Act. However, if a creditor is a “debt collector”, as defined un-der the Act, then the creditor can be held liable if the provisions of the Act are vio-lated. A debt collector can be defined as a creditor who uses any name other than his own, which would indicate that a third person is collecting or attempting to collect such debts. See the problem? Does the inclusion of the corporate name on the bill turn the hospital from a creditor into a debt collector?

PROVIDER BEWARE

By Joy Stephenson, Esq. & Charles Acquisto, Esq.

When UnitedHealth Group Inc., acquired Executive Health Resources Inc. for $1.5 billion in August of 2010, few in the health care industry raised an eyebrow. No con-cerns were raised in the media of United-Health Group’s adding the Newton Square, Pennsylvania-based company known as EHR to its Ingenix database management and consulting unit.Eighteen months later, a caution flag was raised by Banner Health officials in an April 30, 2012, article by KaiserHealth. Banner, one of the nation’s largest non-profit hospi-tal systems with 23 facilities in seven states, had hired Executive Health Resources as a vendor to fight Medicare and UnitedHealth-care on claim denials and underpayments prior to UnitedGroup’s acquisition of EHR.The Banner executives in the Phoenix-based corporate offices had issues with the potential conflicts of interest. “It does seem as though there is reason for concern be-cause they [UnitedHealth Group] can use our own information against us,” Banner CFO Dennis Dahlen told KaiserHealth.The worries are legitimate. The Minneton-ka, Minnesota-based UnitedHealth Group is the largest health insurer in sales in the United States with 30 million members. EHR, founded in 1997, provides hospitals with teams of outside physician advisers to

Is The Fox Guarding The Henhouse?The UnitedHealth Group/EHR Dilemma

CONT’D - Next Page

“Does the inclusion of the corporate name on a bill turn the hospital from a creditor into a debt collector?”

INSIDE SCOOP

hospitals, labs and radiologist), Picis (dates networks for seriously ill patients), and CareMedic (claims consultant for revenue cycle). UnitedHealth’s “slow-pay” reputation does not help make these acquisitions any easier to swallow according to Revive Pub-lic Relations President Brandon Edwards, whose company has found the health plan to annually rank at the bottom of its survey of California hospital managers’ opinions of health plans.“Many hospitals have commented that it’s almost as though United’s contracts and administrative processes are specifically designed to generate high denial rates,” Ed-wards told KaiserHealth. United Healthcare representative Daryl Richard countered the Revive survey, telling KaiserHealth that the non-scientific methodology seeks “web-based response from a couple hundred hospitals,” which fails to give an accurate reflection of the industry. Revive told Kai-serHealth the survey included 258 interview respondents representing 28 percent of all U.S. hospitals.Since being acquired by UnitedHealth in 2010, EHR’s business continues to grow. More than 2,000 hospitals have hired EHR to manage insurance claims. Banner’s CFO Dahlen told KaiserHealth there has been no indication that EHR is taking advantage of its situation inside Banner’s business offic-es. However, he added, “I’m not sure we’d ever see any evidence of that even if they were doing it.”

UnitedHealth - CONT’D

By Richard Lovich, Esq.

OverviewCalifornia maintains a health care program for adults suffering from various genetic dis-eases. The Genetically Handicapped Per-sons Program, commonly known as GHPP, aids adults suffering from various diseases including: diseases of the blood, cystic fi-brosis; diseases of the brain and nerves; protein metabolism; carbohydrates metab-olism, copper metabolism and Von Hippel-Lindau Disease.Prior Authorization RequiredOther than emergency services, the pro-gram is a prior authorization program and requires completion and submission of a service authorization request (SAR) prior to delivery of services. Billing ProcedureWhile the program does not currently ac-cept electronic billing, paper claims are submitted per the instructions found on the authorization form. There are three SAR forms: 1. New Referral CCS/GHPP Client SAR2. Established CCS/GHPP Client SAR 3. CCS/ GHPP Discharge Planning SARVerification of EligibilityEligibility can be verified three ways: 1. Because GHPP eligibility is linked to

the Medi-Cal database, eligibility can be obtained by swiping the Benefit Identification card in other computer;

2. Checking the online Medi-Cal data-base; and

3. Calling GHPP 1-800-639-0597. Denial of SARIf the SAR is denied, you may appeal the denial by submitting a written appeal, at-taching all relevant documentation and send it to:Attn: Nurse Consultant IIIGenetically Handicapped Persons Program MS 8100, PO Box 997413Sacramento, CA 95899-7413

Breaking Down GHPP

Franklin Honor Awarded to Presbyterian Intercommunity

review hospital revenue cycle for regulatory compliance and efficiency. Critics point out the EHR acquisition allows the vendor ac-cess to confidential information about Unit-edHealth’s rival insurers as well as patients. Furthermore, the conflict strikes at EHR’s ability to demand reimbursement from its behemoth corporate owner, UnitedHealth.“Imagine going to a plaintiff’s lawyer to take your malpractice case and not knowing that plaintiff’s layer actually works for the hospi-tal you’re suing,” medical software and pa-tient records specialist Dr. Scot Silverstein of Drexel University told KaiserHealth.When health plans are in search of addi-tional revenue stream via diversification, the insurers are seeking out business ad-versaries such as medical groups and pro-vider consultants such as EHR. Included in the acquisition concerns are health plans acquiring technology companies and re-search firms that cater to hospitals, raising major concerns about independence as well as the privacy of patient’s information.UnitedHealth and EHR maintain there is a separation between the insurance and health-services sides of the two compa-nies. There is no mention of EHR’s owner-ship in the “Corporate Overview” section of its website, or anywhere else on its site. KaiserHealth also learned that American Hospital Association (AHA) did not identify EHR as a United subsidiary in September of 2011 when it renewed its exclusive en-dorsement of EHR’s denial-fighting servic-es. EHR pays an undisclosed fee to AHA for the endorsement. “There may be some hospitals out there who see the connection and decide not to use them,” AHA Vice-President for Policy Don May told KaiserHealth. “And I think that’s totally reasonable.”EHR CEO Thomas Mercer told Kaiser-Health that the EHR client agreements contain “confidentiality restrictions which preclude us from sharing their confidential information outside of EHR.”Georgetown University professor Mila Kof-man, Maine’s former insurance superinten-dent, remains skeptical. “I am not convinced that, even with proper disclosure,” that an entity owned by United could aggressively advocate against United’s interest,” Kofman told KaiserHealth.Recent UnitedHealth Group’s history sup-ports Kofman concerns. In 2009, United paid $350 million to physicians and patients as well as $50 million to fund a new inde-pendent database to determine reimburse-ment rates to settle allegations with New York Attorney General Andrew Cuomo that United rigged a database to underpay phy-sicians. United’s recently acquired Monarch Healthcare has been accused in California by Blue Shield of California of recruiting or poaching members from rival health plans, according to the KaiserHealth article.UnitedHealth has not only acquired EHR and Monarch, but also Axolotl (allows pa-tient-information sharing for physicians,

SAC CONGRATULATES

Presbyterian Intercommunity Hospital (PIH) in Whittier has received the 2012 Franklin Award of Distinction from The Joint Commission and the American Case Management Association (ACMA). The award was presented to PIH’s Care Management Team for its team-based ap-proach to case management. PIH is the first Southern California hospital to win the Franklin Award, which is named for Benja-min Franklin, the co-founder of the first or-ganized hospital in America.

SAC EDUCATES

SAVE THE DATE

October 12, 2012Wente Vineyards

Livermore, CA

Do you have any hobbies or interests outside of work?I love to paint, snowboard, hike, bargain shop, jog with my dog, and travel. I have visited nine countries including London, France, Greece and Australia. I also like to try new foods since Los Angeles has such a wide variety of global influences.

Do you have any charitable causes that inter-est you and events you have participated in recently?

I am a Committee Member for the Beverly Hills Bar Association and recently volun-teered for their “Vintage Bouquet” event which raises money for Public Counsel, the nation’s largest pro-bono firm. I have also volunteered for the Big Brothers/Big Sisters program and the S.C. Paw Animal Adoption Association.

Do you have family and/or pets you’d like to tell us about?I am engaged to a wonderful man named John Hilvert who is a Regional Manager for Stryker Craniomaxillofacial. We are proud “parents” of a Chorkie (Chihuahua / Yorkie mix) named Buzi – which means “kiss” in Polish. My two older brothers are married and live on the east coast. My parents reside in El Paso, Texas but will hopefully move to California when they retire. I also have an adorable niece named Soleil Anna.

Do you have any guilty pleasure television shows, movies or other activities to tell us about?I am a pretty big reality television nerd and am currently obsessed with Survivor, Amaz-ing Race, Big Brother, and The Bachelor. I also record almost any wedding show since John and I are getting married in August! Some favorites are – Four Weddings, Say Yes To The Dress, and Big Wedding Blun-ders.

What are your favorite foods? Colors? Other favorites?

My favorite foods are sushi, Mexican and Italian. I also love white wine, gummy bears and frozen yogurt. My favorite band is Red Hot Chili Peppers although I have recently become a big fan of electronic/house music (Kaskade, Deadmau5). My favorite beach in the world is Bondi in Australia.

Q: RAC identified our inpatient claim for take-back and they are correct – claim should have been billed for observation or outpatient...have we lost our case?

A: Not necessarily – you can ask an Arbitration Law Judge (ALJ) for a partially favorable decision, a.k.a., an O’Connor finding, based on the leading precedent the Law Offices of Stephenson, Acquisto & Colman helped establish. Under Medicare regulations even though the hospital bills incorrectly, it is entitled to fair reimbursement for services it provided if services were medically necessary, albeit at a lower level of care.

Q: An ALJ rendered a partially favorable deci-sion – do we need to rebill?

A: No, Palmetto is supposed to initiate the reprocessing of your claim on its own.

Q: What have you observed during the course of appealing the case(s) that you think hospi-tals could improve on?A: For those hospitals who have direct con-tracts with various insurance companies or health plans, the contracts typically have a meet and confer requirement that hospitals are not using to their advantage. Such pro-vision allows for informal discussions be-tween the parties – whether it be telephonic conferences or in-person meetings to occur that could assist in amicable resolution to avoid the time and expense litigating the case(s). At times, the contract limits these discussions to only executive level employ-ees with settlement authorities. Nonethe-less, if hospitals take advantage of this op-portunity, it would result in an increase on the number of settled / resolved claims.

Q: What recommendations / suggestions would you give to hospitals when their con-tracting team sits down to negotiate their contracts with health plans. A: From the legal standpoint, SAC recom-mends hospitals to pay close attention to limitations on time to initiate arbitrations or statute of limitations, including any provi-sions that waives the hospitals rights from filing any lawsuits if the appeals were con-sidered untimely by the plans. For example, we recently learned (though not confirmed) that Anthem Blue Cross has already negoti-ated a number of contracts with hospitals in 2011 or as recent as 2012 that waives the hospitals’ rights to file an arbitration on medical necessity claims. The hospital’s last remedy under this contract is a binding decision from an independent medical re-view team chosen by both parties. Signing off on these contracts is detrimental to the providers’ revenue recovery.

Your Questions Answered By Our SAC Team of Experts

ALEKSANDRA SAROSIEK

Our spotlight this quarter is attorney Aleksandra Sarosiek. She has been with SAC since 2009 and specializes in complex litigation. Within her short time here, Aleks is already making her mark in the firm and we are proud to highlight her as a member of the SAC team.

Spotlight Q&A

What is your area of expertise within SAC?I was hired to file complaints against health plans but soon began handling all stages of arbitration and litigation. Today, I am part of the litigation team under Rich Lovich. We specialize in aggressive litigation with an emphasis on thorough discovery to maxi-mize information gathered before trial yet minimize surprises during trial.

What one piece of sage advice can you offer to our clients that can help them in the future?We are fortunate that SAC’s clients under-stand the impact of the contracts they exe-cute and strive to incorporate terms that will protect their interests. However, it’s essen-tial to be reminded that even the addition or exclusion of one word can dramatically change the terms of a contractual provision. Some words which must be carefully con-sidered before including in any contract in-clude: “any”, “all”, “indemnify”, “hold harm-less”, “waive rights.”

Can you talk about a recent success story of yours? What was the challenge and how were you able to overcome it?Since 2010, I have been successful in pursuing government entities for failing to properly reimburse healthcare providers for services rendered to in-custody patients on behalf of our clients. This area of health-care litigation was seemingly untouchable after the 2007 case decided in San Diego which held that the county did not have fi-nancial responsibility over pre-commitment arrestees [Sharp Healthcare et al v. County of San Diego et al., 156 Cal. App. 4th 1301 (4th Dist. 2007)]. With the help of my liti-gation team, we crafted arguments which persuaded government entities that the pa-tients at issue were actually committed and therefore, these entities were responsible. Our crafty arguments were only success-ful because these particular hospitals had great record-keeping systems which helped prove that the patients had been “commit-ted” and therefore, they helped cement our position.

Southern California Office303 North Glenoaks BoulevardSuite 700Burbank, CA 91502(818) 559-4477 - Main(818) 559-5484 - Fax

Northern California Office5700 Stoneridge Mall RoadSuite 350Pleasanton, CA 94588(925) 734-6101 - Main(925) 463-1805 - Fax

AAHAM Western Chapter SeminarNorthbay Medical Center - Fairfield, CA July 18, 2012

Chuck will be presenting on the topic of “Managing Your Denials : Tips from the Attorney”

DISCLAIMER: This newsletter is for general educational and informational purposes only. You should not act upon this information with-out seeking your own independent profes-sional advice.WWW.SACFIRM.COM

We would love to hear from you!If you have questions, comments or feedback please email us at SACReview@sacfirm.com.

QUESTIONS / COMMENTS

UPCOMING EVENTS

Vince Acquisto Memorial Golf Tournament and Silent Auction to benefit The Bili Project FoundationWente Vineyards - Livermore, CA October 12, 2012

Registration and sponsorship opportunities can be found at: http://www.hfma-nca.org/HFMAEvents

info@thebiliproject.org

The Bili Project Foundation is dedicated to advance research to better detect and treat the complex family of cancers affecting the Hepatobiliary system, in-cluding cholangiocarcinoma, gallbladder cancer, and hepatocellular carcinoma (HCC). To find out more about the foun-dation, email:

Created in memory of Vince Acquisto

her career, Denise has developed a strong client support presence and is a familiar face within the healthcare community as a 25-year member of HFMA & AAHAM and a 10- year member of CAHAM. Her expertise in enhancing operations to address each customer’s unique need is already making a difference here at SAC. If you don’t al-ready know Denise, we invite you to help us welcome her by introducing yourself at TRansdell@sacfirm.com.

NEW ADDITIONWelcome Director of Client Relations, T. Denise RansdellSAC is happy to introduce the newest addition to the SAC family, Tina Denise Ransdell, the new Direc-tor of Client Relations. She comes to us with over 28 years of health-care experience and over