Provider organizations tell us that as much as 1% of their net patient service revenue is recouped annually by payers. They don’t realize that most of those takebacks are expressly prohibited under ERISA.
While health plans are accustomed to setting their own payment terms under state statutes, many of their members are protected by ERISA, the federal Employee Retirement Income Security Act of 1974. Designed to safeguard the rights of beneficiaries in employer-sponsored health plans, ERISA includes specific provisions that prohibit retroactive coverage-related denials. And, as a federal law, ERISA supersedes state-governed policies.
In other words, many healthcare payment recoups are unambiguously recoverable under ERISA.
ERISA Rescission Rules
According to the law, a health insurer may retroactively recoup coverage under only two conditions:
- The covered individual commits an act of fraud or deliberately misrepresents material facts
- The covered individual fails to pay premiums toward the continuation of coverage
Barring one of those, the insurer “must not rescind coverage under the plan, or under the policy, certificate, or contract of insurance, with respect to an individual (including a group to which the individual belongs or family coverage in which the individual is included) once the individual is covered under the plan or coverage.”
Following ERISA’s overall intended purpose, the provisions on recoups favor the plan beneficiaries. This is demonstrated in several critical components:
The recission regulations apply to all plans and insurers.
While grandfathered health plans are exempt from some components of the ERISA law, the prohibition on take-backs expressly applies to all ERISA-covered health plans, regardless of status.
The regulations set a high bar for determining fraud.
Making a distinction between inadvertent omissions and deliberate fraud, ERISA does not allow health plans to use inadvertent omissions as justification to retroactively deny coverage. For example, if a breast cancer patient neglects to include a long-ago visit to a psychiatrist when asked “Is there anything else we should know about your health?” the health plan may not use that as a basis for which to rescind coverage.
Insurers can’t rescind coverage when there are other established remedies.
A tobacco use clause provides the best example of this tenet: Insurers may not rescind coverage for beneficiaries who provide false information about tobacco use because they are instead permitted to retroactively increase premiums.
Beneficiaries must be notified in advance.
Insurers are obligated under the law to notify the affected patient at least 30 days in advance of a retroactive coverage denial that will result in a payment recoup. Our providers tell us that almost never happens.
Temporary COVID relief measures have extended the payment deadlines for continuation of coverage.
For the next several months, additional COVID-related protections are in place that make it even harder for a health plan to legally justify a recoup. Because of the pandemic, employer-plan beneficiaries have been given extensions for signing up and making their premium payments toward continuation of coverage. Therefore, health plans are prohibited from denying many 2020 and 2021 claims on the grounds of lapsed coverage.
Revenue Recovery under ERISA
ERISA appeals work is highly specialized and entirely separate from the recovery work done by other PFS teams. Experienced ERISA appeals analysts are prepared to pursue the appropriate plan documentation and defend providers’ rights to proper payment against health plans and attorneys.
Most providers assume they have no recourse against retroactive coverage-related take-backs. In fact, providers are explicitly protected by ERISA. And with additional COVID protections in place, now is the time to leverage this option.
Do you have questions about recovering payment recoups through ERISA appeals? Please feel free to reach out to us directly.
Learn More: We explain the complete untapped revenue recovery potential of the ERISA appeals process in our latest white paper. Download it here.