By our estimates, as many as 98% of provider organizations assume that health plans have the last word in coverage decisions and reimbursement rates.
Often, they don’t. Most private-sector health plans are actually subject to the Employment Retirement Income Security Act of 1974 (ERISA). This means that providers are typically owed millions of dollars in denied reimbursement that should have been approved.
Designed to protect the rights of beneficiaries in employer-sponsored programs, ERISA dictates that reimbursement must follow the guidelines outlined in employee benefit plans. This holds true even if the employee benefit plan conflicts with rate agreements that health plans have established with their in-network providers.
In other words, health plans are accustomed to rejecting claims or reducing reimbursements according to their own established rates and policies. However, if denials or underpayments conflict with coverages granted in an employer-sponsored benefits plan, the health plan is unknowingly triggering an opportunity for discovery and investigation of the employers’ benefit plan per ERISA.
This represents a significant opportunity, as ERISA protects a substantial number of American employees. According to the Department of Labor’s 2020 report to Congress, there were approximately 2.3 million ERISA-covered group health plans in 2017, representing approximately 135 million participants and beneficiaries.
In our experience, the average hospital is usually due millions in revenue from inappropriately denied claims.
So, why don’t hospitals know about ERISA appeals?
There are two primary reasons.
They’re not trained to consider ERISA
Revenue cycle education and training are built around collecting from two payers: health plans and patients. Insurance disputes are understood to be worked through the health plans. Therefore, revenue cycle managers currently have no exposure to the concept of looking for collection or appeals opportunities in any other place.
ERISA is exceedingly complex
The foundation material for ERISA appeals is buried deep in one of the most complicated laws on the books. The ERISA law is currently estimated to span more than 100,000 pages. Only experienced ERISA attorneys and claims specialists know what to look for and can craft a purpose-built solution to a particular revenue cycle problem.
Once a hospital PFS team knows about ERISA appeals, what happens next?
Assess your opportunity
Step one is to review the last year of denials and write-offs in light of ERISA and to calculate the financial opportunity represented in those claims.
In ERISA terms, any decision by a health plan that involves a denial, reduction, or termination of benefits to an ERISA-governed employer’s benefit plan is known as an Adverse Benefit Determination. While there are obviously numerous Adverse Benefit Determinations cited by health plans for denials and reimbursement reductions, the top three for in-network providers are:
- Medical Necessity
- Non-Covered Service
Start by aggregating the AR represented in claims denied for those three Adverse Benefit Determinations. A single hospital may find a $1 million opportunity; larger health systems will find more.
From there, an experienced ERISA appeals team will partner with you to build the best strategy for revenue recovery. It must include:
- Employer Documentation Discovery—ERISA appeals are based on the coverages outlined in employer-sponsored health plan documents. ERISA attorneys and appeals specialists understand how to obtain Summary Plan Descriptions and other critical resources.
- Relationship Management—Despite the enormous revenue potential, provider organizations must be cognizant of placing excessive burden on any one health plan. Strategic appeals planning is a partnership between the ERISA claims specialist and the provider to identify the most appropriate claims to pursue.
Are you ready to learn more? We explain the ERISA appeals process in great detail in our latest white paper, “Revenue Recovery with ERISA Appeals: Exploring the Untapped Potential in Denials and Underpayments.” Download it here, or reach out to us with questions.
Argos Health is a KLAS top performer and offers the broadest range of complex claims services of any vendor in the category. Learn more about our ERISA appeals services by going here.