QUARTERLY NEWSLETTER - WINTER ISSUE 2011 - #2

Welcome to the second edition of the SAC Review. The response has been fantastic and we are thrilled with the positive feedback we’ve received from you. Your enthusiasm has encour-aged our team to put together an extra special holiday edition packed with valuable informa-tion. Please enjoy our new column Ask SAC; a section devoted to answering common client questions. In addition to the hard copy mailed to you, the newsletter andbonuscontentcan be found on our website at www.sacfirm.com. We wish you and your entire staff a happy and healthy holiday season.

Joy, George, Vince

GETTING AROUND THE SHARP DECISION OBTAINING PAYMENT FOR TREATMENT OF “IN-CUSTODY” PATIENTSBy: Aleksandra Sarosiek, Esq. & Karlene J. Rogers-Aberman, Esq.

It is generally difficult for hospitals to obtain payment from California cities and coun-ties after giving care to arrested persons in need of immediate medical attention. Over time, this struggle has become even more difficult as a result of both legislative activity and rulings by California courts.

• In 1992, an amendment to California’s Penal Code provided that cities should not be liable for medical costs resulting from an officer transporting an arrested person to the hospital prior to booking them into county jail.

• Between 1992 and 2007, hospitals were able get around the amendment by relying on the longstanding 1968 case of Washington Township Hosp. Dist. v. County of Alameda, which gave a broad meaning to the term “book-ing.” Under Washington Township, an arrested person was considered “booked” even if he or she was not physically committed to a cell. This was called a “constructive” booking. Under Washington Township, the con-structive booking theory meant that the arresting entity was responsible for paying for the arrested person’s medi-cal care from the time he or she was placed under arrest. The reasoning was that if the arrested person had not been injured, he or she would instead have been taken directly to jail.

• In 2007, the case of Sharp Healthcare v. County of San Diego essentially

overturned the holding of Washington Township by doing away with the the-ory of constructive booking. In Sharp, the California Court of Appeal ruled that San Diego County was not liable for the medical care expenses of a per-son arrested and treated at a hospital before the arrestee was committed to the county jail because there was no duty to book an arrested person “in absentia.” The Sharp court held that “County may elect to delay booking of arrestees until after they have received medical attention.”

Despite the ruling in Sharp, it is important to note that nothing in the case prevents the sheriff from voluntarily booking an arrested person. In other words, the sheriff or other enforcement officer can waive the right to delay booking. A hospital could therefore make the argument that if a patient is trans-ported to a hospital and “field booked” by the government entity while receiving treat-ment, the patient has been voluntarily “com-mitted” under Sharp. (A “field booking” gen-erally occurs outside the physical confines of jail and is completed from a remote loca-tion such as a hospital. Field bookings use the same procedures and render the same results as a jailhouse booking). By volun-tarily field booking the patient, the govern-ment entity is effectively acknowledging it has a duty to pay for the care rendered to the individual.

In practice, this voluntarily booking is usu-ally represented by an “In-Custody Medical Treatment Form” completed by the arrest-ing offer. The form typically lists the name of the patient, their age and gender, as

well as the arresting officer’s signature and badge number. Most importantly, it (i) cer-tifies that the treatment was authorized by the appropriate enforcement division (e.g., the County Sheriff’s Department), and (ii) provides a booking number.

Hospitals are therefore in a good position to get around the Sharp decision if they obtain a properly completed In Custody Medical Treatment Form at or near the time treat-ment is rendered. If the hospital waits too long to obtain the In Custody Medical Treat-ment Form, it could give the city or county an opportunity to argue there was a “delay” in booking. That then gives the county an “out” to argue it has been absolved of any fi-nancial responsibility for services rendered.

Hospitals are also in a good position to get around Sharp if there have been any partial payments received from the city or county in connection with the hospital’s treatment of the arrested individuals. By making a payment on the claim, no matter how small (and it usually is!), the city or county is ef-fectively acknowledging some responsibil-ity for the treatment rendered.

As a side note, there are many legal nuanc-es and holes in the Sharp case that remain open to interpretation and will likely lead to more litigation in the future. For example, Sharp never clearly defined the term “com-mitment” and did not specifically address field bookings. Therefore, it is left to be seen whether other judges or the Califor-nia legislature will agree that a field booking renders an arrested person “committed” as intended by the Sharp decision.

HOT TOPIC

By: Richard Lovich, Esq. & George Colman, Esq.

Patient financial services professionals know very well the documents that make up their daily work. These documents, in-cluding computer notes, UB04s, EOBs, and correspondence with payors are so common in the field that their significance in obtaining appropriate reimbursement are often overlooked. Although routine in their applicability, these documents become the ammunition used to force payors to live up to their financial responsibilities. Disputed claims referred to the pre-litigation and liti-gation professionals at SAC become more easily appealed/litigated and overturned with the proper and essential documents.

The ability to recover for medically neces-sary services the hospital has rendered is often based on what was done in submitting the bill, in following up, appealing, and cor-responding with the payor. Most accounts we litigate do involve issues of medical ne-cessity, however, there are many contrac-tual issues involved in the recovery process as well (i.e. contractual timely submission of a claim, contractual timelines to submit an appeal, etc)., The best way to ensure recovery under these circumstances is to present persuasive evidence and docu-mentation for each act.

Evidence comes in the form of documents and testimony and the bulk of evidence is documentary. This is because most often, by the time the claim reaches arbitration, the person who actually sent the records is not available to testify or simply because of the volume of claims they handle daily, pre-vents any current recollection of what hap-pened on that individual claim. This means that in order to establish that the hospital is entitled to the expected reimbursement, it must be shown with internal hospital docu-ments that the bill and subsequent appeals were submitted correctly and timely. If the documents fail to establish each step of this process, the claim has to be considered weak and the likelihood of recovery is di-minished. The case is strongest where the computer notes or correspondence clearly and unequivocally indicate what was done. Creating clear, complete, and timely claim documentation – a task within the hospital’s control – can lead to a significant increase in recovery.

Document request and retrieval for our assigned accounts is essential.

ence in your contracts, or at a minimum, freeze the Provider Manual provision to the manual in existence at the time the contract is signed with a provision that any charges need to be negotiated as a contract amend-ment and be signed by the Provider in order to take effect.

DISALLOWED CHARGES

Why in the world would a Provider give a Payor the right to disallow charges for ser-vices it provided to a patient? Some con-tracts give Payors arbitrary control in this area. When a bill is submitted, a Payor can delete some charges from the bill to lower the total billed charges to less than a stop loss threshold mark or to lower the percent of charges it pays. This too is a very bad idea. My advice to Providers: do not give the Payor any discretion on what it will pay or not pay. I like the term “Total Billed Charges” in contracts to eliminate the Payor’s discretion to limit charges and re-imbursement.

These are my latest pet peeves. Although I hope for improved relationships with Pay-ors with regard to reimbursement.

GEORGE COLMANThis quarter’s spotlight is on one of SAC’s founding partners, George Colman. For more than forty years, George has been in-volved in representing over 100 healthcare providers in revenue recovery and busi-ness office consulting, assisting in creat-ing “on-site” programs in public and private hospitals, as well as specialized insurance and third party recovery programs through-out the country. Through his years of ex-perience, George has contributed to vital programs, serving as a President of the Southern California Chapter of the Health-care Financial Management Association (HFMA), the Chapter Liaison Representa-tive for Region 11 of HFMA; he currently serves as national legal counsel to the American Association of Healthcare Admin-istrative Management (AAHAM), and is the legal advisor to the California Association of Healthcare Admitting Managers (CAHAM).

OPERATIONS MANUALS

A number of contracts I have seen have a provision stating, “Payor has an opera-tions manual that is incorporated by refer-ence into this contract”. This troubles me for several reasons. First and foremost, this allows for a unilateral contract change since the Operations Manual is totally controlled by the Payor with no input from the Provider. These Operations Manual changes become part of the Provider con-tract. Providers could then be barred by a unilateral directive from the Payor. This is not a good provision as it allows a Payor to make “backdoor” changes detrimental to the Provider. My second point of concern is that the incorporation language is contrary to the California Providers Bill of Rights.

The bill, in essence, says a Payor cannot make a change to its agreement with a Pro-vider without the Provider’s WRITTEN con-sent. How often have Providers given their written consent regarding changes in the Provider Manual? Providers need to insist on the written consent provision of the Pro-vider’s Bill of Rights regarding changes to their contract. “ Another option is to exclude any reference to an incorporation by refer-

No doubt many of you have had the plea-sure of attending George’s lectures at his education seminars dressed in his signa-ture bow tie. George is active in his com-munity, tirelessly advocating for special-needs children and studying American Sign Language to fully communicate with his grandson.

His most recent accomplishment is receiv-ing the “Heart of St. Francis” award at the St. Francis Charity Ball for his contribution to the community and for his instrumental role in their organization as Chairman of the Board of Trustees of the Foundation. His outgoing personality and funny wit are en-joyed by his family, clients and employees alike. We sat him down to ask questions to get some insight on his journey to where he is now, what’s next and ask him to offer some sage advice.

CONT’D - NEXT PAGE

BEST PRACTICES

PROOF IS IN THE PAPERWORK MORE PET PEEVES REGARDING MANAGED CARE CONTRACTING

Q: After we receive a letter from HDI iden-tifying our claim for take back, we receive two medicare RA-s: one, showing a zero pay-ment and another showing a take back of the amount Medicare originally paid for this claim. Why is Medicare taking their money back so soon, before we ever get a chance to appeal? A:Medicare is not taking their money at this point – this remittance advice that looks like a take-back (with code N432) is really a tag, or a place holder. Q: We have been seeing a significant in-crease in the number of denials of Medi-Cal claims in the last six months. What is happen-ing? What can we do about it? A: What you are seeing is the effects of Hewlett Packard being phased out as the Department of Healthcare Services (DHCS) Fiscal Intermediary. Just make sure you do not get caught up in the re-billing cycle - re-member, you can keep re-submitting your claim for processing within the first six months after the discharge date. After that, unless you have a valid late billing excuse, you will have your claims cut back by 25% and then 50% and after 1 year, you will just get a plain denial. Make sure your staff is aware they need to comply with the Medi-Cal administrative appeals process and that they submit their Claim Inquiry Form (CIF) and appeals timely.

Q: Medi-Cal is not paying for our expensive supplies. What can we do about it? A: Make sure you comply with their invoice requirements - do not submit purchase or-ders, it is not the same thing.

Q: How do we go about having Medi-Cal repro-cess an incorrectly paid claim? A: It happens all the time - e.g., on an in-patient claim Medi-Cal deducts an incor-rect part B medicare amount or, processes claim with an incorrect patient id, deducts wrong share of cost... The fastest way to accomplish the reprocessing is to first do a CIF for take back and then promptly rebill (if you are still within the first 6 months af-ter discharge) or, appeal once you receive the warrant showing that the take back was performed. To avoid having your CIF de-nied as untimely, make sure you mark the “overpayment” box.

Q: If a claim is the financial risk of another capitated hospital / IPA or medical group, can we still go after the health plans for pay-ment?

Your Questions Answered By Our SAC Team of Experts

Q: How did you first meet Joy and Vince and form Stephenson, Acquisto & Colman?A: I met Joy and Vince at my prior firm, Hayt, Hayt & Landau. I was the Managing Partner at that firm and actually the one that hired both of them as healthcare attorneys for that firm. Vince had been an attorneywith HFCA involved in Fraud & Abuse and at the ‘cusp’ in creating DRG’s. Many cli-ents questioned the hiring of Vince consid-ering HCFA the enemy – my comment is he is now on our side and we have garnered the secrets and contacts at the federal level that can enhance us all.Joy was so easy to interview and offer a job to. Her personality, creative thinking and astuteness with respect to the law, made a decision to hire her, a snap one. Joy is a fabulous litigator with respect to Admin-istrative and Healthcare Law and has un-questionably raised the caliber of legal rep-resentation for hospital providers. Q: Do you have any funny stories you can share from the 22+ year history of the firm?A: Most of the funny stories I can share are not for publication, however we certainly can share our 20th anniversary CD with anyone who asks. It parodies the SAC of-fice with the well publicized television show – The Office.Q: What is the single most important piece of advice you can offer our clients?A: March 2012 will mark my 43rd year of practicing law – 14 years in New York as a trial attorney representing large commer-cial entities and physicians in their personal affairs. I have learned and experienced much over those years, and what I can of-fer our clients as advice has more to do with life. Whether personal or as employees, managers or administrators, behave as a human being first and as boss second. I have found that this posture works to create a mutually beneficial and sound working re-lationship. Second, respect the fact that healthcare delivery in America is special, and the pas-sion we have in providing care and over-seeing the process must continue; even under the financial restraint and complex regulation that makes our jobs more diffi-cult every day. Q: Do you have some career advice garnered from your experience?A: As an attorney we have an obligation, in order to maintain our license to practice, for continuing education. Rather than be-grudge it as a chore, I look to it as an oppor-tunity to continue to best represent our cli-ents and to enhance my career. Likewise, every opportunity that anyone has to obtain an education for a personal interest or on the job elevates oneself and promotes ca-reer opportunity.Q: What causes and charities have you been involved in over the years? A: Juvenile Diabetes; Autism and National

CONT’D - ON BACK

Healthcare issues, and met with members of Congress to effect change. I have as-sisted several families with special needs children; visited our national government offices spending time with representatives of congress to move legislation forward that can assist providers to continue quality care for our population, even with reduced reim-bursement and rising costs.

Q: What sort of things do you like to do during your down time away from the office?A: Golf, sculpt, read, visit museums, spend time with my grandchildren. Although my golfing skills are slightly above the average golfer, it is the enjoyment of the outdoors with friends and the beautiful golf courses in Southern California which are the reward.Q: Who is the better golfer? You, Joy or Vince and why?A: Joy is taller and more beautiful, and man, does she hit the ball far. Q: Tell us something about your family.A: A wonderful group of people that stand by each other and provide constant sup-port and love for each other. I owe much of my success and ability to “give back” to the community I live and work in, to my family. I am also proud of my family, my children and grandchildren; they are independent thinkers and achievers – having become successful and notorious on their own.

GEORGE - CONT’D

Georgereceivedthe“HeartofSt.FrancisAward”attheSt.FrancisCharityBallonOctober1,2011

Many of you have been looking forward to SAC’s debut on the KTLK radio show “Led-ger on the Law”. Sadly Clear Channel has notified us that the show has been indefi-nitely postponed. We are still available to answer your questions offline though.

California is LAST in the nation in Medic-aid (MediCal) funding. In 2010, California was underfunded by $4.6 billion dollars. As providers you MUST identify your denied medically necessary days AND appeal and/or litigate them. Getting appropriately reim-bursed is essential. Contact Vince Acquisto or George Colman for more information.

UPDATE - RADIO SHOW

FACT: LAST PLACE

SPECIAL ALERT!!Medi-Cal DRG program, designed to re-place the TAR process, hasbeendelayeduntilatleastJanuary1,2013 and may be extended further.

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) 734-6100 - Main(925) 463-1805 - Fax

14th Annual HFMA Region 11 Healthcare SymposiumJanuary 29 - February 1, 2012Caesar’s Palace - Las Vegas, NV

Chuck is on the CORE committee with the general session speakers.

DISCLAIMER: This newsletter is for general educational and informational purposes only. You should not act upon this information without seeking your own independent professional advice.

WWW.SACFIRM.COM

A: Yes. Although hospitals are aware of the process of cap and deduct, very few hospitals actually take advantage of the process. Hospitals have to make sure that they bill the claim(s) to all parties and ap-peal to all parties within a timely manner. Those claims that were never billed to the health plans and appealed timely within the deadlines- regulatory or contractual deadlines, are the claims that are difficult to recover payments. Hospitals should also look at their contracts to determine what sort of payment obligations a health plan has when a claim is capitated.

Q: Is a denial for no authorization the same as a denial for medical necessity?A: No. Many people confuse the two. Deni-als for no authorization is a failure to follow an administrative procedure of obtaining pre-certification whereas medical necessity is strictly a clinical denial. If a contract be-tween the parties exist, that contract gener-ally provides an outline on the administrative procedures that hospitals should following when obtaining authorization for post sta-bilization care and/or elective procedures. Insurers also have copies of their policies that can be obtained through the provider’s

online access. That said, for contracts that do not preclude retrospective reviews then those insurers should not deny a claim for lack of authorization.

Go to sacfirm.com for more frequently asked questions by clients and exclusive web con-tent. Additional exclusive web content topics in-clude:

• ICD-10,HIPAA5010, new DHCS’ Fis-cal Intermediary - Ladies and gentle-men brace yourselves, we are entering an eye of a hurricane....

• If we were to look at your main account inquiry, will we be able to tell at first glance if a file was paid in full?

ASK SAC - CONT’D

If you have any questions, comments or feed-back you would like to address to our team for our next newsletter, please email SACReview@sacfirm.com and check out the next newsletter for the answer.

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