As the debate for healthcare reform heats up, it’s good to be reminded that this isn’t a health insurance company problem it’s a healthcare COST problem, and the providers share responsibility. A recent case ruling in the United States District Court Eastern Division of New York – Jeffrey Farkas, M.D. LLC versus Cigna Health and Life Insurance Company – shines a bright light on how providers are a part of the problem. In this case, Dr. Farkas sought relief under the Employee Retirement Income Security Act (ERISA) for the collection of a $332,300 bill for emergency brain surgery. The doctor asserted that this charge is Farkas’s usual and customary rate. The patient was covered by an employer plan which provided for 100% reimbursement of emergency room services (and no doubt, this was an emergency), but the doctor argued that Cigna was a fiduciary under ERISA and had no right to assess the reasonableness of the doctor’s charge.
The provider was out-of-network and in limiting its reimbursement, Cigna wrote that they were allowing 300% of the Medicare rate or $6,893.20. In fact, they ultimately paid $12,407 before the case was brought to court.
In making its summary judgment ruling against the doctor, the court acknowledged that while a “civil action may be brought . . . by a participant or beneficiary . . . to recover benefits due to him under the terms of the plan” that ERISA allows the plan administrator to use reasonable discretion in carrying out its responsibilities.
The court agreed (and surely, we all do) that a provider billing 48 times the reimbursement standard of 300% of what Medicare allows is an abuse.
The system needs checks and balances to avoid abuse, and fingers point in every direction – not just at the health insurance companies.