By: Hailey Groover, Legal Assistant
Conflicts in Coordination of Benefits Under Maryland Insurance Article § 15-1008
Healthcare providers occasionally run into situations where a patient will have coverage under two health plans. Ironically, because of misunderstandings between the two plans, neither plan will ultimately pay the claim, leaving the provider with an unpaid bill. One might ask how is that possible? This article discusses a Maryland statute that attempts to remedy this situation, and how this law needs to be improved.
Real Life Example
Consider a real-life example: In January of 2021, a young kidney transplant patient is admitted to the hospital for treatment of a circulatory condition. The artificial blood vessel connection created in the patient’s arm for dialysis was blocked, leading to severe swelling from blood flowing in the wrong direction.
After the corrective procedure, the patient recovers well and five days later is safely discharged. However, a crucial billing opportunity went unnoticed. When the young man checked into the hospital, he listed health coverage through his Medicaid Managed Care Organization (“MCO”). As such, in February 2021, a month after the hospital procedure, the MCO reimbursed the entire stay.
However, in March of 2022, 13 months later, the MCO retracted its payment. The MCO determined that the patient also had coverage through Medicare’s end stage kidney disease program. While it is generally understood that Medical Assistance is the payer of last resort, the patient’s coverage through Medicare was never disclosed to the hospital. When viewed in this context, one could say that three mistakes were made:
1. The patient provided coverage information only for the MCO, and not Medicare;
2. The hospital did not check to see if the young man had other health coverage;
3. The MCO, prior to paying the claim, did not check if its member had additional coverage.
How The Maryland Statute Works
Maryland Insurance Article Section 15-1008 addresses the situation of an erroneous payment made by a health plan. Under this statute, a carrier may only retroactively deny reimbursement paid to a health care provider during the six-month period after the date that the carrier paid the provider.
In our example, this would give the MCO until March of 2022 to retract its payment for any valid reason.
However, under certain circumstances a carrier is allowed up to 12 additional months from payment to retroactively deny reimbursement to a health care provider. Click here to view the full text of the statute.
Subsection (c)(1)(i) states that a carrier may only retroactively deny reimbursement for services subject to coordination of benefits with another carrier, the Maryland Medical Assistance Program, or the Medicare program during the 18-months after the date that the carrier paid the health care provider.
This exception now gives the MCO until August of 2022 to recoup its payment for coordination of benefits. Because the MCO correctly determined that the patient had Medicare coverage, the MCO concluded it was able to recoup the payment. But there is a difference between retracting a claim and coordinating payment with another payer.
In the example of the kidney patient, although Medicare was the primary payer, Medicare refused to issue payment to the provider due to untimely filing. Under its own rules, Medicare only processes claims within one year from the date of service. Because the MCO retracted its payment 13 months after the date of service, and outside of that one-year limit, coordination of benefits is precluded.
Of note, subsection (c)(2)(ii) requires the retracting payer to send a written statement to the provider with the name and address of the primary carrier acknowledging responsibility for the claim. The notice is meant to advise the provider to bill the correct payer. In the case of the young man with kidney disease, however, Medicare would never accept responsibility because the coordination of benefits is outside of the year from the date of service.
This explains why there are many cases where a hospital is not paid for its services, even though the patient was covered by two health plans.
What Needs to Happen
To avoid this illogical and unjust result, Md. Ins. Art. Section §15-1008 needs be amended to eliminate the risks faced by improper coordination of benefits retractions. First, the notice should confirm that the other payer will pay for the health plan, not just a statement that the patient had health benefits during the dates of service. Second, if the provider cannot obtain payment from the other health plan, the funds should be repaid by the retracting health plan. Third, and perhaps most importantly, the Maryland statute should limit coordination of benefits for Medicare claims to 9 months from the date of service. This would give the hospital 3 months to coordinate with Medicare, within its permissible timely filing limits.
Meanwhile, the Maryland Insurance Administration – the regulatory agency under whose auspices this statute is placed – should issue a clarification that recoupments must be done to allow sufficient time for a provider to bill the appropriate payer.
Hailey Groover is a Legal Assistant at Anderson & Quinn, LLC, a law firm based in Rockville, Maryland, providing individuals, businesses, corporations, and healthcare institutions with the legal and litigation support they need. This article was written by Ms. Groover with input from her supervising attorney, Gustavo Matheus.
Anderson & Quinn, LLC is a law firm based in Rockville, Maryland, providing individuals, businesses, corporations, and healthcare institutions with the legal and litigation support they need to protect revenues.
