Law Feature November 2009
Tex Med . 2009;105(11):25-29.
By Crystal Conde
When Ravi Kumar Sreerama, MD, a Clarksville internist, received a letter from Health Research Insights, Inc. (HRI) in June, he was suspicious. The letter informed him he'd overcharged Tennessee-based Averitt Express Inc.'s self-funded health plan for six patient visits from June 2006 to July 2007.
The letter explained that Averitt had hired HRI, based in Franklin, Tenn., to recover overpayments by Blue Cross and Blue Shield, the third-party administrator (TPA), because of inaccurately or incorrectly coded claims. The letter elaborated: HRI analyzed claims information Dr. Sreerama's office submitted to the TPA and determined that his office had incorrectly billed for the six claims.
Dr. Sreerama had 15 days to pay $311.87 - the amount HRI said was overpaid - or give HRI all appropriate medical records, case notes, or other documentation sufficient to justify the billing.
Should he fail to respond to HRI's request, the letter threatened that a complaint might be filed with the U.S. Department of Labor's Employee Benefits Security Administration (EBSA).
After reviewing charts for the six patients in question, Dr. Sreerama determined he hadn't upcoded. He then contacted HRI.
"I called HRI's recovery department and asked how they can determine upcoding without seeing any medical records. I was told they don't have to look at the charts because they use some type of algorithm. It's just ridiculous," Dr. Sreerama said.
After talking with the company, Dr. Sreerama then contacted the Texas Medical Association.
"TMA really helped guide me on what to do and recommended I send a letter to HRI," he said.
In his June letter to HRI, the physician wrote that HRI had "no grounds in which to request this refund." He also informed HRI that he was appealing the recoupment request and contacting the American Medical Association to ask that it look into the company's operations.
Dr. Sreerama decided to neither pay HRI nor submit medical records for the patient visits under review. As of September, an HRI employee informed Dr. Sreerama the claims in question were on hold pending further direction from Averitt.
"HRI isn't asking for that much money, but if doctors pay, they're admitting they've done something wrong. If you send the money, companies like HRI will come back again and ask for more next time," Dr. Sreerama said.
While Dr. Sreerama represents one of tens of thousands of Texas physicians, more could receive an HRI letter. TMA is aware that H.E. Butt Grocery Co. (H-E-B) - which says it has 56,000 employees in more than 300 stores in Texas and Mexico - has contracted with the company. HRI also contracts with large self-insured employer groups, unions, and trusts, many of which have a national presence and employees in Texas.
Texas isn't the only state where HRI operates. The company's collection efforts have sparked an outcry from physicians in Kentucky, Georgia, and Tennessee. The Tennessee Medical Association filed a lawsuit against the company.
That association and two Nashville physicians sued HRI, the Metropolitan Board of Public Education (MBPE), and Blue Cross and Blue Shield of Tennessee (BCBST) in June. The Litigation Center of the AMA and State Medical Societies is assisting in funding the case.
MBPE hired HRI to recover overpayments for medical services in 2006 and 2007 to patients in MBPE's health plan, administered by BCBST. While BCBST is a party in the lawsuit, the health insurance company said it has no affiliation with HRI.
Among the plaintiffs' allegations, the lawsuit maintains HRI caused MBPE to breach its contract with BCBST, engaged in unfair or deceptive business practices against physicians, and failed to satisfactorily document that it had the proper authority to obtain private patient information from physicians.
Yarnell Beatty, JD, director of the Legal and Government Affairs Division at the Tennessee Medical Association, says releasing patients' private health information is a major concern.
"If patients knew some private auditor was looking at their records, I'm certain they'd be worried. The law says entities asking for patient medical records must have documentation that shows they're entitled to the records," he said.
Theodore Perry, PhD, HRI president and chief executive officer, said he couldn't comment on pending litigation. He did explain, however, HRI's right to request medical records from physicians.
"Our business practices comply with the Health Insurance Portability and Accountability Act (HIPAA) and the Security Rule," Dr. Perry said. "Proof to that effect is provided via business associate agreements and additional information we have on the scope of what's allowed in terms of protected health information and what we're allowed to have under HIPAA."
Dr. Perry adds that HRI follows generally accepted standards for security and destruction of personal health information.
According to the lawsuit, HRI refused physician requests to produce its business associate agreement.
In HRI's letter to Dr. Sreerama, the company warned it would file a complaint against the doctor should he fail to respond. But now, Charles Polatsek, HRI executive vice president, says HRI has altered its review method and no longer threatens to contact EBSA. He says HRI doesn't impose penalties but acts at the direction of the employer client, which the Employee Retirement Income Security Act (ERISA) authorizes to audit health care claims.
When asked for an example of the type of action HRI might take at a client's direction when a physician is unresponsive, Mr. Polatsek said he couldn't provide one because the company has changed its review method and experienced "a very high rate of participation [among providers]."
The Tennessee Medical Association decided to sue HRI in June after, Mr. Beatty says, members deluged the association with calls, faxes, and e-mails about HRI's strong-arm letters and harassing phone calls. Members began receiving letters from HRI in mid- to late March.
"It didn't take long for us to take action," Mr. Beatty said.
Mr. Beatty says the medical association quickly looked into HRI's operations and issued an e-mail member alert in late March to let physicians know what HRI was doing. He says dozens of members complained, but the association has no way to know exactly how many Tennessee practitioners received letters or paid HRI.
"We felt compelled to challenge HRI's claim in its letters that it could determine E&M coding levels without reviewing medical records. That was the biggest complaint from members. Physicians are presumed guilty without a review of medical records," Mr. Beatty said.
Dr. Perry says HRI can identify claims that have a high probability of containing an error by using predictive modeling techniques, similar to those used by health care payment plans.
"Once we are able to identify a potential error on a claim, we send a record request. Once we receive the record, it's sent to a third-party certified coding vendor," he said.
Because HRI hires third-party certified coders to conduct medical record reviews, Mr. Perry says an incentive to identify upcoding doesn't exist.
In addition, the Tennessee Medical Association argues HRI violated state collection laws by seeking to recoup overpayments going back more than 18 months to claims from 2006 and 2007. Mr. Beatty says MBPE is exempt under ERISA because it is a governmental entity.
"In the case of the public schools, the state recoupment laws apply, so it is our position that HRI couldn't request records beyond 18 months," he said.
The lawsuit asserts that HRI's defamatory accusations of physician overbilling, combined with assertions on its Web site that HRI "only targets providers who have willfully and persistently over a period of time overbilled" essentially accuse plaintiff physicians of fraud.
Mr. Beatty says the association received redacted copies of HRI letters to physicians in which only a few claims - a dozen or fewer during 2006-07 - are in dispute.
"How is that persistent and willful overbilling?" he asked.
As of September, HRI had removed any mention of frequent and persistent overbilling from its frequently asked questions page on its Web site, www.healthresearchinsights.com.
On top of the Tennessee lawsuit, health plans in other states have dissociated themselves from HRI. Blue Cross and Blue Shield of Texas (BCBSTX) issued the following statement regarding the company:
Blue Cross and Blue Shield of Texas (BCBSTX) is independent of Health Research Insights, Inc. (HRI) and is not affiliated with that company's audit and recovery activities. We are not contracted with HRI for any services and have not been involved in its audits or reviews, including audits associated with any self-funded employer groups that are part of the BCBSTX network.
Blue Cross and Blue Shield of Georgia issued a statement that it's neither affiliated with nor has hired HRI to perform historical claims data reviews.
Additionally, action by the Kentucky Medical Association (KMA) prompted the United Food and Commercial Workers (UFCW), which had contracted with HRI to perform claims reviews in the state, to suspend HRI's recoupment efforts in early September. According to a KMA statement, the association received reports from members that HRI had sent threatening letters and made harassing phone calls to collect overpayments on claims.
KMA helped members appeal overpayment determinations and file complaints to the UFCW, Department of Labor, Department of Insurance, and state attorney general. The medical association also sent a letter to the UFCW Board of Trustees in which it outlined HRI's questionable business practices.
HRI in Texas
With all the controversy surrounding HRI's business operations, TMA knows of only one Texas-based employer that has hired the company to recover overpayments. H-E-B informed TMA in August of its decision to work with HRI. H-E-B officials were unavailable to comment on this story, but Kathy Durbin, director of benefits for H-E-B, has been corresponding with TMA via e-mail.
In an Aug. 5 e-mail to TMA Executive Vice President/Chief Executive Officer Lou Goodman, PhD, CAE, Ms. Durbin indicated H-E-B contracted with HRI to initiate work in Texas by reviewing inpatient hospital claims. She added that HRI would "move to outpatient professional services in phase two" shortly thereafter.
In an Aug. 19 e-mail, Dr. Goodman informed Ms. Durbin that TMA was "deeply disappointed" the grocery company had decided to hire HRI for auditing services. Dr. Goodman informed Ms. Durbin of the lawsuit filed by the Tennessee Medical Association against HRI and asked that she clarify whether H-E-B intends to have HRI audit hospital claims only or physicians' charges, as well, while the patient is in the hospital.
As of September, Ms. Durbin hadn't responded to the question.
According to Ms. Durbin's e-mail to Dr. Goodman, H-E-B worked closely with HRI to make these improvements to its identification and recovery processes:
By requesting only medical records and not payments initially, Ms. Durbin wrote, "This gives providers due process and thus they should not feel they are being falsely accused of wrongdoing or there is an implied presumption of guilt."
Under Texas law, the review period for insurance health benefit plans is six months rather than 18. The six-month limitation, however, doesn't apply to self-funded health benefit plans like that of H-E-B. In Texas, 60 percent of group health benefit plans are employer-funded, unregulated by the Texas Department of Insurance (TDI), and therefore not covered under Texas law.
Despite H-E-B's right under ERISA to use a review period of more than 18 months, Ms. Durbin wrote, "In the spirit of cooperation, H-E-B will use the 18 months, since that's what providers seemed to be most comfortable with."
HRI's Dr. Perry said in September that the company doesn't have "any plans to do any direct physician contact for the next three to four months" in Texas. Getting a good idea of the extent of HRI's recovery efforts in Texas is difficult.
Dr. Perry said only that the company has "several" Texas-based self-insured employer groups as clients. He added that HRI's operations in Texas on behalf of clients would focus on hospital in-patient record auditing.
When asked about the payment arrangement HRI has with clients, Mr. Perry said some clients pay a fee for services, and some allow the company to keep a percentage of the overpayments it collects.
BCBSTX adjudicates claims paid by H-E-B. According to the complaint filed in the lawsuit in Tennessee, BCBST contracts with employers contain provisions that assign overpayment recovery rights to BCBST. TMA is unaware of the physician agreement H-E-B has with BCBSTX in regard to assignment of overpayment recovery. In addition, according to Donald P. "Rocky" Wilcox, JD, vice president and general counsel at TMA, Blue Cross and Blue Shield contracts with physicians typically contain or refer to a dispute resolution process for resolving any questions or difference of opinion over medical claims.
When asked why a self-funded employer health plan such as H-E-B needs to hire HRI to perform claims audits, given contractual dispute resolution and overpayment recovery processes with a health care payment plan, Dr. Perry said that in the case of large insurers like BCBSTX, HRI functions as a "supplement." He adds that not all insurers perform auditing services.
"Many TPAs, especially the smaller ones, don't perform internal auditing services," Dr. Perry said. "That has traditionally allowed companies like HRI the capability of performing those services for self-insured employer groups that are serving as their own health plans."
Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by e-mail at Crystal Conde .
Concerned over litigation in Tennessee against HRI and the company's aggressive tactics to recoup overpayments from physicians in other states, TMA is monitoring HRI's recovery activities in Texas closely. Physicians who receive letters from HRI should contact Erin Gregorcyk in TMA's Payment Advocacy department by e-mailing Erin Gregorcyk or sending her a fax at (512) 370-1693. Include a copy of the letter from HRI, your response to HRI, and the self-funded employer health plan sponsor. You can also mail the documentation to Ms. Gregorcyk at TMA, 401 W. 15th St., Austin, TX 78701.
TMA is taking HRI activities seriously. At the 2009 TMA Fall Conference, the TMA Board of Trustees voted to authorize TMA to identify physician members harmed by H-E-B's actions and HRI's tactics and representations and to assist members in the mediation and arbitration of disputes as mandated by BCBSTX contracts. TMA will continue to work with H-E-B and to monitor HRI's conduct in Texas.