HORIZON: Compliance Dispute Ruling Affects Non-Par Plan Reimbursement
The national class-action settlement dispute officer (CDO) recently dismissed two compliance disputes filed by MSNJ members under the national class-action settlement agreement. The CDO’s decision has negative ramifications for physicians who participate in Horizon’s PPO plan under contracts that incorporate by reference certain payment policies in the Horizon PPO Office Manual. The CDO’s decision allows Horizon to reimburse for services to patients in non-contracted plans at the contracted PPO rate, instead of UCR, and allows Horizon to prohibit balance billing of these patients.
The physicians participated in Horizon’s traditional PPO plan, but chose not to participate in Horizon’s other managed care plans. Both practices anticipated receiving reimbursement at usual, customary and reasonable rates (UCR), the benchmark for out-of-network fees, and for which there is a settlement term on fee methodology. Instead, Horizon reimbursed some fees at the contracted traditional PPO rate when the physicians treated Horizon patients in other plans. While the rate of reimbursement was higher than those of the non-contracted plans, it was lower than what would be expected based on UCR.
Horizon also took the position that the practices were prohibited from balance billing under the terms of the PPO Contract and Office Manual. The practices and MSNJ believed that Horizon’s actions, not paying UCR for non-contracted plans and prohibiting balance billing, violated the national BCBS class-action settlement agreement. MSNJ supported the practices’ compliance disputes; the national class-action settlement facilitator found the disputes valid and prosecuted them before the CDO.
The CDO decided that the PPO contract required the physicians to accept Horizon’s contracted rates and to forego balance billing when they treat Horizon’s managed care members. His decision was based on contract law and his conclusion that Horizon effectively made the Manual a part of the contract.
The CDO also considered “participating” and “non-participating” status under the settlement agreement and found that these terms could be interpreted to allow Horizon to treat physicians with only a PPO contract as “participating” physicians as to Horizon. Consequently, the rights of non-participating physicians under the settlement agreement simply did not apply to physicians in this situation.
Last, the CDO determined that the “all-products clause,” designed to limit the power of insurers who contract with one plan to contract with all plans, was not available to the physicians. He noted that the physicians were not required to contract with all plans, or required to accept the contracted rates for those plans. In his view, physicians are not compelled to treat Horizon patients in plans in which they do not participate. However, once physicians treat patients in non-contracted plans, the contract and any payment policies incorporated by reference, may limit reimbursement.
MSNJ is disappointed with the result in this case. While physicians may not be compelled to treat all Horizon members, the economic reality in New Jersey is that Horizon is the state’s dominant healthcare insurer. Many physicians have no meaningful participation choice, beyond their ability to pick and choose among plans. If contracting with one Horizon plan means that physicians who treat Horizon patients in other plans—out-of-network—will receive the discounted rate, then it is imperative that physicians carefully consider whether it is economically feasible to treat Horizon’s members out-of-network.