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Archived File – for Reference Use.
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Physician/Provider Information and Advice for Physicians and Providers

For Your Information

2001

Prompt Pay Blitz Nets Restitution
Montemayor Orders Aetna to Pay Restitution and Fine
Aetna Consent Order Summary Montemayor Compels Restitution for Doctors/Providers and
Issues $9.25 Million in Fines
Commissioner´s Bulletin NO. B-0023-01 regarding Prompt Payment
TPA Fact Sheet 1 | Fact Sheet 2 | Fact Sheet 3
Fact Sheet 4 | Fact Sheet 5 | Fact Sheet 6

Restitution 101

2005 Restitution/Fines

On December 19, 2005, United Healthcare Insurance Company and United Healthcare of Texas, Inc. (jointly referred to as "UHC") entered into a consent order with the Texas Department of Insurance regarding UHC´s failure to pay clean claims with particular reference to certain pharmacy claims, failure to properly report claims payment information to TDI, and incomplete information in UHC's complaint records and complaint logs. UHC agreed to pay a $4 million penalty to the State of Texas and to pay any restitution due for failure to properly pay statutory penalties on late clean claim payments. UHC also agreed to pay graduated penalties in the future if the company fails to comply with certain provisions of the Texas Insurance Code. In addition, UHC agreed to an independent audit of quarterly prompt payment claims reports.

2004 Restitution/Fines

In 2001, United Healthcare Insurance Company (UHIC) and United Healthcare of Texas, Inc. (UNT) signed consent orders with TDI regarding late payment of physician and provider claims. TDI continued to receive a significant number of complaints from physicians and providers regarding late claims payment by the two United Healthcare companies. TDI began an investigation for alleged violations of the consent order and prior prompt pay laws, and failing to timely respond to TDI inquiries, pay certain claims for injuries arising from motor vehicle accidents, timely provide fee schedules to physicians, and file certain small employer plan forms with TDI. UHIC and UHT continued to pay restitution to providers for late paid claims. In September 2004, UHIC paid $30,000, UHT paid $10,500, and the two companies together paid $200,000, for a total of $240,500 in additional penalties.

PacifiCare was among the carriers TDI identified in 2001 as having paid physician and provider claims late. In 2002, PacifiCare filed a lawsuit against TDI. In July 2004, TDI reached an agreement with PacifiCare. The agreement was that if PacifiCare performed various enumerated tasks to resolve outstanding claims, then at the end of the time period for performance, PacifiCare would pay penalties and attorney fees, and the case would be dismissed by agreement. By that same agreement, PacifiCare escrowed money for the penalties and attorney fees. PacifiCare did perform in accordance with the agreement. By agreement, the Judge dismissed the case in July 2004. PacifiCare paid $3,007,468.98 in penalties and $13,617,688.03 in restitution.

2001 and 2002 Restitution/Fines Background Information

In September and November of 2001, Commissioner Montemayor fined 22 health carriers for failing to pay clean claims in accordance with the prompt pay statutes and rules. An additional 25 health carriers were fined in April 2002. These carriers signed consent orders agreeing to comply with Texas prompt pay statutes and rules, pay administrative penalties, and pay restitution to physicians and providers.

The first set of prompt payment consent orders required the health carriers to research claims from August 1, 2000 to September 1, 2001 for payment of restitution. In November 2001, the Aetna Companies signed a consent order regarding prompt pay. The Aetna consent order covers claims with dates of service August 1, 2000 through November 1, 2001. Additionally, the Aetna Companies made restitution payments through the end of 2001 and will continue to send restitution payment information throughout 2002 for certain claims.

On April 1, 2002, thirteen additional health carriers signed prompt pay consent orders. These orders cover claims with dates of service August 1, 2000, through February 28, 2002.

On April 29, 2002, twelve additional health carriers signed prompt pay consent orders. These orders cover claims with dates of service August 1, 2000, through March 31, 2002

Restitution Amounts

The consent orders require that the restitution reports "list the total number of physicians who were paid restitution, and the total amount of restitution paid, and the total number of providers who were paid restitution and the total amount of restitution paid." As of July 2002, more than $45 million in restitution has been paid to physicians and providers. To View the chart that lists each of the 47 carriers and the amount of restitution paid: http://www.tdi.texas.gov/hprovider/drnews.html#jan02.

The Department is conducting examinations to verify the restitution amounts reported by these health carriers. We are most interested in knowing whether appropriate amounts of restitution have been paid.

Here are some helpful tips for your restitution review.

  • Check your HCFA 1500s or UB92. Be sure that all fields required by the clean claims rules and your contract or notice of attachments have been completed. Please remember that restitution is only due on clean claims - those with all fields completed as required. If your claim form is clean, then continue your review and consider the additional items listed below.
  • Check the date of service for the claim. The clean claim rules became effective on August 1, 2000. Check the date of the claim for which you seek restitution. Claims with a date of service on or after August 1, 2000, are subject to contract penalties or billed charges as defined by rule.
  • Only certain contracted claims qualify for restitution. Remember - not all claims are subject to the prompt payment statutes and rules. Notably, ERISA self-funded plans, workers compensation, and Medicare claims are not covered. Be certain to screen the types of claims for which you seek restitution.
  • Date of receipt of the claim is critical. To calculate whether a claim was paid after the 45th day, you must establish the date the claim was received by the carrier. The 45-calendar-day period starts on the date the clean claim is received at the claims processing address that the HMO or insurance company designates in accordance with the claims processing notice procedures in the clean claims rules.
  • Watch for duplicate claims. Conduct a thorough review of your outstanding claims. Some providers resubmitted claims without reconciling against payment information.

Restitution Complaints

If you discover that a particular health carrier has not paid you the correct contract penalty or full billed charges (not in excess of usual and customary, less any amounts previously paid, and less any charges for non-covered services), please notify that health carrier in writing asking for the required payment. If the health carrier denies your request or fails to answer, please file a written complaint with us.

In preparing your written complaint, please:

  • Review the HCFA 1500 or UB 92 form you submitted with your claim to be sure that all the essential data elements listed in the clean claim rules were completed at the time the claim was filed with the payor. Claim forms which do not contain all data elements are considered deficient, unless your contract states that a specific item is not required.
  • Determine if there is a particular part of your contract that affects your claims. If so, include the pertinent part of the contract along with the signature page.
  • Identify the type of coverage (HMO, PPO or other managed care coverage)
  • Provide documentation about the clean claim including the date of receipt of the claim.
  • Describe the clean claim violation: the claim was not paid at all, the claim was paid late (after the 45th day of receipt), or paid incorrectly and the correct contract amount was not paid by the 45th day from the date of receipt of the claim.
  • Note your contract penalty amount or the amount you are seeking as billed charges. Include all documentation to substantiate your clean claim and the amount you are seeking.
  • Include any correspondence regarding your efforts to collect the restitution.

Contract Penalties

For clean claims that were not paid timely that have dates of service after the consent orders noted above, remember that you are entitled to your contracted penalty amount for any clean claims paid late, paid incorrectly, or not paid at all. If your contract does not have a contract penalty, then billed charges as defined by TDI rule will determine the amount you are owed.

Full Billed Charges

Billed charges may not be in excess of the general level of charges made by other physicians or providers who render or furnish the same or similar services, treatments, or supplies to persons in the same geographical area and whose illness or injury is comparable in nature or severity ("usual and customary"). In the event of a case rate agreed to between the physician or provider and the HMO or preferred provider carrier, billed charges shall be considered the higher of the case rate or billed charges.

Please note that the health carrier may subtract amounts previously paid on the claim in calculating the restitution amount owed. Also, any amounts charged for benefits not covered under the contract are not part of the restitution amount.

Agreed Amounts

The consent orders also provided that carriers may negotiate an agreed amount for all restitution owed to a particular physician or provider. You may wish to consult your business manager or legal representative about whether a global settlement for clean claims not paid in accordance with the prompt pay statutes and rules is advantageous for you.

Compliance

These 47 health carriers owed a contract penalty or a billed charge (as defined by TDI rule) for clean claims that were paid late, paid incorrectly, or not paid at all. The consent orders provided that restitution would be the contracted penalty amount, billed charges as defined by rule, or an agreed amount as restitution for these prompt pay violations. In addition to the restitution, the health carriers paid administrative penalties.

Administrative Penalties

The administrative penalties were paid to the State of Texas and deposited into the state´s general revenue fund. The amounts paid and estimated dates of payment are listed below.

Aetna Life Insurance Company ($350,000)
Prudential Insurance Company of America
Aetna U.S. Healthcare Inc. ($200,000)
Aetna U.S. Healthcare of North Texas Inc. ($200,000)
Prudential Health Care Plan, Inc. ($400,000)
Paid $1.15 million administrative penalty on November 29, 2001

Blue Cross and Blue Shield of Texas, a Division of Health Care Services Corp.
Rio Grande HMO, Inc.
Southwest Texas HMO, Inc.
Texas Gulf Coast HMO, Inc.
Paid $1.5 million administrative penalty on September 28, 2001

CIGNA Healthcare of Texas, Inc.
Connecticut General Life Insurance Co.
Paid $1.25 million administrative penalty on September 24, 2001

Humana Health Plan of Texas, Inc.
Humana Insurance Co.
Employers Health Insurance Co.
Paid $1.25 million administrative penalty on September 28, 2001

One Health Plan of Texas, Inc. ($416,666.66)
Great-West Life & Annuity Insurance Co. ($541,666.68)
Alta Health & Life Insurance Co. ($541,666.66)
Paid $1.5 million administrative penalty on October 3, 2001

Sierra Health and Life Insurance Co., Inc.
Texas Health Choice, L.C.
Paid $1.25 million administrative penalty on October 8, 2001

Unicare Life & Health Insurance Co.
Paid $1.25 million administrative penalty on September 24, 2001

United Healthcare Insurance Co.
United Healthcare of Texas, Inc.
Paid $1.25 million administrative penalty on October 5, 2001

April 1, 2002 Restitution/Fines (as of June 2002)

On April 1, 2002, thirteen additional health carriers signed prompt pay consent orders. These orders cover claims with dates of service August 1, 2000, through February 28, 2002. The April 1, 2002, consent orders resulted in restitution and fines levied against 13 insurance carriers.

Restitution and Administrative Penalties
Health Insurance Carrier Restitution Paid Administrative Penalty
Amil International Insurance Company, Inc. $46,542.62 Restitution and $150,000
 
Central Reserve Life Insurance Company $657,746.20 Restitution and $550,000
Continental General Insurance Company $108,966.69  
Provident American Life and Health Ins. $135,964.94  
Provident Indemnity Life Ins. Co. $2,523.74  
 
Conseco Medical Insurance Company $1,070,990.03 Restitution and $250,000
 
Guardian Life Insurance Company $1,070,179.32 Restitution and $325,000
 
Metropolitan Life Insurance Company $718,809.67 Restitution and $575,000
New England Life Insurance Company $527,435.95  
 
Pacific Life and Annuity Company $3,239,579.00 Restitution and $250,000
 
Principal Life Insurance Company $1,081,316.16 Restitution and $250,000
 
Protective Life Insurance Company $27,780.19 Restitution and $125,000
 
Trustmark Insurance Company $789,703.87 Restitution and $300,000
 
TOTAL $9,477,538.38 Restitution and $2,775,000

April 29, 2002 Prompt Pay Consent Orders (as of June 2003)

On April 29, 2002, twelve additional health carriers signed prompt pay consent orders. These orders cover claims with dates of service August 1, 2000, through March 31, 2002. The prompt payment consent orders resulted in 47 carriers paying more than $45 million in restitution and $14.9 million in administrative penalties. In June 2003, one carrier reported additional restitution paid.

Health Insurance Carrier Restitution Paid Administrative Penalty
American Heritage Life Insurance Company
June 2003 additional amount reported
$170,106.06
$25,470.78
Restitution and $200,000
     
Avemco Insurance Company $119,572.08 Restitution and $220,000
     
Continental Assurance Company Zero Restitution and $75,000
     
Fortis Benefits Insurance Company $138,151.51 (as of February 2004) Restitution and $450,000
John Alden Life Insurance Company $232,815.57 (as of February 2004) (included above)
Fortis Insurance Company $131,174.36 (as of February 2004) (included above)
     
Golden Rule Insurance Company $51,977.96 Restitution and $60,000
     
Methodist Health Insurance Company - includes $1,196,472.06 Restitution and $200,000
Combined Insurance Company of America    
Methodist Care, Inc. $7,609,267.24 (included above)
     
Oxford Life Insurance Company $50,710.36 Restitution and $125,000
     
World Insurance Company $172,902.30 Restitution and $400,000
     
TOTAL $9,614,344.32 Restitution and $1,730,000

January 2002 Restitution Summary

Restitution Paid Chart

TDI´s September enforcement actions against 17 HMOs and insurance companies required the filing of reports to the TDI regarding the restitution paid to physicians and providers. The companies filed reports in November 2001 and some health carriers filed updated reports in December 2001 and January 2002. In addition, five Aetna companies filed their report on January 15, 2002, in accordance with their consent order. Additional restitution amounts will be reported in February and throughout the remainder of 2002. These 22 insurers and HMOs state in their reports that they paid restitution of approximately $4,591,558.49 to 11,686 physicians and $21,494,805.20 to 5,723 hospitals and other providers. These amounts are in addition to the $10.4 million paid as fines.

To make certain that all Texas providers receive the restitution they are owed, TDI continues to audit information from several HMOs and insurers to ensure that the reports are accurate. In particular, TDI questions whether the restitution reported included amounts paid for claims that were submitted for payment not meeting the definition of a clean claim but where the provider was not notified of the deficiency as required by law. TDI is currently examining four health carriers and plans to examine others.

Provider Ombudsman Project - Restitution Paid Chart (as of July 2002)

Carrier Number of Physicians Restitution Paid Number of Providers Restitution Paid   Total Number of Entities Paid Total Restitution Paid
Alta Health & Life Insurance Company 1 $22.45 3 $8,483.48      
Great-West Life & Annuity Insurance Co. 4 $776.80 19 $101,296.28      
One Health Plan of Texas, Inc. 39 $5,369.55 55 $352,597.54      
Subtotal - Great-West 44 $6,168.80 77 $462,377.30   121 $468,546.10
               
Blue Cross and Blue Shield of Texas 402 $129,191.88 173 $2,569,303.24      
Rio Grande HMO, Inc. 163 $62,476.96 39 $204,265.23      
Southwest Texas HMO, Inc. 161 $84,970.16 36 $207,317.16      
Texas Gulf Coast HMO, Inc. 865 $1,014,038.68 160 $2,226,439.84      
Subtotal - BCBS 1,591 $1,290,677.68 408 $5,207,325.47   1,999 $6,498,003.15
               
CIGNA Healthcare of Texas, Inc. 209 $21,399.07 1,744 $1,113,999.42      
CIGNA Delegated Entities 299 $205,185.77 67 $6,993.45      
Connecticut General Life Insurance Co. 752 $133,587.77 1,418 $840,474.89      
Subtotal - CIGNA 1,260 $360,172.61 3,229 $1,961,467.76   4,489 $2,321,640.37
               
Humana Health Plan of Texas, Inc. 506 $50,485.50 238 $1,039,487.10      
Humana Insurance Company 100 $27,371.01 72 $249,448.22      
Employers Health Insurance Company 1,125 $304,756.73 123 $488,522.27      
Subtotal - Humana 1,731 $382,613.24 433 $1,777,457.59   2,164 $2,160,070.83
               
Unicare Life & Health Insurance Co. 224 $264,700.77 50 $271,758.00   274 $536,458.77
               
Sierra Health and Life Insurance Co. Inc. 308 $49,178.72 37 $73,928.18      
Texas Health Choice, L.C. 664 $137,396.44 80 $738,319.97      
Subtotal - Sierra Health/Texas Health Choice 972 $186,575.16 117 $812,248.15   1,089 $998,823.31
               
United Healthcare Insurance Company 19 $3,348.45 9 $65,605.25      
United Healthcare of Texas, Inc. 261 $67,853.39 64 $471,496.35      
Subtotal - United 280 $71,201.84 73 $537,101.60   353 $608,303.44
               
Aetna Life Insurance Company 1,907 $682,925.60 226 $2,786,753.47      
The Prudential Insurance Co. of America 722 $372,498.68 165 $1,775,726.75      
Aetna U.S. Healthcare Inc. 668 $269,985.15 51 $819,393.87      
Aetna U.S. Healthcare Inc. of North Texas 476 $149,845.02 78 $961,124.94      
Prudential Health Care Plan, Inc. 920 $363,835.45 180 $3,368,664.02      
               
Subtotal - Aetna 4,693 $1,839,089.90 700 $9,711,663.05   5,393 $11,550,752.95
Subtotal - Aetna Delegated Entities 287 $51,147.33 523 $6,804.44   810 $57,951.77
Subtotal - Aetna payments for MSM restitution 476 $149,845.02 78 $961,124.94   554 $1,110,969.96
TOTAL FOR AETNA GROUP 5,456 $2,040,082.25 1,301 $10,679,592.43   6,757 $12,719,674.68
               
GRAND TOTAL - ALL COMPANIES* 11,558 $4,602,192.35 5,688 $21,709,328.30   17,246 $26,311,520.65
Aetna Letter of Credit Payments**       $10,303,417.00      
*Some physicians and providers may have received restitution from more than one carrier, therefore reducing the total number of physicians and providers paid. Also, the total number of physicians and providers has been adjusted based on subsequent reports.
**Aetna US Healthcare of North Texas is subject to an additional $600,000 fine if certain MSM Letter of Credit payments are not made throughout 2002.

November 2001 Restitution Summary

November 29, 2001

TDI´s September enforcement actions against 17 HMOs and insurance companies required the filing of a report to the TDI by November 20 regarding the restitution paid. The insurers and HMOs claim in their reports that, in the aggregate, they paid restitution totaling $12,164,118.47 to 5,754 physicians and 4,235 hospitals and other providers. Of this amount, approximately $2,449,378.17 is estimated to have been paid to physicians while $9,714,740.30 is estimated to have been paid to hospitals and other providers.

Health care provider testimony and anecdotal evidence suggest that this amount should be significantly higher. TDI, therefore, is launching audits and examinations to ensure that HMOs and insurers are not simply re-classifying claims or using other sleight-of-hand tricks to avoid payments that doctors and health care providers are due.

Most of the HMOs and insurance companies have asserted that their reports are confidential. These reports contain data about the amount of restitution each has made to doctors and health care providers. TDI questions the confidentiality claims and has asked for an Attorney General´s opinion on the matter.

"I am disappointed that these companies have taken this position," said Commissioner Montemayor. "The public and health care providers should have access to the data to ensure public confidence in these companies´ claims payment practices."

To make sure that all Texas providers who are owed restitution receive what they are owed, TDI is auditing information from these HMOs and insurers to ensure that the reports are accurate. TDI has already scheduled examinations for four carriers based on a preliminary review of their restitution reports.

TDI is committed to full compliance with Texas prompt payment statutes and rules.

Important Information About Restitution Payments (as of September 2001)

Q: Which HMOs and PPOs signed consent orders regarding prompt pay to physicians and providers?
[List health carriers and link to press release.]

Q: What clean claims are covered by the consent orders?
A: The orders apply to clean claims with dates of service during the period August 1, 2000 through September 1, 2001.

Q: When will the restitution payments be made?
A: The consent orders were signed on September 6, 2001. These orders provide that the 17 health carriers have 60 days from the date of the order to pay restitution for clean claims subject to this order to each and every physician and provider not paid within the statutory time periods. Restitution payments are ongoing and most should be completed by November 5, 2001. United HealthCare Insurance Company and United HealthCare of Texas received an extension until January 31, 2002, to pay restitution on certain claims that were paid before the 45th day, but the amounts paid were incorrect. Restitution applies to clean claims not paid, clean claims paid late (paid after the 45th day of receipt), and clean claims not paid correctly. Texas Health Choice received an extension until January 1, 2002, to complete its restitution payments. Texas Health Choice has made application to withdraw from the Texas market in 2002.

Q: Do I have to file a complaint with the Texas Department of Insurance to receive restitution for clean claims that were not paid as required by the prompt pay statute and rules?
A: No. The consent orders require the 17 health carriers to pay restitution on all clean claims between the indicated dates that violated the prompt pay statute and clean claim rules. The particular statutory reference for HMOs is the Texas Insurance Code article 20A.18B and for PPOs the reference is the Texas Insurance Code article 3.70-3C section 3A. The clean claim rule reference is the Texas Administrative Code section 21.2801 through 21.2816.

Q: How can I determine if my claims are clean?
A: Clean claims are defined by rule. A carrier may also require additional elements and attachments by written notice, in your provider manual or other claims filing instructional document, or by your contract with the HMO or PPO. You must satisfy all requirements of the rule and satisfy the carrier´s additional requirements to have a clean claim. Carefully read your contract, provider manual or other claims filing instructional document and any amendments for additional elements and attachments. If you fail to provide a required element or a required attachment, you have not filed a clean claim. Deficient claims are not subject to the consent orders. No restitution is owed for such claims.

Q: My contract penalty is one percent. May I get full billed charges instead as restitution?
A: No. You must use the contract penalty provision in your contract. If you did not have a contract penalty provision, then billed charges would be the method to use to determine the restitution amount.

Q: How are restitution charges determined for billed charges?
A: After establishing that you filed a clean claim with a date of service between August 1, 2000 through September 1, 2001, and that the health carrier did not pay the contracted amount, deny the claim, or notify you of an audit and pay 85 percent of the contracted rate on or before the 45th day after receipt of the clean claim, you may calculate the restitution owed. If you do not have a contract penalty rate, the prompt pay statute and clean claim rules provide that billed charges will serve as the basis for the restitution payment. Billed charges may not be in excess of the general level of charges made by other physicians or providers who render or furnish the same or similar services, treatments, or supplies to persons in the same geographical area and whose illness or injury is comparable in nature or severity ("usual and customary"). In the event of a case rate agreed to between the physician or provider and the HMO or preferred provider carrier, billed charges shall be considered the higher of the case rate or billed charges. The health carrier may subtract amounts previously paid on the claim in calculating the restitution amount owed. Also, any amounts charged for benefits not covered under the contract are not part of the restitution amount. Let´s look at seven examples that assume you have a clean claim that was not paid in accordance with the contract terms and violates the prompt pay statute and rules.

  • Example #1: You filed a clean claim with a date of service of December 3, 2000, based on a contract that you have with the health carrier. The billed charge was $100 and your contract provided that you would be paid $80. The health carrier did not make any payment before the 45 day after receipt of the clean claim. The carrier owes $100 as restitution, provided that $100 is not in excess of the usual and customary amount for the service provided.
  • Example #2: The billed charge was $100 and your contract provided that you would be paid $80. The health carrier paid $80 on the 50th day after receipt of the clean claim. The restitution payment is calculated by subtracting the amount paid from the billed charges. The health carrier would owe $20 as restitution, provided that the $100 is not in excess of the usual and customary amount for the service provided.
  • Example #3: The billed charge was $100 and your contract provided that you would be paid $80. The health carrier paid $75 on the 35th day after receipt of the clean claim, but did not pay the additional $5 before the 45th day. Restitution is owed because the carrier did not pay in accordance with the contract before the 45th day. In this example, the health carrier would owe $25, provided that the $100 is not in excess of the usual and customary amount for the service provided.
  • Example #4: The billed charge was $100 and your contract provided that you would be paid $80. The $100 billed charge included a $10 charge for a non-covered service under your contract with the health carrier. The health carrier paid the $80 on the 60th day after receipt of the clean claim. In this example the health carrier subtracts the amount paid ($80) and subtracts the $10 that is not covered under the contract from the billed charge. Assuming the amount of billed charges was not in excess of usual and customary, the restitution payment would be $10.
  • Example #5: I submitted a deficient claim and the health carrier paid $75 when my contract provided for $80. My billed charges are $100 and satisfy the usual and customary standard. Am I entitled to restitution? You are not entitled to restitution because you did not file a clean claim. You may recover $5 under the terms of your contract.
  • Example #6: The billed charge was $100 and your contract provided that you would be paid $70. Your patient´s insurance policy provides that the insurance company will pay 90% of the fee to a contacted provider and the insured must pay 10%. The insured´s deductible has already been met. The insurance company paid $63 on the 50th day after receipt of the clean claim. The restitution payment would be calculated by determining that 90% of the billed charge is $90 and subtracting the payment made by the insurance company ($63) from that amount. The insurance company would owe $27 in restitution, and the insured would owe $7 (10% of $70), provided that the $100 is not in excess of the usual and customary for the service provided.
  • Example #7: The billed charge was $100 and your contract provided that you would be paid $70. Your patient´s insurance policy provides that the instance company will pay 90% of the fee to a contracted provider and the insured must pay 10% after the annual deductible of $200 has been met. When services were provided, the insured had satisfied all but $30 of the annual deductible. The insurance company paid the correct amount of $36 ($70 - $30 = $40 x 90% = $36), but the claim was paid late. The insurance company would owe in restitution an addition $27 ($100 - $30 = $70 x 90% = $63 - $36 = $27) and the insured would owe the $30 unmet annual deductible amount and $4 (10% of $40), provided that the $100 is not in excess of the usual and customary for the service provided.

Q: If a PPO fails to take action on a claim and owes billed charges, may the PPO apply plan contract limitations to that amount? For example, the PPO plan covers 90% of covered charges for hospital services. Would the PPO pay 90% of billed charges or 100% of billed charges?
A: The preferred provider carrier may apply contract limitations to the amount owed, so the carrier would pay 90% of the billed charge. The amount that is owed by the carrier to the physician or provider is offset by amounts previously paid or amounts that are the responsibility of the insured, including copayments, coinsurance and deductible. However, pursuant to 28 TEX. ADMIN. CODE ?3.3703(a)(1) (and the contract between the carrier and the physician or provider), the physician or provider may bill the insured only on the discounted fee and not the full billed charge.

Q: My health carrier has requested that I sign a waiver of the restitution payment owed in exchange for a better contractual arrangement next month. Can I sign the waiver?
A: If you and health carrier reach such an agreement, you would not be entitled to the restitution owed. You can by agreement waive your restitution payments. Just as parties can contract for a penalty rate, you can also contract for a reduced amount for restitution. You may wish to consult your financial officer and legal counsel regarding such arrangements.

Q: What should I do if I have not received restitution payments or if I dispute the restitution amount received?
Contracted physicians and providers who filed clean claims that were not paid, paid late, or paid incorrectly are entitled to restitution payments. The consent orders provide that restitution will be the contract penalty, billed charges (not in excess of usual and customary, less any amounts previously paid, and less any charges for non-covered services), or an amount agreed to by the physician or provider and the health carrier.

While most of the 17 carriers paid restitution in November 2001, three health carriers received extensions. United HealthCare Insurance Company and United HealthCare of Texas received an extension until January 31, 2002, to pay restitution on certain claims that were paid before the 45th day, but the amounts paid were incorrect. Restitution applies to clean claims not paid, clean claims paid late (paid after the 45th day of receipt), and clean claims not paid correctly. Texas Health Choice received an extension until January 1, 2002, to complete its restitution payments. Texas Health Choice has made application to withdraw from the Texas market in 2002. Additionally, the Aetna Companies will pay restitution payments through the end of 2001 and into 2002 for certain claims. The list of 22 carriers follows:

Aetna Life Insurance Company
Prudential Insurance Company of America
Aetna U.S. HealthCare Inc.
Aetna U.S. HealthCare of North Texas Inc.
Prudential Health Care Plan, Inc.

Blue Cross and Blue Shield of Texas, a Division of Health Care Services Corp.
Rio Grande HMO, Inc.
Southwest Texas HMO, Inc.
Texas Gulf Coast HMO, Inc.

CIGNA HealthCare of Texas, Inc.
Connecticut General Life Insurance Co.

Humana Health Plan of Texas, Inc.
Humana Insurance Co.
Employers Health Insurance Co.

One Health Plan of Texas, Inc.
Great-West Life & Annuity Insurance Co.
Alta Health & Life Insurance Co.

Sierra Health and Life Insurance Co., Inc.
Texas Health Choice, L.C.

Unicare Life & Health Insurance Co.

United HealthCare Insurance Co.
United HealthCare of Texas, Inc.

If you discover that a particular health carrier has not paid the restitution you believe you are due or paid an incorrect amount as the restitution payment, please notify that health carrier in writing asking for the required payment. REMEMBER: Restitution applies to clean claims that were not paid, paid late, or paid incorrectly. If you are not able to reach a satisfactory resolution with the health carrier, please file a written complaint with the Texas Department of Insurance.

In preparing your written complaint, please:

  • Review the HCFA 1500 or UB 92 form you submitted with your claim to be sure that all the essential data elements listed in the clean claim rules were completed at the time the claim was filed with the payor. Claim forms which do not contain all data elements are considered deficient, unless your contract states that a specific item is not required.
  • Determine if there is a particular part of your contract that affects your claims. If so, include the pertinent part of the contract along with the signature page.
  • Identify the type of coverage (HMO, PPO or other managed care coverage)
  • Provide documentation about the clean claim including the date of receipt of the claim.
  • Describe the clean claim violation: the claim was not paid at all, the claim was paid late (after the 45th day of receipt), or paid incorrectly and the correct contract amount was not paid by the 45th day from the date of receipt of the claim.
  • Note your contract penalty amount or the amount you are seeking as billed charges. Include all documentation to substantiate your clean claim and the amount you are seeking.
  • Include any correspondence regarding your efforts to collect the restitution.


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Last updated: 09/23/2015

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