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Out of Network Billing Under Increased Scrutiny

Out of network patient billing gives rise to many issues. As a result, some health care providers, including physician groups and ambulatory surgery centers, have struggled with the decision to participate or not to participate in various insurance plans. In addition to the political considerations that arise, various state and federal laws also may apply when providers implement customized collection protocols in addressing monies owed by patients for which the practice or the facility has a non-participating status.

A recent court case involving a New Jersey insurance plan (Horizon Blue Cross Blue Shield of N.J. v. East Brunswick Surgery Ctr., No. 3:08-cv-4227(FLW) (D.N.J. Apr. 23, 2009), highlights the importance of taking a measured approach when making decisions that can have legal consequences. Although the case involves technical aspects of a federal law governing certain insurance plans, the underlying facts and circumstances of the case are of particular interest.

In summary, on April 23, 2009, a federal court in New Jersey found that an insurer was not preempted by federal law from bringing certain state law claims against an out-of-network provider. The provider, East Brunswick Surgery Center (SC), an ambulatory surgery center, was a participating provider in Horizon Blue Cross Blue Shield of New Jersey’s health insurance plans (“Horizon”). Among other allegations, Horizon alleged that subsequent to SC’s termination of its participating status with Horizon, SC waived certain patient financial obligations (e.g., co-insurance and deductibles) for the purpose of inducing the patients to use its services thereby effectively circumventing Horizon’s in-network contractual obligations. Horizon sought to bring various legal causes of action including, civil fraud, misrepresentation, and tortious interference with in-network provider contracts. The case will proceed in state court. However, this case illustrates the need for providers to review collection protocols in out-of -network situations in order to oversee compliance with the applicable state laws.

For more information regarding network billing, please call Abby Pendleton, Esq., Adrienne Dresevic, Esq. or Carey F. Kalmowitz, Esq. at (248) 996-8510, visit The HLP website’s Compliance and HIPAA page, or visit The HLP website.

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