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Preferred Providers: Ohio May Require a Change in Billing Practices

08.15.11 written by

Preferred providers should be aware of Virginia King v. ProMedica Health System, Inc. currently pending before the Ohio Supreme Court. This case has the potential to bar preferred providers from accepting payments from third-party payors such as med-pay coverage car insurance policies and subject those doctors to liability for doing so.

In becoming a preferred provider, doctors contractually agree to accept lower reimbursement rates, i.e. a discount from the fair market value of their services, for seeing the patients insured by the insurance company and in exchange the doctors have access to a larger supply of patients. Up until this current case, which insurance paid first, i.e. what policy was the primary insurance was determined by Ohio’s coordination of benefits laws. Often, the med-pay coverage was the primary coverage and preferred provider physicians billed and accepted payment of their non-preferred provider rate from the med-pay coverage.

In King v. ProMedica, the Sixth District Court of Appeals construed R.C. 1751.60(A) and held that a health care provider who executes preferred provider agreements with insurance companies cannot bill third-party payors. R.C. 1751.60(A) restricts preferred providers from seeking compensation for services from the patient except for approved copayments and deductibles. The statute does not address whether it applies to third-party payors such as med-pay coverage. In fact, up until recently, no court had construed this statute to prohibit preferred providers from seeking reimbursement from other potentially liable parties.

While arguing its case in front of Ohio’s high court, ProMedica asserted that billing car insurance companies at a doctor’s preferred provider rate would give a benefit of a contract not entered into between the doctor and the car insurance company. However, King argued that patients are harmed by providers billing med-pay at non-preferred provider rates by increasing the amount of subrogation claim against the patient. Ultimately King desires to have the choice of which insurance policy should be billed.

If the Ohio Supreme Court construes R.C. 1751.60(A) to prohibit a preferred provider from billing third parties such as Med-Pay coverage of car insurance policies, then preferred providers may only bill health insurance companies for their services. In that event, a preferred provider that bills and collects from a med-pay insurance coverage should rethink that practice in light of King v. Promedica. Otherwise, the physician may face future litigation.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

Laura A. Brady is an attorney with Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A. in Canton and is a member of the firm’s Healthcare Practice Section.