In the recently filed case of Popovchak, et al. v. UnitedHealth Group Inc., et al, the plaintiffs, as representatives of a proposed class, put forth significant allegations against various UnitedHealthcare affiliates/subsidiaries (collectively, “UHC”), detailing a scheme in which UHC has drastically enriched itself to the detriment of self-funded plan participants.
Under the guise of a “savings” program, it is alleged that UHC has breached its fiduciary duties by acting in its own interest, rather than in the interests of the self-funded plans it administers and the participants of such plans. Through its “savings” program, UHC is paid a contingent fee as high as 35% of the “savings” it claims to obtain by reducing plan/plan participant financial obligations for out-of-network (“OON”) services. The problem, as alleged, is that such “savings” are entirely illusory and in violation of UHC’s ERISA-based fiduciary duties as a plan administrator.
It is contended that UHC, without authorization, uses a calculation methodology for calculating “eligible expenses” (also often referred to as “allowed amounts”), which serve as the basis for determining the plan’s and plan participants financial obligations to OON providers. Effectively, as alleged, UHC is calculating eligible expenses based on amounts paid nationwide by carriers for services, via “repricers” like Data iSight, in violation of explicit plan terms that require eligible expenses to be calculated based on “competitive fees” (i.e., charges) in the local geographic area. Unlike with “competitive fees”, amounts paid by carriers do not exclude discounts and generally do not reflect full and fair reimbursement since such a metric is entirely controlled by the carriers. The plaintiffs argue that UHC has no authority to use this improper methodology, which is solely intended to bolster UHC’s own coffers at the expense of plan participants (among others).
Since the OON providers in these cases have not agreed to accept reduce reimbursement rates, there are no “savings” secured on behalf of the plan participants. Rather, pursuant to the plain terms and conditions of the plan, out-of-network charges not covered by the plan remain the financial responsibility of the plan participant (i.e., the patient). Therefore, by inappropriately calculating the eligible expenses based on amounts paid, rather than charges via the FAIR Health database (a database the UHC has admitted is intended to be the default for determining eligible expenses), UHC is the only party that benefits: UHC receives a higher contingent “savings” fee (calculated as a percentage of the difference between billed charges and eligible expenses), while the patients are burdened with an even more significant financial obligation (i.e., the lower the eligible expenses, the lower the plan’s payment toward the charges).
UHC’s conduct is surely not surprising to anyone in the industry. Indeed, it was partially as a result of UHC’s alleged past misconduct, including allegations concerning the improper use of its own database, that the FAIR (Fair And Independent Research) database was established. Nevertheless, the hope is that this case can serve as yet another step toward increased pressure being placed on carriers to fairly reimburse out-of-network providers.
If you would like more information on this case and how it can be used to benefit your organization, please do not hesitate to contact The Patriot Group, as we would be happy to discuss the same, as well as other strategies to maximize your organization’s revenue.
