When emailing you about medical bills, it is probably best not to write about using “dummy codes” to “bury” administrative fees. But that’s exactly what two major healthcare companies did between 2012 and 2016, and now it’s an issue that is about to get new attention.
Ohio is already suing one of the companies, claiming the billing is wrong. Also, like many other states, Ohio does billions of dollars in business with both of them annually.
So the case ruled last week by the 4th US Appeals Court in Richmond, Virginia, could have ramifications beyond this lawsuit.
The court ordered an Asheville, NC district judge to reopen a case accusing health insurer Aetna and middleman Optum Healthcare Solutions of creating a system of “dummy codes” to “bury Optum’s administration fees.” “And they could improperly pass on Mars Inc.’s self-funded health plan and its employees.
District judge Martin Reidinger dismissed the proceedings on September 16, 2019 and partially ruled that plaintiff Sandra Peters had not proven that she had been harmed by the order.
But in a letter to the appeals court, District Judge G. Steven Agee wrote that Reidinger was not applying the proper yardstick in dismissing the case. Agee said a jury could easily have determined that Aetna had violated its duty to act in good faith on behalf of Mars and its employees.
Aetna and Optum did not respond to requests for comment. But the ruling could be of interest in Ohio and many other states.
Aetna is now part of CVS Health, the fourth largest company by sales in the United States. Optum is part of the UnitedHealth Group, the fifth largest company in the country.
In 2017, these two companies served as pharmacy intermediaries for Ohio Medicaid, managing billions of prescription drugs for the poorest Ohioans. They used a secret reimbursement system that enabled them to pocket $ 244 million more on the cheapest class of drugs than what they paid for the pharmacies that issued them, a later analysis found.
Aetna was not yet part of CVS at the time, but in April it was selected as the managed care provider for OhioRISE, an ambitious new program designed to provide all-round services to children with “the most complex behavioral health and multi-system needs.”
In 2019, Ohio Attorney General Dave Yost sued Optum on behalf of the Bureau of Workers Compensation, claiming the company gave the state $ 16 million in undisclosed discounts. The case is pending.
Optum’s parent company, UnitedHealth, stands ready to maintain its managed care business with Ohio Medicaid even if the division will ditch its drug middlemen who have so frequently launched generics in the past.
Most recently, Yost settled a lawsuit against managed care provider Centene for $ 88 million this month. He accused the company of working through a chain of middleman agreements – including one with CVS – to hide tens of millions of dollars in double billing. Centene denied wrongdoing, despite saying it will pay Ohio and 21 other states $ 1.25 billion.
The revitalized North Carolina suit accuses Aetna and Optum of playing hide-and-seek there too.
It is said that in late 2012, six years before a judge approved the $ 70 billion merger between CVS and CVS, Aetna was looking for a way to get someone else to pay Optum’s administrative fees, according to court documents.
As insurer for Mars, Aetna hired Optum to manage physical therapy and chiropractic care. The problem was that his contract with Mars required Aetna to pay Optum’s fees.
In a brief filed with the Court of Appeal, the American Medical Association said that too many documents were being sealed in the Asheville lower court. However, it said there was enough unsealed to be “direct evidence” that “Aetna and Optum staff developed a plan to pass administrative fees on to patients and their insurance plans.”
The AMA owns the copyright to the Current Professional Technology Code, a series of names for medical procedures used in medical billing. The association said that Aetna and Optum deliberately misused them as licensees to hide improper billing.
The Medical Association referred to an email dated December 2, 2012 from Theresa Eichten, Optums Physical Health Product Director, to Cyndy Kilpinen, Senior Network Manager for Aetna’s Contracts Department. The subject line was partly “dummy code per day”. Eichten put it this way, referring to an earlier conversation:
“Theresa – If you ask for any suggestions on the coding to be used on the Chiro (Praxis) deal to account for the flat rate reimbursement + administration fee, I want to make sure I understand your question. Are you looking for a CPT code that can be used as a “dummy code” to trigger the payment in your system when we send it via the 837 claims file? When we determined this dummy code for the therapy offer, your team gave us the dummy code. Would you like us to go through our CPT codes and give you some suggestions on what we don’t use? Or would it be easier for you to determine this from your system? “
It also states, “Cyndy – I was hoping you would have some idea of which Chiro code would be good to use, which is not normally used too often but is still considered valid for the Chiro. I’m not a chiro expert and this will be my first chiro seller deal. I’ve done other PT / OT programs. If you don’t have a resource I’ll do the research and create some code that can be used, no problems. “
And that: “Theresa – I’ll be working with my team to get some suggestions for a Chiro CPT code that belongs to the Chiro services but is very rarely used so that we can use it as our ‘dummy code’ for can use this program. “
If this exchange shows that the companies plotted to hide the fact that they improperly charged Mars for Optum’s administration fees, the companies may not be held liable solely to Mars and its employees. Peters’ attorneys claim it is a violation of federal law on employee benefits to falsely disguise administrative fees as medical benefits.
And if there was any doubt that the companies were trying to hide the fees, Optum’s Ellen Gallagher, a customer payments management officer, might have clarified in an email dated Jan. 28, 2016 to Aetna’s Shiron Hagens .
Finally, as we discussed this morning, one of Aetna’s original goals with the service model was to “bury” the administrative fee in the claims process (to ensure Aetna didn’t have to pay … from its own bank account) if that goal didn’t is more critical, it opens up options for our service model. That means we have more leverage to pull and consequently lower the cost of the program. “
The AMA called this gross abuse of the medical services it assigned.
“There are no ‘dummy’ codes in the CPT code set, and each code is specifically tied to a medical service or procedure,” the appeals court told. “The fact that some codes are explained in terminology that may be difficult for laypeople to understand is no reason to use them as a pretext for other allegations that Aetna and Optum were trying to hide.”
This story originally ran in the Ohio Capital Journal.