Insurers Take Advantage of Impossible Expectations Placed on Physicians

You are doing something wrong. At least when it comes to the business side of medical practice. I haven’t met you. I haven’t reviewed your records. I haven’t performed a site inspection of your practice. But I know you are doing something wrong. Insurance companies know it too.

I can illustrate why I am so sure, if I may borrow a quote attributed to Cardinal Richelieu, (the real-life politician depicted as the bad guy in Alexandre Dumas’ The Three Musketeers), “Give me six lines penned by the most honest of men, and I will find in them, something in them with which to hang him.”

The concept transfers perfectly to the business side of the practice of medicine; which has been so overrun by bureaucracy, it is impossible to do everything correctly. Historically, this has been of little consequence. As long as the patient care was actually needed, and was provided the service described in the bill, it was of little concern that there might be some technical defect in the documentation or clinical business practice. “Equity” protected providers from any Procrustean, arbitrary standard to which exact conformity is forced.

Strictly speaking, a provider must substantially comply with the terms of a contract in order to maintain a legal right to be paid for services. This includes slavish adherence to all provisions in the provider manual, as well as any regulations, statutes which might apply. Any breach of these rules might defeat the right to recover on the contract.   In order to soften the harshness of this rule, equity, normally should step in and allow a party to a contract to collect on the theory of quantum meruit, which is Latin for, “What one has earned.”  Equity takes the profit out of “fault finding.” 

Yet in medical practice, a cottage industry has developed, which is dedicated solely to legal “fault finding,” without regard to equity.  The idea seems to have originated with federal enforcement of the Anti-kickback Statute (AKS) and Stark Law.   This “equity won’t help you” concept is illustrated by the Office of Inspector General Roadmap for New Physicians.
“The Government does not need to prove patient harm or financial loss to the programs to show that a physician violated the AKS. A physician can be guilty of violating the AKS even if the physician actually rendered the service and the service was medically necessary."

In other words, if you violate certain federal laws and regulations, the patient gets the service for free, and the government owes nothing.

No one seriously questions the ability of the government to write rules that exempt it from equitable principles.  What happens when private insurance companies seek to behave in “me too” fashion?  With greater frequency, private insurance companies are auditing business practices, looking for fault and a reason to deny claims, recoup payments, and in some cases, terminate providers. 

Unlike the government, however, private insurance contracts are controlled by contract and equitable principles. You may have rights in a dispute with a private insurance carrier, which have been stripped away in the case of government programs.

If you receive unusual letters from insurance companies requesting inspection of your contracts, books, charts, or which request the names of your employees and their credentials, you can bet the company is searching for a way to save money at your expense. Odds are, you have done something that the insurance company could claim creates a basis for action. Whether or not some failure on your part will translate to financial loss for you depends upon a number of factors. Next week, we will explore some of the more common targets of insurance scrutiny.