The MULTIPLAN AND PHCS DISCOUNTING DEBACLE AND NON-CONTRACTED DISCOUNTS.

As are many of my industry colleagues, I am frustrated as the the rampant PHCS and MULTIPLAN and COVENTRY discounts continue to plague my reimbursement. I am not contracted with PHCS and Multiplan or Coventry in our practice. Back in April 2022, I was ready to sign. Had my mouse pointed at the Docusign area when I saw that they intended to take a discount for all Worker's Comp and Third-party Liability Claims.

I market those myself. They do not steer cases to me. There is no steerage or other value proposition. So why take 12%, 16% or more from me on these claim payments? There is no "value received". Follow me here:

“For value received” is a phrase commonly used in a bill of exchange, deed, promissory note, or other contract to indicate the exchange of unspecified consideration. The exchange of consideration is a critical component of any legally binding contract and the use of such boilerplate language in the foregoing contexts reinforces documentation of its exchange. 

So here's what's happening:

ROI (and many of my industry colleagues) have no contract with PHCS or MultPlan or Coventry. It submits a claim for a workers compensation patient or an accident patient to the insurance plan of record. There is no contract with Sedgewick, Fedex and others, including State Fund of California, to render services at a discount from their usual and customary charges. ROI submits usual and customary charges and expects that the claim will be reduced to 100% of the Relevant States' Workers Compensation Fee Schedules, and rightfully so. When the payment arrives, the bill is reduced as expected to the state's fee max, and then further reduced by Coventry (and others), claiming reliance on a contract with MultiPlan (that does not exist, never existed, and is not valid.)

I teach in my managed care contracting classes in the abstract, but here's how this works IRL:

Privity of Contract

Privity of contract refers to the relationship between the parties who have entered into a contract, meaning that only those parties can enforce the terms of the contract or be held liable under it. In this case:

1. Coventry has a contract with a self-funded employer or insurance company, under which Coventry provides access to discounts with healthcare providers for a PEPM or other leasing fee.
2. Coventry also has a separate contract with Multiplan to access Multiplan's network of providers and their negotiated discounts. Multiplan has no discount with ROI. 
3. ROI (Robotic Orthopaedic Institute) is not a party to the contract between Coventry and Multiplan unless it has an independent agreement with Multiplan, which it does not.

Since ROI does not have a contract with Multiplan to provide discounts, there is no privity of contract between ROI and Coventry in relation to the discount. Coventry cannot enforce a discount against ROI because no contractual relationship exists between ROI and Multiplan concerning that discount.

Detrimental Reliance (Promissory Estoppel)

Detrimental reliance, also known as promissory estoppel, occurs when one party reasonably relies on a promise or representation made by another party, and as a result, suffers a detriment. In this scenario:

1. Coventry relied on the assumption (or representation) that Multiplan had negotiated a discount with ROI.
2. Coventry used this assumed discount as part of its product offering, reselling access to the discount to self-funded employers, insurance companies, and union health and welfare benefit plans.
3. However, Coventry did not verify whether ROI had a contract with Multiplan that actually provided such a discount. Indeed, it has no such contract. Multiplan has given ROI a letter of confirmation to present to anyone taking this inappropriate discount, which it has presented to Coventry as prima facia evidence that no such contract exists.
4. When ROI demands full payment without the discount, Coventry faces a problem because the discount it promised its clients does not exist.  Its contract with its clients may or may not address equitable estoppel. Coventry may indeed be responsible to pay or indemnify its clients, not limited to the reversal of the discount, but the labor and other fully loaded costs and any assessed penalties by regulation and also any interests on the late paid amounts that exceeded the 30 day clean claim payment rules that may apply.

In this situation, Coventry's reliance on the existence of a discount with ROI (based on the assumed Multiplan agreement) was detrimental because it misrepresented the discounts available to its clients. Coventry may be liable to its clients for the difference between the full payment demanded by ROI and the discounted rate that Coventry promised, especially if the clients relied on Coventry's representation of the discount when contracting with Coventry, and more.

If you have a contract with Multiplan, PHCS, Coventry or if your contracts with other plans and payors have an "Assignment" clause that you left wide open, you may not have the same argument as me, because you may indeed be contracted with one of the above, and therefore, the discounts are valid.

Lots of managed care and other reimbursement contracts contain the following language:

Assignment of Benefits: The rights and benefits of [Assignor] under this Agreement may be assigned, in whole or in part, by [Assignor] to any third party without the prior written consent of [Other Party], provided that such assignment does not materially alter the obligations of [Other Party] under this Agreement. [Assignor] shall provide [Other Party] with written notice of any such assignment within [number] days of the assignment. That's wide open for runaway discounting. You become the assignor's "chattel personal".

Why "Chattel"?

If the contractual rights being assigned by on of the above or another payor (e.g., access to discounts, rights under an agreement) are considered intangible property, they might be viewed as a form of chattel. In this case, when the payor that you've contracted with and left the assignment clause wide open, assigns its rights to access a discount, those rights could be considered chattel personal. To shut it down, strike out the without the prior written consent part. Make it bilaterally consensual. Otherwise, you could be competing against yourself in two contracts, each one paying the lowest of all discovered rates available.

The Provider's Rights (For ROI)

Coventry might consider suing Multiplan, but the success of such a lawsuit would depend on several factors, primarily the specific terms of the contract between Coventry and Multiplan, as well as the nature of the representations made by Multiplan. ROI Could care less, none of this concerns them and how they fight it out.

Potential Grounds for Coventry to Sue Multiplan

1. Breach of Contract:
2. Misrepresentation or Fraud:
3. Negligent Misrepresentation:
4. Indemnity:

Challenges Coventry Might Face

• Contractual Terms: Multiplan might argue that it never guaranteed that specific providers, such as ROI, were part of the network and that Coventry was responsible for verifying the details of the network before reselling the discounts. They won't be able to do this because ROI has no contract.
• Proving Damages: Coventry would need to prove that it suffered actual damages as a result of Multiplan’s actions or omissions, and that these damages are directly attributable to Multiplan’s breach or misrepresentation. When Coventry's clients get the fines and late fees on the unpaid or late paid portion of the claims I intend to pursue as ROI, it may find it has to decide whether to disrupt its relationship with MultiPlan or not. Here's the situation: I must pursue the Coventry or Multiplan client, not Coventry or Multiplan. I don't have a contract with either Coventry or MultiPlan. I have no contract on these claims submitted to FEDEX or Sedgewick. they ow me 100% of the California or Utah State Worker's Comp Fee schedules for those patient claims. They made a reliance (to their detriment) on what they were sold by Coventry or PHCS. I was not involved in what they knew, believed, or took action on. It is not ROI's place to call MultiPlan as Coventry's representative told me to do. I have no business with MultiPlan. What should I say? "Stop it!" That's playground behavior. She can't tell me to call MultiPlan to cancel my contract with them. I don't have one! But Coventry relied on what they were allegedly told by MultiPlan that I was their chattel personal to be sold under a leasing agreement where MultiPlan allegedly sold access to a discount with ROI that does not exist.
• Causation: Multiplan might argue that Coventry’s failure to verify the discount independently was the proximate cause of its damages, rather than any action or inaction by Multiplan.

Whatever happens between those parties and their contract is not ROI's affair. ROI is only due the rest of its reimbursement. No more. No less.

I have no duty to contact MultiPlan as Coventry's rep directed me to do. (I forgive her for she knows not of what she speaks. She was probably told to say that just as I was told to say things when I worked for a health plan ... she just can't get snippy with me. I don't deserve that.)

If I don't get paid, my next step is to contact the carrier in question who took the discount, and next to contact the Department of Insurance, workers compensation division and force the issue, the interest and the penalties of late, short paid claims.

Ultimately, if you have a contract through the front door (direct contract), back door, a window or a side door (indirect contracts and assignments) you don't have the same fight as me. If you tossed your MultiPlan, PHCS, Coventry, and other contracts because the book of business was not strong enough to warrant an exchange of a "discount for value received", and you don't have a contract, you can follow the above as an example of what I did and am about to do.

I am done spending my whole meager profit margins on administrative inefficiencies and damages as a result of improper payment.