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©2010, Jin Zhou,

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New Webinars, Seminars & Certification Classes Announced for New Federal Health Claim Appeals Regulations on July 22, 2010 from HHS, DOL & IRS, Effective On Sept. 23, 2010 for 193 Million Americans

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Webinars, Seminars & Certification Classes for New Federal Health Claim Appeals Regulations - Free Webinars - New Federal Claims & Appeals Regulations, Effective Sept. 23, 2010, for 193 Million Americans Seminars - 2010 Two-day Basic ERISA Appeal Seminars - Denials and Overpayment Appeals - 2010 PPACA & ERISA Claim Specialist Certification Programs in Chicago, Illinois  Create An Appeal Department for Your Hospital or Practice (In-house, onsite ERISA Claim Specialist Certification Programs)


Appeal for Downcoding & Bundling Denials




What You Should Know about Filing Your Health Benefits Claim

New Federal Claim Regulation, effective January 1, 2003, is the best and the most powerful protection for improper medical necessity denials:


Plan must disclose all the "secrets" under new definitions of relevant documents with better disclosure obligations, no more medical necessity secrets, UCR fee schedules & Bundling/Downcoding are no longer confidential. [Page 70252 & 70271, CFR § 2560.503-1(m)(8)  (DOL FAQ B-5, C17)]


Bundling And Down Coding, How To Fight Against Our Nation’s No. 1, The Most Important And Popular, Medical Claim Partial Denials?

© Jin Zhou,




Managed-Care Bundling And Down Coding Denial & Crisis? What Does an Unanimous US Supreme Court Say?


On June 21, 2004, an unanimous US Supreme Court ruled that claim processing (bundling and down-coding as partial benefits determination & denials, DOL FAQ C12)  and denials of benefits under the employer-sponsored health plans, ERISA-regulated benefit plans, for both self-insured and fully-insured (through purchase of insurance) health plans, are completely governed by federal law ERISA, that supersedes and invalidates state laws. "employer-sponsored group health plans" = "ERISA-regulated benefit plans", both self-insured and fully-insured (through purchase of insurance) health plans, (ERISA - Title 29, Chapter 18.  Sec. 1002.) - Supreme Court Managed Care ERISA Watch

Aetna Health Inc. v. Davila


Opinion of the Court


"Held: Respondents’ state causes of action fall within ERISA§502(a)(1)(B), and are therefore completely pre-empted by ERISA §502 and removable to federal court. Pp. 4–20."


"We hold that respondents’ causes of action, brought to remedy only the denial of benefits under ERISA-regulated benefit plans, fall within the scope of, and are completely pre-empted by, ERISA §502(a)(1)(B), and thus removable to federal district court. The judgment of the Court of Appeals is reversed, and the cases are remanded for further proceedings consistent with this opinion.7 It is so ordered."



           I.     Bundling & Down Coding Claim Partial Denials Are Identified As The Number One And The Most Important And Popular Managed Care Hassles By AMA (PSA) Through Nationwide State Medical Associations And Medical Specialty Societies


Top Seven Issues through National Medical Specialty Societies


Problems Reported By Popularity Rank






Medical Necessity Decision Denials



Prompt Payment



Administrative Hassles



Coding Issues






Bargaining Lack of Negotiation Power



Top Eight Most Importantly & Frequently Listed Issues through
State Medical Associations


Problems Reported By Importance Rank


Downcoding & Bundling


Prompt Payment


Lack of Budgeting Power


Medical Necessity Denials


Prior Authorization of Med. Services


Health Plan Credentialing


Drug Formularies







II.              Solutions by AMA?


After extensive explanations of corrective coding initiative and exercising CPT editorial muscles and conclusion of national survey of downcoding and bundling as the most important and popular claim partial denials, AMA offered, through its web site and a free guide, the following solutions (on page 9 of AMA free guide):


  1. To appeal the claim denials and document all communications with insurer, referenced on “squeaky wheel theory” without practical instructions;
  2. To notify state, county and national medical societies and associations for advocacy strategies;
  3. To complete online AMA Health Plan Complaint Form.


“If a claim is filed correctly and the health insurer inappropriately bundles or downcodes, the physician should attempt to appeal the claim, by putting in writing a clinical justification for the appeal. The practice should document all communication with the insurer. While appealing claims obviously adds another administrative burden to the practice, there is a large element of truth in the “squeaky wheel” theory: an individual physician who is persistent, has good documentation, and is logically persuasive stands a better chance at succeeding than a physician who does nothing.3



The physician also should notify the relevant state and county medical associations and the relevant national medical specialty society. Those entities can then determine how widespread the problem is, and, if it is widespread, work with the AMA to develop an advocacy strategy. Finally, physicians should complete the AMA Health Plan Complaint Form, which can be accessed at That information will be used to determine prevalence of these practices.” (© 2002, American Medical Association)


Apparently and practically, bundling and down coding partial claim denials remain to be the most popular and important healthcare claim partial denials in the U.S..



DOJ: Criminal Resource Manual 2432 Coercive or Fraudulent Interference with ERISA Rights -- 29 U.S.C. 1141

2432 Coercive or Fraudulent Interference with ERISA Rights -- 29 U.S.C. 1141

Title 29 U.S.C. § 1141 states:


"It shall be unlawful for any person through the use of fraud, force, violence, or threat of the use of force or violence, to restrain, coerce, intimidate, or attempt to restrain, coerce, or intimidate any participant or beneficiary for the purpose of interfering with or preventing the exercise of any right to which he is or may become entitled under the plan, this title, section 3001, or the Welfare and Pension Plans Disclosure Act. Any person who willfully violates this section shall be fined $10,000 or imprisoned for not more than one year, or both. The amount of fine is governed by 18 U.S.C. § 3571. The U.S. Sentencing Guidelines address 29 U.S.C. § 1141 under the guidelines for "Fraud and Deceit" (U.S.S.G. § 2F1.1) or for "Extortion by Force or Threat of Injury or Serious Damage (U.S.S.G. § 2B3.2)......"


"For example, Section 1141 would reach the use of deception directed at misleading a welfare plan beneficiary as to the amount of health benefits owed to the beneficiary under the terms of the plan or at misleading a pension plan participant as to the amount of retirement benefits to which he would become entitled under the plan upon his retirement."


ERISA in the United States Code

ERISA 510 29 USC 1140 Interference with protected rights.
ERISA 511 29 USC 1141 Coercive interference.



Healthcare providers nationwide are left without sufficient understanding and effective appeal solutions in accordance with governing laws and regulations for bundling and downcoding partial claim denials.


After years  of frustration and struggling without practical solutions from national medical societies, state governments and federal government as well as state and federal courts, 950,000 physicians nationwide filed unprecedented lawsuits in class actions against more than 19 health insurers and managed-care organizations in federal court and state courts throughout the country.


Contrary to the popular understanding and healthcare expert's assertion that ERISA doesn't provide for managed care "bundling and downcoding" partial denial protections as state law does, ERISA  statutorily prescribes the regulatory appeal process for "bundling and downcoding" partial denial violations.


United States Supreme Court unanimously ordered on May 27, 2003 in BLACK & DECKER DISABILITY PLAN v. NORD that DOL FAQ (Benefit Claims Procedure Regulation), available on DOL web site, is the view of the Supreme Court and must be followed:


"It is the Secretary of Labor’s view that ERISA is best served by “preserv[ing] the greatest flexibility possible for . . . operating claims processing systems consistent with the prudent administration of a plan.” Department of Labor, Employee Benefits Security Administration,, Question B–4 (as visited May 6, 2003) (available in Clerk of Court’s case file). Deference is due that view." (Bold and underline added) Black & Decker Disability Plan v. Nord , U.S. Supreme Court, Decided 05/27/2003


      ERISA claim regulation compliance and enforcement will largely fix "bundling and downcoding" violations and crisis in U.S. healthcare delivery system.




III.            Class Actions by 950,000 Physicians and U.S. Supreme Court Ruling in PACIFICARE HEALTH SYSTEMS, INC. v. BOOK


After gaining preliminary victory on class certification for healthcare providers and losing class certification for patients tract claim, health insurers and managed-care organizations appealed to the United States Supreme Court.  Health insurers and managed-care organizations argued that healthcare providers’ claims must complete arbitration in accordance with managed-care contract signed by providers before proceeding to federal court, and U.S. Supreme Court agreed with health insurers and managed-care organizations in PACIFICARE HEALTH SYSTEMS, INC. v. BOOKAlthough Aetna has settled with healthcare providers, most insurers and managed-care organizations have refused to settle or to  admit wrongdoings, and managed-care bundling and downcoding partial claim denial continued as business usual without any sign of slowing down.


After U.S. Supreme Court ruling in PACIFICARE HEALTH SYSTEMS, INC. v. BOOK , health insurers and managed-care organizations survived last threat from physicians and medical associations nationwide.


The Root of U. S. Healthcare Crisis

Jin Zhou,

The Hearing at Senate Committee on Finance on 3-3-04, [View Video "Health Insurance Challenges: Buyer Beware" 3-3-04
Hearing, Senate Committee on Finance
or Transcript (PDF) (]  revealed the mechanism, nature and extent of ERISA failure and nonenforcement as the reasons for "Growth in Bogus Health Insurance Plans Targeting Desperate Small Business Owners", as being concluded as "No the results are not good. It’s a tragedy." by Ann Combs, assistant secretary of DOL. The mechanism, nature and extent of ERISA failure and nonenforcement as presented at the Hearing are universally true and applicable to all health care claim denials and delays in managed care environment from all employer sponsored health plans as the root of U. S. healthcare crisis.


This is a 911 call on "healthcare 9/11 disaster"!



Therefore "squeaky wheel" appeals with documenting communication with insurers and threatening to sue by our associations have lost its most practical and financial results, especially after national campaign of "Patient's Bill of Rights" died so miserably that after seven years of national campaign with countless political contributions and legislations, "Patient's Bill Of Rights" disappeared on every medical association’s agendas and web site. - 950,000 MD's Settled With Aetna & Cigna on ERISA



IV.            About 80% of Care Claims Governed under ERISA and New Federal/ERISA Claim Regulations


In the United States, about 80% of healthcare claims are ultimately governed by ERISA, Employee Retirement Income Security Act of 1974, the Federal Law and Regulations governing and regulating most healthcare claims sponsored by employers in private sectors.  New ERISA claim regulation went into effect January 01, 2003 for all ERISA plans and provided most extensive clarification and protections for patients and physicians against inappropriate bundling and downcoding partial denials.  Unfortunately healthcare providers have failed to understand this most powerful statutory and regulatory protections.



V.              Bundling And Down Coding Partial Denials, ERISA or PPO/Provider Contract Dispute?  A Mixed Coverage and Provider Contract Dispute.  DOL FAQ, A8 & C12


As clearly and correctly illustrated by AMA in its "Free Guide" about bundling and downcoding from coding prospect, bundling and down coding partial denials were never explained or understood from legal aspects as to its governing statutes and regulations as well as remedies, as the grounds for appeal solutions for physicians.  Therefore AMA has failed in its free guide to provide any effective and practical solutions in appealing bundling and downcoding partial claim denials.


In general, healthcare provider’s managed care contract (PPO and POS) authorized for percentage discount per medical procedure (CPT code) only after patients benefit/coverage claim settled or moot.  For example, if benefits claim is not covered under the policy due to the policy exclusion and Medical necessities, and insurances/plan payers have no obligations for any payments, provider contract with managed-care organization or Payor cannot be triggered.  If provider is not the participating provider and has no contract with particular managed-care network and Payor, such a discount contract does not exist.  If Patient's benefit claim is approved completely or partially, without any dispute, the Payor is obligated for undisputed payments to the patient, then provider's contract for that particular managed-care network or plan is triggered, provider will accept a partial and discounted payment as payment in full without pursuing the patient/plan member for discounted and the remaining payments.


It is unlikely that any provider contract with managed-care organization has authorized for bundling and downcoding denials unconditionally as a form of discount for participating managed-care network.



Therefore, Patient's claim for benefits under ERISA plan, without regard to participating provider's contract with managed-care network, is a claim under ERISA, an ERISA question and issue, under the Federal Law. After   such question and issue are settled without any dispute, the percentage per procedure discount question and issue are triggered, then that PPO question and issue will be a provider's dispute with the managed-care network, ultimately with plan's Payor in accordance with provider's contract with managed-care organization and the networks, governed by each individual state law.


Without this basic understanding of distinction between ERISA and provider contract dispute, providers will be misguided in pursuing any statutory remedies as to federal law or state law, federal court or state court, for jurisdictions and remedies, this is fatal tragedy for most healthcare providers and medical associations in fighting managed-care claim denials and delays.


U. S. Department of Labor (DOL), explains the distinction between ERISA and PPO discount in its regulatory enforcement Frequent Asked Questions publications in clarifying New Federal claim regulations.


Patient Disputes Provider Disputes, (DOL FAQ A8); Provider/MCO Contract (PPO/HMO) Disputes are not Triggered until Patient ERISA Disputes With the ERISA Plan Are 100% Resolved or Moot (DOL FAQ C12) (PASCACK VALLEY HOSPITAL, INC. v  LOCAL 464A UFCW WELFARE REIMBURSEMENT PLAN (3rd Cir. 11/01/2004)


DOL, FAQ, A8 clarifies HMO or PPO Discount v. ERISA Claim Denial:  the Provider's HMO or PPO contractual dispute will have no effect on a claimant’s ERISA right to ERISA benefits under an ERISA plan and the Provider's HMO or PPO contractual dispute is not triggered or has no effect on the medical claim UNTIL a claimant’s ERISA right to ERISA benefits under an ERISA plan is resolved or moot.


A-8: Do the requirements applicable to group health plans apply to contractual disputes between health care providers (e.g., physicians, hospitals) and insurers or managed care organizations (e.g., HMOs)?


No, provided that the contractual dispute will have no effect on a claimant’s right to benefits under a plan. The regulation applies only to claims for benefits. See questions A-3, A-4, A-5.  The regulation does not apply to requests by health care providers for payments due them -- rather than due the claimant -- in accordance with contractual arrangements between the provider and an insurer or managed care organization, where the provider has no recourse against the claimant for amounts, in whole or in part, not paid by the insurer or managed care organization.


The following example illustrates this principle. Under the terms of a group health plan, participants are required to pay only a $10 co-payment for each office visit to a preferred provider doctor listed by a managed care organization that contracts with such doctors. Under the preferred provider agreement between the doctors and the managed care organization, the doctor has no recourse against a claimant for amounts in excess of the co-payment. Any request by the doctor to the managed care organization for payment or reimbursement for services rendered to a participant is a request made under the contract with the managed care organization, not the group health plan; accordingly, the doctor’s request is not a claim for benefits governed by the regulation.


On the other hand, where a claimant may request payments for medical services from a plan, but the medical provider will continue to have recourse against the claimant for amounts unpaid by the plan, the request, whether made by the claimant or by the medical provider (e.g., in the case of an assignment of benefits by the claimant) would constitute a claim for benefits by the claimant. For information on authorized representatives of claimants.  See questions B-1, B-2, B-3.



DOL also clarifies the definition of benefits claim denial, simply put, any payments less than 100% claimed is considered benefits denial:


C-12: If a claimant submits medical bills to a plan for reimbursement or payment, and the plan, applying the plan’s limits on co-payment, deductibles, etc., pays less than 100% of the medical bills, must the plan treat its decision as an adverse benefit determination?


Under the regulation, an adverse benefit determination generally includes any denial, reduction, or termination of, or a failure to provide or make payment (in whole or in part) for, a benefit. In any instance where the plan pays less than the total amount of expenses submitted with regard to a claim, while the plan is paying out the benefits to which the claimant is entitled under its terms, the claimant is nonetheless receiving less than full reimbursement of the submitted expenses. Therefore, in order to permit the claimant to challenge the plan’s calculation of how much it is required to pay, the decision is treated as an adverse benefit determination under the regulation. Providing the claimant with the required notification of adverse benefit determination will give the claimant the information necessary to understand why the plan has not paid the unpaid portion of the expenses and to decide whether to challenge the denial, e.g., the failure to pay in full. This approach permits claimants to  challenge whether, for example, the plan applied the wrong co-payment requirement or deductible amount. The fact that the plan believes that a claimant’s appeal will prove to be without merit does not mean that the claimant is not entitled to the procedural protections of the rule. This approach to informing claimants of their benefit entitlements with respect to specific claims, further, is consistent with current practice, in which Explanation of Benefits forms routinely describe both payable and non-payable portions of claim-related expenses. See § 2560.503-1(m)(4).


Therefore, if it is coverage/benefits denial, any payment less than 100% claimed, practically and namely, bundling and down coding, completely or partially, should be considered as benefits denial, coverage denial, an ERISA dispute or issue.  However in a practical world of managed-care environment, things could be very tricky and straight-line managed-care practice hardly exists, in most bundling and down coding partial denials, the explanation of benefits/EOB, denial notice, will inform healthcare providers and the patients that:


"As a participating provider, you agreed and not allowed to balance bill our member/your patient of this amounts, or patient not responsible for this amount" for bundling and down coding denials.


"Thank you for choosing participating provider, you're not responsible for this amount".


This is called "anti-balance billing instruction", that makes bundling and down coding partial denial as a provider contract dispute, covered under PPO contract, governed under state law.


If a provider appeals, the response from the plan will be that "your doctor agreed to this discount", and if the provider challenges that's not discount but bundling and down coding, the plan/managed care organization will ask that patient to call, the provider is not their member, if a patient calls, instruction from the plan would be to have provider call.  If a provider seeks for help from the provider relationship department of managed-care organization, the response would most likely be that this is an billing and coding and coverage issue, the provider should take it up to Customer Service Department of the payor insurance company, which in turn will insist in having patient to call.


If the dispute involves "BlueCard program" from Blue Cross Blue Shield plans and networks, this circus will go from local Blue plan, remote Blue plan, home Blue plan, patient, self-insured plan sponsor, providers, and insurance brokers, and in the end, no one is responsible, because the home Blue plan looks at EOB that states the bundling down coding is a PPO discount when it actually was benefits/coverage partial denial, and it shifts appeals or dispute to provider’s local Blue for PPO dispute resolution, but local Blue considers bundling and down coding as benefits/coverage denial and claims for no responsibility and obligations, the patient and providers could be bounced back and forth from different Blue plans in different states, state Department of Insurance in different states, state court in different states, back and forth from local state court through federal court and all the way to the U.S. Supreme Court (PACIFICARE HEALTH SYSTEMS, INC. v. BOOK) without clear resolutions.


A court battle circus could also go like this:  if a patient sues for the benefits, the plan will assert provider PPO discount, if a provider sues, the plan will defend bundling and down coding as benefits dispute or benefit limitation, if both patient and provider sue, the plan or managed care organization will assert wrong defendant status because almost all claim denials were performed by nonfiduciary TPA, or ASO (Administrated Service Only) subcontractors; If the Provider sues the managed-care organization in the state court, the plan or managed-care organization will assert ERISA preemption by moving the lawsuit to federal court for ERISA jurisdiction on the ground of ERISA benefits denial, once in federal court the plan could move to dismiss the case for failure to state a claim under ERISA or failure to complete arbitration by providers to assert and revive provider contract dispute, such as in PACIFICARE HEALTH SYSTEMS, INC. v. BOOK in U. S. Supreme Court.


How do we stop this managed-care hassle circus in this country?



VI.            Bundling And Down Coding Partial Denials With Anti-Balance Billing Instructions, Participating Or Nonparticipating Providers?


The practical complicity of this problem is that lack of understanding of distinction between ERISA benefits partial denial and provider contract percentage discount per procedure dispute.


The payor and managed-care organization in making bundling and down coding partial denials will change positions back and forth in between ERISA and PPO denials, and most importantly ERISA plan fiduciary and non-fiduciary TPAs, countless middlemen, and healthcare providers never understood and followed ERISA claim regulations.


The important and basic understanding of distinction of insurance policy coverage/ERISA benefits partial denial, such as bundling and down coding, and provider managed-care contract percentage per procedure dispute, as distinctively governed by federal law and state laws.


Bundling and down coding without anti-balance billing instructions is an ERISA benefits dispute, as illustrated by DOL FAQ A8 & C 12, while bundling and down coding with anti-balance billing instructions will be allegedly the provider contract dispute, at least according to EOB.


Bundling and down coding with anti-balance billing instructions when provider is not participating with applicable managed-care network is an ERISA issue, instead of provider contract dispute as there was no provider contract applicable to bundling and down coding partial denial ever existed.


Bundling and down coding with anti-balance billing instructions when provider is participating with applicable managed-care network could be tricky and ambiguous, therefore careful evaluation of EOB and timely appeals to the claim fiduciaries to clarify and finalize the denial decision will simplify appeal process and produce fair results.


ERISA Failure Syndrome

U.S. Healthcare Crisis Trilogy

(by Jin Zhou, Copyright © 2004)


Medical Killing
Medical Inflation
Insurance Robbery
"Health Insurance Challenges: Buyer Beware" 3-3-04
Hearing, Senate Committee on Finance

Read Making a Killing




Bar graph showing trends in hospital charges and revenues in California from 1995-2002







American Job ExportING!

Mass layoffs up in January 2004

Weirton Steel cancels 10,000

GM: $67.5 billion in 2003

One Nation under Debt: U..S. economy threatened by aging of America


Healthcare Disaster at Fault Verdict Index:

U.S. Government 30%

U.S. Employers & Insurers 30%

Healthcare Providers 30%

Consumers 10%

(ERISA Failure + Managed-Care) Destroyed US Healthcare
(ERISA Failure + Managed-Care + HSA) Invite US Federal Budget Deficit & Social Security Disasters = 100X 9/11 Attacks


GAO: Current and Emerging Fiscal and Retirement Security Challenges, American Benefits Council/MetLife Conference, Washington, DC, on January 14, 2005

  1. Rising Health care Costs Have Many Implications (Direct)

  2. Rising Healthcare Costs Have Many Implications (Indirect)


Rx-1  $$$$$$$$$ERISA"Health Insurance Challenges: Buyer Beware" 3-3-04
Hearing, Senate Committee on Finance
$$$$$$$$$$  Rx-2



VII.         The How To Appeal Bundling And Down Coding In Accordance With New ERISA Claim Regulation And U. S. Supreme Court Ruling In PACIFICARE HEALTH SYSTEMS, INC. v. BOOK


  1. Provider must have basic understanding of ERISA claim regulation;

  2. Provider must obtain sufficient and valid authorization from the patient to become an authorized representative in accordance with ERISA come regulation in order to appeal any denials and the delays [DOL FAQ B2, B3];

  3. Provider shall follow correct coding initiative and prevailing industry billing guidelines as illustrated by AMA Free Guide to Bundling And Down Coding;

  4. Appeal bundling and down-coding based on "National Correct Coding Initiative Edits" by understanding and using "mutually exclusive" and "mutually inclusive" coding edits.

  5. Appeals by Provider should be filed timely to be appropriate named claim fiduciary and  be based only on official denial notice/EOB for reasons of denials instead of phone talks [Page 70252 & 70271, CFR § 2560.503-1 (h)];

  6. Provider’s appeal should be filed in accordance with plans claim procedure with evidence of "an authorized representative" and challenge ERISA benefits denial and PPO/provider contract discount dispute at the same time [DOL FAQ B2, B3];

  7. Provider’s appeal for bundling and down coding with anti-balance billing instructions should always request from the managed-care organization and the plan payer for the specific reference and provisions in provider contract applicable to bundling and down coding agreement;

  8. Provider's appeal should request from the managed-care network for immediate arbitration if bundling and down coding denial was based on provider contract;

  9. Provider's appeal should always request from the plan fiduciary for complete copy of Summary Plan Description (SPD) and relevant plan documents based on which the bundling and down coding decisions were made as provided by new federal claim regulations. [Page 70252 & 70271, CFR § 2560.503-1(m)(8)  (DOL FAQ B-5, C17)]

  10. Provider's appeal should complete at least two levels of appeals to the plan fiduciary;

  11. "Forty states required individuals to first exhaust their health policy’s internal appeals and grievance process before seeking external review." (GAO, September 2003, Page 46)  The health policy’s internal appeals and grievance process = ERISA appeals 80% of the time.

  12. Provider's appeal must be submitted by certified letters with return receipt requested each and every time, to appeal PPO discount (Bundling & Downcoding,B/D) & ERISA benefits denials at the same time to ensure winnings in both state and federal court! (ERISA § 2560.503-1(l), PACIFICARE HEALTH SYSTEMS, INC. v. BOOK)



    Both Aetna and CIGNA have agreed to settle the class-action lawsuits by 950,000 physicians and agreed to process appeals in accordance with ERISA claim regulations for both ERISA claims and non-ERISA claims, and to establish external review boards for Billing and Coding Disputes, Medical Necessity Disputes and Policy Coverage Disputes, in compliance with state external review laws, however external reviews will not be available until internal appeals/ERISA appeals are completely exhausted.

    All other 8 major insurance companies named in class-action lawsuits have refused to settle, even if federal court would rule for physicians, the Aetna and CIGNA settlements will be "as good as it could get" from the rest of insurers and MCO's as evidenced in Aetna and CIGNA settlements with physicians.

    Unless physicians understand and complete ERISA internal appeals, all of those "a love fest" and "victories" from class-action settlements would mean a fantasy of "a love fest"  to any physicians.


For more specific information, please contact us or check out our appeal systems and seminars.


© Jin Zhou,



Dr. Jin Zhou is available for special presentations and consulting to any interesting parties on the subject of Appeal for Downcoding & Bundling Denials and U.S. health-care crisis turnaround.

He can be reached at (630)-736-2974 by phone or by email at



Discount for March 2005: $35

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Denials + Recoupment = Inflation + Fraud or Cost-Sharing?

Rx = Compliant Denial & Appeals! "Roughly one in seven Americans has no health insurance. That hurts HCA Inc. (nyse: HCA - news - people), the largest U.S. hospital chain, which last year wrote off $2.21 billion of revenue because patients couldn't pay their bills."

The American Hospital Association (AHA): "Hospitals today are faced with the challenge of managing their limited resources, while continuing to deliver the highest standard of care. According to health care experts, the cost of clinical denials to individual healthcare organizations averages $3.3 million annually. However, many hospitals do not have the resources or the expertise needed to avoid unpaid days at the end of admissions and lead the denial-appeals processes."

Payments Go Under a Microscope ( "MAMSI and CareFirst recoup overpayments to doctors by making deductions from future reimbursements. Doctors can appeal insurers' decisions. But, in the end, they usually pay up, doctors and insurers agree."

Hospital Pricing and the Uninsured, Glenn Melnick, Ph.D., "Price Gouging"
(Subcommittee on Health
Hearing on the Uninsured, Tuesday, March 09, 2004)

U.S. FILES COMPLAINT AGAINST NATIONAL ACCOUNTING FIRM UNDER FALSE CLAIMS ACT (DOJ Press Release"January 5, 2004 - PHILADELPHIA – United States Attorney Patrick L. Meehan announced today the filing of the Government's complaint against national accounting firm Ernst & Young. According to the complaint, nine hospitals paid Ernst & Young for billing advice – advice which later caused the submission of false claims to the Medicare program." - Hospitals Sock Uninsured with Much Bigger Bills

GM to Report $60B in Future Health-Care Obligations


HMOs Earn $10.2 Billion in 2003, Nearly Doubling Profits, According to Weiss Ratings; Blue Cross Blue Shield Plans Report 63% Jump in Earnings (BUSINESS WIRE)--Aug. 30, 2004


CMA Rebuts Health Plan Allegations of Unfair Physician Billing Practices [Posted 11/11/04] 

Click here to download CMA's letter to DMHC.


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View a 5-minute clip  Paper Chase "Health Insurance Challenges: Buyer Beware" 3-3-04
Hearing, Senate Committee on Finance

    Paper Chase in 20% of national healthcare claims has been revealed and scrutinized, while Paper Chase in 80 percent of national healthcare claims ($1.55 trillion) has been ignored by health-care providers due to lack of understanding of ERISA, because ERISA preempts State Laws in 80 percent of healthcare claim Disputes, and third party reviewers are never liable under ERISA, even new Federal Regulations providing more protections (Q-C16, Q-C17, Q-D9 & Q-D10) against such Paper Chase are totally ignored by health-care providers.

Payments Go Under a Microscope (

January 12, 2004

"CareFirst officials said the audit of 2,800 doctors was triggered by an earlier examination of several thousand claims that found 9 of every 10 were inaccurate. "The doctors, we're not saying we don't trust them," said Jeff Valentine, a CareFirst spokesman. "But as President Reagan said a number of years ago: 'Trust, but verify.' "


"The largest insurer of all, the federal government, recently estimated that the Medicare program overpaid doctors, hospitals and other health-care providers by $11.6 billion in 2002, according to an audit of 128,000 claims. The audit found many providers submitted insufficient documentation (45 percent), billed for medically unnecessary services (22 percent) and used incorrect codes to describe patient visits (12 percent)."


"A larger audit is planned this year. "The digging now is much deeper," said Leslie V. Norwalk, chief operating officer of the Centers for Medicare & Medicaid Services, the government agency known as CMS. "Any dollar overpaid is a dollar too much."


"MAMSI and CareFirst recoup overpayments to doctors by making deductions from future reimbursements. Doctors can appeal insurers' decisions. But, in the end, they usually pay up, doctors and insurers agree."






"January 5, 2004 - PHILADELPHIA – United States Attorney Patrick L. Meehan announced today the filing of the Government's complaint against national accounting firm Ernst & Young. According to the complaint, nine hospitals paid Ernst & Young for billing advice – advice which later caused the submission of false claims to the Medicare program."


"It is the responsibility of an independent reviewer to be alert to fraud and abuse and certainly not to ignore it," said Meehan. "In this case, as the complaint alleges, Ernst & Young kept itself deliberately ignorant of the facts."

Labor Department Sues Corporation For Violating Federal Employee Benefit Law (Release Date: 02/02/2004)


(Peer Review)

Final Order

S T A T E  O F  N O R T H  D A K O T A


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Column 1/Column 2 Correct Coding Edits
(formerly Comprehensive/Component Edits)


Mutually Exclusive Edits

NCCI Policy Manual for Part B Medicare Carriers
Medicare Claims Processing Manual (Sec. 20.9)
NCCI Questions and Answers
NCCI Edits Program Transmittals
Comprehensive Error Rate Testing (CERT) Program FY 2003 IMPROPER MEDICARE FEE-FOR-SERVICE PAYMENTS REPORT (Short Version) (PDF 671 KB)
AMNews: Oct. 20, 2003. HHS inspectors' action plan reveals hot buttons for fraud ... American Medical News AMNews: Dec. 8, 2003. Primary care troubled by coding errors ... American Medical News
White Paper: Health Care Fraud-- a Serious and Costly Reality for All Americans (PDF) (National Health Care Anti-Fraud Association -

"Aetna and CIGNA Settlement Secrets"
"Talking Points"



Usual, Customary and Reasonable Charges



State of Illinois, Department of Insurance

            (Utilization Reviewer Registration Verification)


Contact The Proper Agency - Where to File
Medicare, Medicaid and Other Health Plan Complaints
Illinois Department of Insurance Seal

Illinois Department of Insurance
Understanding the Health Care Provider
 Complaint Process

Hard Copy PDF Format
On-line Health Care Provider Complaint Form

DOL Compliance Assistance for Health Plans







ERISA Not Insurance

Aetna Video Shows ERISA Patients Mistreated


"According to the video, when faced with claims for identical medical problems, Aetna separates the claims where no damages are available - those subject to the federal Employee Retirement Income Security Act, or ERISA - from non-ERISA claims, where consumers can sue.1 2"


Aetna Reaches Agreement with Physicians, May 22, 2003 (


No ERISA Preemption of BOME Regulation of Medical Decisionmaking ...
Murphy v. Board of Medical Examiners, 949 P.2d 530, 190 Ariz. 441, 247 Ariz. Adv. Rep. 35 (Ariz.App.Div.1 07/15/1997)

 (Edward P. Richards, III, J.D., M.P.H.)


"Although Dr. Murphy is not engaged in the traditional practice of medicine, to the extent that he renders medical decisions his conduct is reviewable by BOMEX. Here, Dr. Murphy evaluated information provided by both the patient's primary physician and her surgeon. He disagreed with their decision that gallbladder surgery would alleviate her ongoing symptoms. S.B.'s doctors diagnosed a medical condition and proposed a non-experimental course of treatment. Dr. Murphy substituted his medical judgment for theirs and determined that the surgery was "not medically necessary." There is no other way to characterize Dr. Murphy's decision: it was a "medical" decision."


"We affirm the trial court's ruling that BOMEX has jurisdiction to review medical decisions which could affect the health or safety of a patient or the public, including decisions Dr. Murphy renders as medical director for Blue Cross. ...."




Department of Labor

"A group health plan is an employee welfare benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement, or otherwise.

Most private sector health plans are covered by the

 Employee Retirement Income Security Act (ERISA). Among other things, ERISA provides protections for participants and beneficiaries in employee benefit plans (participant rights), including providing access to plan information. Also, those individuals who manage plans (and other fiduciaries) must meet certain standards of conduct under the fiduciary responsibilities specified in the law."




Usual, Customary and Reasonable Charges



Usual Customary and Reasonable claim denial is almost usual and customary but unreasonable denial for a physician's practice every day in industry.


Silent PPO Discount


$10,600 ERISA Claim

Recent Federal Court Ruling in a Case with $10,600 medical claim, insurance Co. refused to pay, provider made numerous demand for payment in almost one year, but no appeals filed, the court dismissed the lawsuit because provider failed to exhaust administrative remedy, as required under ERISA, by filing ERISAclaim appeals.  This situation is so popular in health-care community.



$37,350 ERISA Claim

Health-care provider alleged medical claims submitted to Aetna for reimbursement, Aetna asserted no receipt of medical claims, no written denials.  Health-care provider failed to present proof of claim submission, claim denial and ERISA claim appeals. This case was dismissed. ERISA health-care claims are handled in federal court, state law is generally not applicable.





External Review

Patients' Rights: External Review 2000,50 State Comparisons:


New Survey: State External Review Programs (Henry J. Kaiser Family Foundation)


Prompt Payment


Rights Bills


$400,00 Fine

Georgia fines Humana again for slow claims payments (

   Excerpt: "Georgia has fined Humana Employers Health Care of Georgia   Inc. $400,000 for violating the state's prompt pay law, the second time in as many years that the HMO has been fined for dragging its feet on paying claims." (


Health Insurance Laws & Benefits Tools from


NAIC News Release


ERISA Laws/Rules

ERISA in the United States Code: Cross-reference table, table of contents






Peer Review



Independent Medical Review Experiences in California (California HealthCare Foundation)








Office for Civil Rights - HIPAA

OCR Guidance Explaining Significant Aspects of the Privacy Rule- December 4, 2002



Statutes (United States Code) 
ERISA - Title 29, Chapter 18. 

        Selected links:

Sec. 1002.

Sec. 1003.

Sec. 1022.
Summary plan description
Sec. 1104.
Fiduciary duties

Sec. 1140.
Interference with protected rights

Sec. 1141.
Coercive interference

part 7
group health plan requirements



Code of Federal Regulations

Codified in Title 29 of the Code of Federal Regulations:


        Selected links:

2520.102-3 Contents of summary plan description.

Claims procedure.










National Correct Coding Initiative Edits - Version 11

2003 Improper Medicare Fee-for-Service Payments Report


Medicare Announces 2004 Physician Fee Schedule and Payment Policy Changes

CMS Files for Download for Medicare Payment Systems


CMS Finalizes Appeals Process for Medicare Coverage Decisions


Regional Offices Link

2004 Medicare Payment Information Available from CD-Rom (WPS, WI,MI,IL, MN)


National Correct Coding Initiative (NCCI)





Physicians CCI EDITS

NCCI Policy Manual for Part B Medicare Carriers
(Updated Oct 1, 2004)
Medicare Claims Processing Manual (Sec. 20.9)
NCCI Edits Program Transmittals




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