Provider Law Likely Heading Back to Court

by Mark Friedman  on Monday, May. 5, 2008 12:00 am  

Lynn Weaks, CEO of Arkansas Surgical Hospital in North Little Rock, says the 41-bed facility won't be able to survive long term without higher reimbursement rates.

After a 10-year battle in the federal court system, the "any willing provider" law appeared to be settled in 2005 when it went into effect.

But now AWP, or the Patient Protection Act of 1995, is on track to return to court, and one state senator is planning to hold hearings over the rates insurance companies pay hospitals.

The current debate over the intentions of AWP started in early 2007 when the Arkansas Surgical Hospital in North Little Rock complained to the Arkansas Insurance Department that it was being paid less for the same procedures than full-service hospitals in Little Rock.

The disparity is believed to have cost the surgical hospital millions of dollars, said Sam Perroni, a North Little Rock attorney who is an investor in the Arkansas Surgical Hospital. And its CEO, Lynn Weaks, said the 41-bed facility won't be able to survive long term without the higher reimbursement rates.

The Patient Protection Act cracked open the preferred provider networks in Arkansas to medical providers that had previously been excluded even though they were willing to accept the same reimbursement rates as in-network providers. Arkansas Surgical believes that, under the law, insurance companies should have some uniform methodology for setting the reimbursement price for a procedure.

"There is no methodology," Perroni said. "And that's been our complaint all along. We never said we should be paid the exact same amount. We just said under the law, they are required to pay us the exact same way."

Arkansas Insurance Commissioner Julie Benafield Bowman ruled in December that AWP doesn't "require identical payment to hospitals for similarly performed services." She also added that a health insurance company could take into account a hospital's services, patient population and the number of beds when determining reimbursement rates.

Arkansas Surgical, along with the Surgical Hospital of Jonesboro and HealthPark Hospital in Hot Springs, appealed that ruling and last month had another hearing before Bowman. She is expected to rule again in June.

Arkansas State Sen. Steve Faris, D-Malvern, who sponsored AWP legislation in 2005, said he wanted to testify about what legislators intended when they approved AWP, but Bowman wouldn't let him.

"My intent was for [Bowman] to be fair and equal" when she applied the law, he told Arkansas Business. "I never intended for her to take the existing statutes regarding insurance law and use them as a way to thwart the intent of this act. ... For some reason she appears to be very closed minded and unjustly punitive in the implementation of this law. And no, I did not intend for her to be that way."

Bowman told Arkansas Business last week that the state Supreme Court has ruled legislators' testimony is inadmissible as evidence.

Still, Faris couldn't stomach being shut out of the Insurance Department hearing.

"We're going to have follow-ups to her hearing, except we're going to have them back over at the Capitol," he said. "And I'll see if she's got the guts to come back over there and explain" her position.



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