All hospitals should know their ERISA rights.

The Employee Retirement Income Security Act gives hospitals the right to appeal any insurance claim to receive 100 percent of the due payment.

“CFOs can use the existing ERISA law to collect 100 percent of charges from insurance companies, but they just don’t know the federal law,” said Ben Carpenetti, a healthcare quality and performance improvement consultant at Carpenetti & Associates. “It was a surprise to me when I learned about it, and I have been in healthcare for 25 years.”

The American Hospital Association says U.S. hospitals are generally aware of the ERISA law and use it.

“It’s a means for employers to provide benefits in health insurance as a self-funded mechanism and an option to figure how they want to pursue their benefits,” said George Arges, senior director for policy at the AHA.

ERISA was passed in 1974 by then-President Gerald Ford. At that time, the hot topic was pension plans, and the new law assisted employers in redesignating pension responsibilities.

Under ERISA the employer, or plan administrator, is the party that assumes responsibility for the benefits plan. The insurance company is just an agent.

Scott Winslow, CEO of CRC Claims, helps organizations use ERISA to appeal insurance companies to gain full payments. The rule of thumb for ERISA is that anyone who gets benefits from their employer is covered; this includes health benefits.

Since 1974, every explanation of benefits (EOB) has included the statement: “If you are dissatisfied with the benefits contained herein you have the right to appeal under ERISA.”

“It is a right – no one can take that away from you,” said Winslow.

Only about 2 percent of all lawyers are trained in ERISA, he said. Most law schools offer it as an elective course.

“It is a very complex set of laws, and that’s why not a lot of lawyers are trained in it,” said Winslow. “It could take up months or years to learn. It has taken us four years to get our business to where it is.”

When using ERISA, there are certain steps to follow before setting foot in a courtroom:

• Step one is to make sure that a denial actually exists (anything less than 100 percent of the claim is considered a denial).
• Step two is that it’s a federal law – it supercedes state laws and all private company rule-making.

There are three levels of appeal under ERISA. Each has a 30-day time frame. Organizations can keep appealing until they “exhaust all administrative remedies.” Then they go to court.

According to Winslow, insurance companies know the ERISA rules and often win cases brought to court.

“In my opinion, all bills that are passed at the last hour, there’s some sort of grease to put it through,” said Winslow. “Ford gave the insurance companies exclusion of compensatory damages – all they can be forced to pay is the actual cost of the treatment. No pain and suffering payments.”

Some court cases are resolved in as little three weeks, while others take months. Arizona recently fined two insurance companies because there were simply so many complaints against them, according to Winslow.

The ERISA laws were included in the recently passed reform overhaul, which is expected to change many processes in hospitals by making the appeals process mandatory. This will be an active rule only six months after the bill is passed.

According to Arges, hospitals outside of an insurer’s network face the most problems in collecting what they’re owed because reimbursements usually go directly to the patient.

Those organizations, he said, want to work with patients or the plan administrator (the patient’s employer) before even considering going after a third party payer.