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There's a bit of story to this:

We had been trying to find a therapist for my son. We wanted one that we felt comfortable with. We didn't care if the provider was out of network or if we'd have to pay for their services out of pocket. We found one that we all really like and have seen them for several sessions now.

We have commercial health insurance through my work, and my son also has insurance through the state (Wisconsin) under Medicaid. My commercial insurance has zero out of network coverages.

The provider billed my commercial insurance first for the services, knowing that it would likely be declined due to being out of network.

After it was declined, the provider then sent the claim to Medicaid, and they declined it too, saying they won't cover any of it since it was out of network to my commercial insurance. I'm fine with that, we just pay for the services out of pocket and that's that. Apparently not. The provider has told us that we can no longer see them because they cannot accept payment from us. The provider said they heard this from a representative at Medicaid and that they read it in some documents.

One supporting quote that I was provided with to support their claim that they can no longer see us is this:

BadgerCare Plus and Wisconsin Medicaid will not reimburse the provider if the commercial health insurance plan denied or would deny payment because a service otherwise covered under the commercial health insurance plan was performed by a provider outside the plan. In addition, if a member receives a covered service outside their commercial health insurance plan, the provider cannot collect payment from the member.

The provider went back to the representative to confirm that they can't bill us even if insurance isn't involved and they were told:

No they can’t, that would be considered fraud.

Is this legal? How can I not just pay for a service out of pocket? What fraud would I or the provider be committing? I'd understand if we went into this whole thing thinking that it was going to be covered by insurance, but we knew insurance likely wasn't going to cover it.

Any help or advice would be really appreciated.

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    The question seems to contain the answer. Are you aware that on StackExchange, askers are encouraged to answer their own question if they discover the answer on their own? – Harper - Reinstate Monica Sep 3 at 6:50
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    Looks like you've found the answer by yourself, which is great! Considering the Q&A nature of Stack Exchange, please post it as a proper answer since self-answering is not only allowed, but even encouraged! (then feel free to flag these comments as "no longer needed" :) – Andrew T. Sep 3 at 16:21
  • @AndrewT. I was more adding extra information to user6726 post. I'll post it as a separate answer and say that I'm piggy-backing off of user6726. – Kyle Sep 4 at 1:58
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This is "Topic #601" in various ForwardHealth interpretative statements about BadgerCare Plus and Medicaid. The last 3 paragraphs say:

When commercial health insurance plans require members to use a designated network of providers, non-network (i.e., providers who do not have a contract with the member's commercial health insurance plan) will be reimbursed by the commercial health insurance plan only if they obtain a referral or provide an emergency service.

Except for emergency services and covered services that are not covered under the commercial health insurance plan, members enrolled in both a commercial health insurance plan and BadgerCare Plus or Wisconsin Medicaid (i.e., state-contracted MCO (managed care organization), fee-for-service) are required to receive services from providers affiliated with the commercial health insurance plan. In this situation, providers are required to refer the members to the commercial health insurance plan's network providers. This is necessary because commercial health insurance is always primary to BadgerCare Plus.

BadgerCare Plus and Wisconsin Medicaid will not reimburse the provider if the commercial health insurance plan denied or would deny payment because a service otherwise covered under the commercial health insurance plan was performed by a provider outside the plan. In addition, if a member receives a covered service outside their commercial health insurance plan, the provider cannot collect payment from the member.

If we take these statements by the Dept. of Health Services as correct interpretations of the law, then it seems that their interpretation is correct: "providers are required to refer the members to the commercial health insurance plan's network providers" (you as a patient have no choice) and "the provider cannot collect payment from the member" (they are encouraged to refer you to a network provider, because they are prohibited by law from taking payment from you).

If you had received the services from the provider and not mentioned any insurance, this would have been treated as a normal doctor-patient case, and they would not know that the state would prohibit them from receiving payment from you. By going through the motions with insurance, I regret to say that you exposed them to relevant knowledge which they cannot take back or deny. The fraud would be between the provider and the state, via the provider's relation with this program.

That does not endorse the DHS legal interpretation, but since they are the ones who wrote the regulations, it is fairly likely that (by definition) they got it right.

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Yes, the law can make such limits

For another common example, an unlicensed person often cannot enforce payment if they carry out building work performed that requires a licence.

It's worth being clear here - it's not unlawful to ask for payment provided that it's made clear that the person being asked has no obligation to pay. If a person who was not entitled to payment knowingly issued an invoice (a demand for payment) without telling the recipient that there was no obligation to pay, that crosses into fraud.

So, for your circumstance:

  • it's not unlawful for the provider to provide the service,
  • it's not unlawful for you to pay, however, such a payment is a gift.

But if you decide not to pay, then the provider cannot make you pay - this is probably a risk most people are unwilling to take. Note that requiring you to pay before providing the service would be unlawful because you can't place conditions on a gift.

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    Are you able to cite any precedent that using a "gift" in this manner is legal? I've seen numerous discussions of working around financial laws (typically taxes) with "gifts" and the conclusion I've reached is that it's a bad idea. – Brian Sep 3 at 13:22
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What fraud would I or the provider be committing?

None. Their conclusion reflects their cluelessness about the prima facie elements of fraud.

Since the insurers already declined coverage, the only person that could have standing to sue for fraud is you. And clearly you don't intend to proceed against the provider. The insurer has no viable claims [against you or against the provider] of fraud at all.

Two prima facie elements of fraud are (1) [plaintiff's] reasonable reliance on (2) defendant's intentional misrepresentations. See, for instance, Imark Ind., Inc. v. Arthur Young & Co., 141 Wis.2d 114, 130 (1987) ("justifiable reliance is an element of intentional misrepresentation"). There is no indication that the provider led you to believe that his services would be covered by the insurer(s). And making that misrepresentation --even if intentionally-- would still be irrelevant because you indicate that coverage was not a factor in your decision making. That precludes a finding of reasonable reliance.

Regarding the quote that starts with "*BadgerCare *", they should have told you the legal source thereof so you/we can identify a misunderstanding. A priori it seems very unlikely that Wisconsin legislation would constrain your freedom of contract in the way the insurer and provider purport.

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  • @Kyle Just FYI, the Wisconsin statute you subsequently added is inapplicable to your matter. That is because, according to your description, you are not intending to secure from the insurer (let alone fraudulently) the benefit or payment of a service that is not authorized: You were open to pay out of pocket. Also, my doubt as to the value and relevance of Topic #227 is twofold: (1) It is unclear whether the Topic is premised on actual legislation; and (2) it is possible that the provider's qualifies under the exception of "not covered under the member's limited benefit category". – Iñaki Viggers Sep 3 at 11:10
  • Yes, I agree with you. I brought that up to my provider to see if it helps. – Kyle Sep 4 at 2:01
  • It is likely this provider is a Medicaid or Medicare approved provider, and their CMS contract would bar them from charging an enrollee of those benefit programs for services outside of the programs. The provider isn't committing fraud against OP; they're committing fraud against the federal government and the government of OP's state. – tbrookside Sep 4 at 12:10
  • @tbrookside Assuming arguendo that there is such [CMS] contract, it would be breach of contract, not fraud. For it to be fraud, the provider and/or the OP would have to mislead the insurer for the sake of being reimbursed by the insurer instead of, or in addition to, the OP paying the provider. And the existence of such CMS contract is unavailing to the extent that the insurer incurs no losses: The transaction between the OP and the provider is equivalent to an injured insured's decision not to report to the insurer his injury. – Iñaki Viggers Sep 4 at 12:26
  • @IñakiViggers Under Title XIX of the Social Security Act, as amended by too many federal acts to enumerate, participation in Medicare or Medicaid binds providers to bill in certain ways, and billings that violate those requirements are subject to prosecution as fraudulent billings. There have been numerous state and federal prosecutions of providers providing Suboxone treatments to Medicaid recipients and billing them in cash, for example. – tbrookside Sep 4 at 14:07
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To piggy-back off of user6726, I found some supporting materials regarding what's going on:

Topic #213 - Sanctions for Collecting Payment From Members

Under state and federal laws, if a provider inappropriately collects payment from an enrolled member, or authorized person acting on behalf of the member, that provider may be subject to program sanctions including termination of Medicaid enrollment. In addition, the provider may also be fined not more than $25,000, or imprisoned not more than five years, or both, pursuant to 42 USC § 1320a-7b(d) or Wis. Stat. § 49.49(3m).

There may be narrow exceptions on when providers may collect payment from members.

Topic #227 - Conditions That Must Be Met

A member may request a noncovered service, a covered service for which PA (prior authorization) was denied (or modified), or a service that is not covered under the member's limited benefit category. The charge for the service may be collected from the member if the following conditions are met prior to the delivery of that service:

  • The member accepts responsibility for payment.
  • The provider and member make payment arrangements for the service. Providers are strongly encouraged to obtain a written statement in advance documenting that the member has accepted responsibility for the payment of the service.

Furthermore, the service must be separate or distinct from a related, covered service. For example, a vision provider may provide a member with eyeglasses but then, upon the member's request, provide and charge the member for anti-glare coating, which is a noncovered service. Charging the member is permissible in this situation because the anti-glare coating is a separate service and can be added to the lenses at a later time.

Topic #601 - Definition of Commercial Health Insurance

Commercial health insurance is defined as any type of health benefit not obtained from Medicare or Wisconsin Medicaid and BadgerCare Plus. The insurance may be employer-sponsored or privately purchased. Commercial health insurance may be provided on a fee-for-service basis or through a managed care plan.

Common types of commercial health insurance include HMOs, PPOs (preferred provider organizations), POS (point-of-service) plans, Medicare Advantage plans, Medicare supplemental plans, dental plans, vision plans, HRAs (health reimbursement accounts), and LTC (long term care) plans. Some commercial health insurance providers restrict coverage to a specified group of providers in a particular service area.

When commercial health insurance plans require members to use a designated network of providers, non-network (i.e., providers who do not have a contract with the member's commercial health insurance plan) will be reimbursed by the commercial health insurance plan only if they obtain a referral or provide an emergency service.

Except for emergency services and covered services that are not covered under the commercial health insurance plan, members enrolled in both a commercial health insurance plan and BadgerCare Plus or Wisconsin Medicaid (i.e., state-contracted MCO (managed care organization), fee-for-service) are required to receive services from providers affiliated with the commercial health insurance plan. In this situation, providers are required to refer the members to the commercial health insurance plan's network providers. This is necessary because commercial health insurance is always primary to BadgerCare Plus.

BadgerCare Plus and Wisconsin Medicaid will not reimburse the provider if the commercial health insurance plan denied or would deny payment because a service otherwise covered under the commercial health insurance plan was performed by a provider outside the plan. In addition, if a member receives a covered service outside their commercial health insurance plan, the provider cannot collect payment from the member.

Wisconsin Legislative 49.49(1)(a)3.

  1. Having knowledge of the occurrence of any event affecting the initial or continued right to any such benefit or payment or the initial or continued right to any such benefit or payment of any other individual in whose behalf he or she has applied for or is receiving such benefit or payment, conceal or fail to disclose such event with an intent fraudulently to secure such benefit or payment either in a greater amount or quantity than is due or when no such benefit or payment is authorized.

Sources

Topic 213
Topic 227
Topic 601
Wisconsin Legislative

Sources accurate as of 2020-09-02

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