Arbitration null in MA coverage disputes, state supreme court rules

The dispute must follow provisions of the Medicare Act since it is "inextricably intertwined” with Medicare claims
The dispute must follow provisions of the Medicare Act since it is "inextricably intertwined” with Medicare claims

Coverage disputes between Medicare Advantage plans and healthcare providers must follow a federal appeals process even if their contract calls for arbitration, the Arizona Supreme Court ruled on Thursday.

The case stems from a dispute between two Arizona mental health providers and United Behavioral Health, a Medicare Advantage organization. The providers entered into participation agreements with United, which included language allowing arbitration of disputes. The case may set a precedence for how long-term care providers in managed care contracts negotiate future disagreements.

United denied the providers' claims for extended inpatient care at their inpatient psychiatric hospitals, stating it was not medically necessary and therefore not covered by the company's MA plans. The providers continued to provide extended care while seeking reimbursement from United, and eventually demanded arbitration of the dispute.

In its ruling the court found the dispute to be “inextricably intertwined” with Medicare claims, and therefore subject to provisions of the Medicare Act, including that disputes be reviewed under administrative procedures issued by the Department of Health and Human Services.

“The Act provides mandatory administrative review procedures for these disputes, which preempt arbitration,” the ruling reads.