Aetna Health v. Radiology Partners and the Danger of Pass-Through Billing
Compliance

Aetna Health v. Radiology Partners and the Danger of Pass-Through Billing

01/13/2025

Although the popular healthcare press is describing the lawsuit filed on December 23, 2024, by Aetna Health, Inc., against Radiology Partners, Inc., as a battle over out-of-network, No Surprises Act billing and even of private equity involvement in healthcare, medical group leaders should pay even closer attention to the allegations involving “pass-through” billing, an issue that many ignore at their own peril.

It’s important to note that, at this point, the lawsuit filed by Aetna and the “facts” and purported conclusions made by it in its Complaint are just allegations. The case is at its earliest stage and there’s been no determination by the court of any liability.

What is Pass-Through Billing

Pass-through billing is an industry term that describes billing by one entity for services or items that were actually provided by a different entity.

In the context of physician services, issues of pass-through billing most often arise when services actually provided by physicians employed by or contracted to one medical group (“Group A”) are billed by a different medical group (“Group B”) under Group B’s provider agreement with one or more payors. The object is to obtain the higher reimbursement associated with Group B’s contract rates.

Allegations Against Radiology Partners

In simplest terms, Aetna alleges that Radiology Partners, an aggregator of independent radiology groups, together with one of its affiliated groups in Florida also named as a defendant, Mori, Bean and Brooks, Inc. (“MBB”), engaged in a fraudulent scheme to bill services performed by radiologists actually employed by other Florida-based, legally independent Radiology Partners affiliated medical groups as if those services were performed through MBB.

Aetna alleges a two-part, two-direction scheme:

Part 1

It claims that, to begin with, Radiology Partners identified MBB as having the most lucrative in-network contracts with commercial payors in Florida, including Aetna, and began using MBB’s name and Tax Identification Number (“TIN”) to bill for services performed by all its “affiliated” Florida radiology groups.

Those other affiliated radiology groups had their own separate contracts with Aetna. Aetna claims that by misrepresenting the affiliation of the radiologists, Radiology Partners secured higher reimbursements under MBB’s more favorable in-network agreement

Part 2

Aetna claims that after it realized the increase in the number of claims filed by MBB and terminated the in-network relationship with MBB, Radiology Partners pivoted to a second phase of the alleged scheme: It continued to bill under MBB’s name and TIN for services performed by the physicians employed by other Florida based affiliated groups, but this time as out-of-network services.

Aetna alleges that this was done to “game” the No Surprises Act’s independent dispute resolution (“IDR”) process, with Radiology Partners causing MBB to file tens of thousands of arbitrations and collecting far more than the in-network rates Aetna had in place with the physicians’ actual employers, being other Radiology Partners affiliated groups.

Pass-Through Billing of Services and You

At the heart of Aetna’s allegations is the claim that services actually provided by physicians employed by or contracted to one medical group controlled by Radiology Partners were billed by a different medical group, in this case, MBB, under the different group’s provider agreement (and, later, pursuant to its out-of-network status).

In ways both similar and dissimilar to Aetna’s alleged “facts”, medical groups of all types and sizes can and have, purposefully or inadvertently, wandered into the same dangerous pass-through territory in regard to physicians’ and other providers’ (e.g., CRNAs, nurse practitioners, etc.) services – in addition to another subset outside of this article’s scope, non-service “items” such as diagnostic tests.

One common example involves an out -of-network group purportedly subcontracting its employed physicians to a better reimbursed in network group through which services are supposedly rendered and billed.

Another common example involves a form of rate arbitrage involving two in-network groups: Better reimbursed “Alpha Group” works a deal with lower reimbursed “Omega Group” to bill Omega’s providers’ services as if they work for Alpha; Alpha retains a piece, the arbitrage profit, for the “favor”.

What’s Wrong With Pass-Through Billing of Services?

So why should you care?

The simple answer is that you likely want to keep your medical license, don’t want to be liable for civil damages including significant punitive damages for fraud, and want to avoid potential criminal prosecution.

I’ve yet to see a payor agreement that doesn’t limit the individuals whose services may be billed pursuant to its terms to those providers who are members of the contracted group. How “members” are defined varies, but it’s nearly always clear that the definition does not include physicians and other providers employed by another group. A violation triggers breach of contract claims, fraud claims, and, on the criminal side, depending on how claims were transmitted, mail fraud, wire fraud, and other state and federal violations.

Depending on the circumstances, the arrangement might also violate state or federal anti-kickback laws, criminal false claims laws, and prohibitions on “fee splitting”.

Pass-through billing can also implicate state medical ethics and “unprofessional conduct” requirements, leading to medical board discipline.

Some Immediately Actionable Takeaways

Before even considering any arrangement in which your group bills for the services of another group’s members, obtain legal advice to interpret the limitations of all impacted payor agreements. The same advice applies in reverse – in the case in which members of your group are going to have their services billed through another group’s TIN.

There are, depending upon the particular arrangement, potential end runs around contractual pass-through billing prohibitions, but they are highly fact specific and technical. Depending on your appetite for risk, they can and should be explored.

For more information on pass-through billing, contact me.



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