Denial of Payment for Medical Care Provided under CHI

 

June 16, 2024

BRACE Law Firm ©

 

The state guarantees citizens, and in certain cases, foreign nationals and stateless persons, the right to receive free medical care throughout the territory of the Russian Federation. In most instances, the compulsory health insurance system (the "CHI") funds this care.

In simplified terms, the CHI system operates as follows: employers and government authorities transfer insurance contributions to the Compulsory Health Insurance Fund. These funds are then redistributed to territorial funds and health insurance organizations to pay for medical care provided. Health insurance organizations pay medical organizations after monitoring the volume and quality of the medical care provided. This monitoring may result in sanctions. Often, the losses incurred by medical organizations can amount to millions of rubles.

This article analyzes the primary reasons for payment denials (or payment reductions) based on the practice of the highest courts and provides recommendations on how to mitigate these risks.

Procedure for Paying for Medical Care within the CHI System

The primary regulatory acts governing legal relationships regarding the provision and payment of medical care within the CHI system include:

• Federal Law No. 326-FZ dated November 29, 2010, On Compulsory Health Insurance in the Russian Federation (the "CHI Law");
• Compulsory Health Insurance Rules, approved by Order of the Ministry of Health of Russia No. 108n dated February 28, 2019 (the "CHI Rules");
• Procedure for Monitoring the Volume, Timing, Quality, and Conditions for Providing Medical Care under Compulsory Health Insurance to Insured Persons, and Its Financial Support, approved by Order of the Ministry of Health of Russia No. 231n dated March 19, 2021 (the "Order of the Ministry of Health of Russia No. 231n").

Medical organizations of any form of ownership and individual entrepreneurs (the "Medical Organization") may provide medical care under CHI, provided they are included in the Register of Organizations Participating in the CHI Program and have been assigned volumes for providing such medical care.[1]

To provide and receive payment for medical care, the Medical Organization enters into a contract with the Territorial Fund for Compulsory Health Insurance (the "TFCHI") and the health insurance organization participating in the implementation of the territorial CHI program (the "Health Insurance Organization"). The Ministry of Health of Russia has approved a standard form for this contract.[1]

Payment for medical care provided occurs according to tariffs approved in the respective constituent entity of the Russian Federation after monitoring the volume, timing, quality, and conditions of medical care provision.[2] Based on the results of such monitoring, the Health Insurance Organization may apply sanctions: non-payment for a case of medical care, partial payment, or a fine if it identifies defects in the provision of care. Below, we examine the grounds for payment denials (reductions) in detail.

Grounds for Denial or Reduction of Payment for Medical Care

The Appendix to the Order of the Ministry of Health of Russia No. 231n lists the grounds for denying or reducing payment. Violations are grouped based on the type of control during which they are identified:

1. Violations identified during medical-economic control.

Medical-economic control is a check of the compliance of data on the volumes and cost of medical care specified in invoices with the terms of the contract, the volumes assigned to the Medical Organization, financial support limits, and established tariffs. This is the primary stage of control, and the TFCHI carries it out monthly for every submitted register of invoices.

At this stage, the TFCHI may identify violations such as the unjustified application of a tariff, the inclusion of activities in invoices for which the Medical Organization lacks a license, invoicing for care provided to an uninsured person, or exceeding the assigned volumes of medical care.

2. Violations identified during medical-economic expert evaluation.

Medical-economic expert evaluation monitors the compliance of actual timing and volumes of medical care with the entries in the medical documentation. Examples include violating waiting times for medical care or failing to submit medical documentation confirming that care was provided.

The Health Insurance Organization conducts medical-economic expert evaluations on a planned or unplanned basis. The Order of the Ministry of Health of Russia No. 231n strictly regulates the cases and timing for such evaluations.

3. Violations identified during quality of care expert evaluation.

Quality of care expert evaluation assesses the timeliness and correctness of the choice of medical care methods and the degree of achievement of the planned result. This evaluation may also be planned or unplanned.

Examples of violations identified through this evaluation include:

• Establishing an incorrect diagnosis;
• Failure to perform, or the untimely or improper performance of, necessary diagnostic and (or) therapeutic measures;
• Unjustified refusal to provide medical care to insured persons;
• Other similar defects.

The Tariff Agreement—concluded annually by the government of the constituent entity of the Russian Federation, the regional Ministry of Health, the TFCHI, health insurance organizations, and medical professional non-profit organizations—establishes the amounts for non-payment (reductions) and fines. When setting these amounts, the parties to the Tariff Agreement follow the coefficient values established in Appendix No. 5 to the CHI Rules.

If monitoring identifies violations, the Health Insurance Organization withholds the amount not subject to payment from the funds intended for medical care or requires its return.[3]

Below, we review the most frequent payment withholdings based on an analysis of judicial practice.

Denial of Payment for Medical Care Provided in Excess of Assigned Volumes

In recent years, one of the most common grounds for denial is the submission for payment of medical care that exceeds the distributed volume of medical care provision. We illustrate this with an example from judicial practice.

A Medical Organization submitted invoices for medical care provided totaling over 32 million rubles. Following medical-economic control, the Health Insurance Organization withheld over 2 million rubles from the payment due to the exceedance of medical care volumes provided for by the contract. Disagreeing with the withholding, the Medical Organization filed a lawsuit to recover the debt. The courts of first, appellate, and cassation instances granted the claim.

However, the Supreme Court of the Russian Federation overturned the decision because the lower courts failed to consider that the volume of medical care provision is a contract condition and cannot be changed unilaterally. A Commission for the development of the territorial CHI program handles the distribution and adjustment of medical care volumes between medical organizations. If a Medical Organization exceeds the distributed volumes or financial limits, it must apply to the Commission for redistribution before the end of the reporting quarter and the formation of invoice registers.[4] The Supreme Court also noted that the Medical Organization had the right to appeal the Commission’s refusal to redistribute volumes but failed to do so. Consequently, the Health Insurance Organization lawfully denied payment for cases of medical care exceeding the assigned volumes.[2]

This is not an isolated decision; the Supreme Court consistently maintains this legal position.[3]

Furthermore, attempts by medical organizations to challenge the constitutionality of the CHI Law provisions that allow insurance companies not to pay for care beyond the assigned volume have been unsuccessful. The Constitutional Court of the Russian Federation concluded that CHI funds have a public purpose; therefore, medical organizations must use them within the established volumes. In cases of elective medical care where volumes are exhausted, a waiting list may be established.[4]

Conversely, payment for emergency medical care provided in excess of the volume can be achieved. In one case, a Medical Organization provided emergency care to patients with acute coronary syndrome. Analyzing the dynamics of patient visits, the organization requested an increase in volumes but received a refusal. Subsequently, the Health Insurance Organization denied payment due to the volume exceedance, citing the Supreme Court’s positions in other cases. However, the court pointed out:

• Ambulance crews brought the patients in accordance with a regional routing order;
• Care was provided in an emergency form, which cannot be refused;
• The Medical Organization submitted requests to increase the volume for the relevant profile. The failure to appeal the refusal decisions does not, by itself, prevent the realization of the right to receive payment for care provided.

The court recovered the debt in the amount of 1.5 million rubles and over 300,000 rubles in interest for late payment.[5]

To reduce the risk of non-payment, we recommend that medical organizations track assigned volumes and funding limits, properly document cases of medical care, timely apply for volume redistribution, and appeal any decisions refusing such redistribution.

Denial of Payment Due to Violations of the Procedure for Providing Medical Care

Another common ground for denial of payment is the violation of the procedure for providing medical care to out-of-region citizens. Let us consider another example from the practice of the Supreme Court of the Russian Federation.

A Medical Organization provided medical care to persons insured under CHI in other regions. Following medical-economic control, the TFCHI denied payment for medical care totaling over 6.5 million rubles because the patients lacked referrals for elective hospitalization. The Medical Organization sued to recover the debt, and three levels of courts supported the claim. The Supreme Court overturned these decisions, stating that the Ministry of Health of Russia has the authority to establish procedures for providing free medical care. These procedures ensure that care is provided on a justified basis and that public funds are spent efficiently.

According to Paragraph 12 of the Procedure for a Citizen to Choose a Medical Organization[6], an mandatory condition for receiving elective medical care outside the constituent entity where the citizen resides is a referral from a physician at the medical organization where the citizen is registered for outpatient care. The Supreme Court established that this procedure was not followed: patients independently sought elective care at the Medical Organization. Under health protection legislation, payment from CHI funds for self-referrals to a hospital is possible only for emergency and urgent care. Thus, the Supreme Court ruled that the TFCHI lawfully denied payment because the Medical Organization violated the procedure for the elective hospitalization of insured persons.[7]

Arbitration courts in nearly all regions of Russia have adopted the practice established by the Supreme Court. Courts reach similar decisions even when referrals are issued by physicians of the same Medical Organization ("to oneself")[8] or by a clinic other than the one where the patient is registered.[9]

To avoid adverse consequences, a clinic must ensure compliance with the procedures for providing medical care.

Payment for Free Medical Care from Patient Funds

Another frequent case of payment denial occurs when a patient or their representative purchases medicinal products included in the VED List or implanted medical devices during inpatient care. We illustrate this with an example from judicial practice.

A Medical Organization applied to the court to declare a TFCHI decision illegal, which reduced payment by 50% for 134 cases of high-tech care involving intraocular lens implantation. The denial was triggered by a medical-economic expert evaluation that identified instances where patients purchased intraocular lenses for surgery using their own funds.

Disagreeing with the Health Insurance Organization, the Medical Organization challenged the results before the TFCHI but was denied, leading to the lawsuit. The Medical Organization argued that the patients' medical records included informed voluntary consents explaining the possibility of cataract surgery without implantation. They claimed the necessary supplies were provided voluntarily to the organization.

The court noted that under Article 80 of Federal Law No. 323-FZ dated November 21, 2011, On the Fundamentals of Health Protection of Citizens in the Russian Federation, the Medical Organization must provide medicinal products and medical devices prescribed by a physician in accordance with standards and clinical recommendations free of charge. The courts were critical of the Medical Organization’s arguments that supplies were insufficient and that CHI tariffs did not fully cover costs. Furthermore, the court emphasized that patients were not informed of the option for surgery without an intraocular lens, and no records of patient consent or refusal for such surgery were presented. The courts denied the application.[10]

In 2021, the Ministry of Health amended the CHI Rules[11], allowing medical organizations to use medications provided by the patient or another organization acting in the patient’s interest. However, these amendments aimed to allow the use of medications purchased through federal budget programs for High-Cost Nosologies or provided by charitable foundations. The general principle that patients must be provided with medications and medical devices under free care remains unchanged, as confirmed by subsequent judicial practice.[12]

In another case that reached the Supreme Court, a Medical Organization was charged with a violation for collecting fees for medical care that should have been provided free of charge. According to the facts of the case, Roszdravnadzor received a complaint from Citizen T. regarding fees charged for dental treatment covered by the CHI program. An investigation revealed that the patient was treated for a tooth. The medical documentation contained an informed voluntary consent signed by the patient over a year prior when entering into a contract for paid services.

Following control procedures, the Health Insurance Organization concluded that before treating the specific tooth, the patient was not informed of the form of care (paid or under CHI) or the upcoming medical intervention. The organization was fined for charging fees for care provided. The court found the TFCHI’s arguments justified.[13]

When charging for medical care, we recommend carefully verifying the language in informed voluntary consents and the terms of contracts with third parties.

Failure to Submit Medical Documentation

Denials of payment also arise from the failure to submit medical documentation for review or the absence of necessary data within it. In such cases, the Medical Organization may not be at fault, or the fault may be disproportionate to the sanction.

In one case, the Health Insurance Organization, following medical-economic expert evaluations, identified the following violations:

• Failure to submit medical documentation confirming the provision of medical care;
• Invoicing for payment in the absence of records in the medical documentation confirming the provision of medical care.

The Health Insurance Organization issued an order for the Medical Organization to pay fines exceeding 280,000 rubles. Upon the organization’s refusal to pay, the Health Insurance Organization filed a lawsuit. Three levels of courts granted the claims.

However, the Supreme Court overturned these decisions, stating that violations must not be purely formal but must relate to the non-provision, untimely provision, or provision of poor-quality medical care. Specifically, the courts ignored the Medical Organization’s arguments that it did not prevent the experts from reviewing documentation at the clinic’s location. Subsequently, all necessary documentation confirming the care provided was submitted to the case file. Regarding the absence of necessary physician entries, the courts failed to determine whether care was actually not provided in those cases. Additionally, the issue of the fine’s proportionality to the violations was not addressed. The case was remanded for a new trial.[14]

In another case, a Medical Organization could not submit documentation for evaluation because it was at a pathomorphological bureau. The Health Insurance Organization viewed this as a violation, denied payment, and imposed a fine. The court ruled that there were no grounds for sanctions in such a situation.[15]

Thus, the Supreme Court concluded that sanctions should not be applied for formal violations during the monitoring of volumes and quality of care. Medical organizations can use this conclusion when challenging monitoring results.

Practice shows that medical organizations operating within the CHI system frequently face payment denials (reductions). Unfortunately, this article can only cover the most current cases. We have focused primarily on financial issues rather than defects in care, where sanctions are justified.

Judicial Protection Against Financial Sanctions under the CHI System

If payment is denied (reduced) or a fine is imposed, a Medical Organization may seek judicial protection. Different methods of protection are available.

1. Filing a lawsuit to recover contractual debt and late payment interest. Such claims are filed under Chapter 13 of the APC RF ("Interlocutory Proceedings"). The statute of limitations is 3 years from the moment the person discovered or should have discovered the violation of their rights. The lawsuit must detail the circumstances, evidence, and legal grounds for the claims.

2. Filing an application to declare a non-normative legal act invalid. Challenging decisions that result in sanctions is done under Chapter 24 of the APC RF. The application must be filed with the arbitration court within 3 months of the date the person became aware of the violation of their rights.

Before filing an application, the Medical Organization must challenge the control acts with the TFCHI. Chapter X of the Order of the Ministry of Health of Russia No. 231n regulates this procedure:

1. Within 15 working days of receiving the conclusion, the Medical Organization sends a written claim to the TFCHI, including justifications, a list of questions, and internal quality control materials. If the Medical Organization previously sent a protocol of disagreements to the Health Insurance Organization, the 15-day period begins upon receipt of the results of that protocol’s review.
2. Within 30 working days of receiving the claim, the TFCHI organizes a repeat expert evaluation and issues a conclusion.
3. Within 10 working days of the evaluation, the TFCHI makes a decision and notifies both the Health Insurance Organization and the Medical Organization.

If the TFCHI finds the arguments justified, the decision to apply sanctions is overturned or amended. If the Medical Organization disagrees with the TFCHI’s decision, it may challenge it in court. Note that expert evaluation acts are appealed only to the fund and cannot be the subject of judicial review.[16]

When choosing a defense strategy, one should consider all circumstances and procedural nuances. Such cases are complex and require deep expertise in medical and pharmaceutical law. We recommend consulting competent lawyers with experience in these fields.

In conclusion, the public nature of the funds used for CHI care imposes certain restrictions on participants that are not typical of "ordinary" civil relationships. Following our recommendations and considering judicial practice will not completely insulate a Medical Organization from payment denials due to the clear insufficiency of CHI funds, but it will help avoid significant losses and increase the chances of success in court. Furthermore, medical organizations should take a more active stance in challenging TFCHI decisions to reduce formal denials and help shape "positive" judicial practice.

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References

[1] Order of the Ministry of Health of Russia No. 1396n dated December 29, 2020, On the Approval of the Form of a Standard Contract for the Provision and Payment of Medical Care within the Basic Compulsory Health Insurance Program.

[2] Determination of the Judicial Chamber for Economic Disputes of the Supreme Court of the Russian Federation No. 306-ES22-7565 dated January 31, 2023, in Case No. A55-2570/2021.

[3] Determinations of the Judicial Chamber for Economic Disputes of the Supreme Court of the Russian Federation No. 308-ES21-5947 dated November 11, 2021, and No. 301-ES21-24224 dated April 4, 2022.

[4] Determination of the Constitutional Court of the Russian Federation No. 3364-O dated December 27, 2022.

[5] Resolution of the Arbitration Court of the Volga-Vyatka District No. F01-6830/2023 dated October 20, 2023, in Case No. A11-15481/2022.

[6] Order of the Ministry of Health of Russia No. 1342n dated December 21, 2012, On the Approval of the Procedure for a Citizen to Choose a Medical Organization (Except for Emergency Medical Care Cases) Outside the Territory of the Constituent Entity of the Russian Federation Where the Citizen Resides, When Providing Medical Care within the Framework of the Program of State Guarantees for the Free Provision of Medical Care.

[7] Determination of the Judicial Chamber for Economic Disputes of the Supreme Court of the Russian Federation No. 305-ES22-1799 dated August 10, 2022, in Case No. A41-81487/2020.

[8] Resolution of the Arbitration Court of the West Siberian District No. F04-1050/2022 dated April 22, 2022, in Case No. A02-794/2021.

[9] Resolution of the Arbitration Court of the Moscow District No. F05-1438/2023 dated March 1, 2023, in Case No. A40-184855/2021.

[10] Determination of the Supreme Court of the Russian Federation No. 307-KG18-15760 dated October 15, 2018.

[11] Order of the Ministry of Health of Russia No. 696n dated July 1, 2021, On Amending the Compulsory Health Insurance Rules Approved by Order of the Ministry of Health of the Russian Federation No. 108n dated February 28, 2019, and the Procedure for Monitoring the Volume, Timing, Quality, and Conditions for Providing Medical Care under Compulsory Health Insurance to Insured Persons, and Its Financial Support, Approved by Order of the Ministry of Health of the Russian Federation No. 231n dated March 19, 2021.

[12] Determination of the Supreme Court of the Russian Federation No. 308-ES23-15483 dated September 5, 2023.

[13] Determination of the Supreme Court of the Russian Federation No. 307-ES23-1659 dated March 17, 2023, in Case No. A21-192/2022.

[14] Determination of the Judicial Chamber for Economic Disputes of the Supreme Court of the Russian Federation No. 309-ES22-11221 dated October 3, 2022, in Case No. A34-16083/2020.

[15] Determination of the Supreme Court of the Russian Federation No. 302-ES23-14326 dated August 22, 2023, in Case No. A78-3161/2022.

[16] Determination of the Supreme Court of the Russian Federation No. 308-ES20-9786 dated July 24, 2020, in Case No. A53-31174/2019.