Jason M. Brocks | Bloomberg Law Drs. Pass & Bertherman, Inc. v. Neighborhood Health Plan of R.I., Nos. 2009-349-Appeal. (PB 07-2970), 2012 BL 10835 (R.I. Jan. 12, 2012) The Rhode Island Supreme Court held that the Neighborhood Health Plan of Rhode Island (NHP), which facilitated the provision of eye care services to Medicaid managed care patients, did not violate state law when it reimbursed optometrists and ophthalmologists at different rates for the same, or substantially the same, services provided to patients. In reaching that decision, the court concluded that funds dispersed by the health plan to optometrists and ophthalmologists were private, rather than public funds, even though funding for the payments was made to health plan in the form of capitated payments from the State of Rhode Island Department of Health Services (DHS). <p class="articleBodyTitleCaps"Health Plan Changes Reimbursement Policy to Accommodate New Group of EnrolleesNHP is a not-for-profit corporation that operates a health maintenance organization. Under contract with DHS, NHP, through its health plan, covers Rhode Island residents who participate in Rite Care, the state’s Medicaid managed care program. Prior to 2002, the health plan had paid the same reimbursement amount to optometrists and ophthalmologists for the same services. However, in 2002, NHP decided to pay higher reimbursement rates to ophthalmologists than it paid to optometrists. NHP’s decision was based on an assessment that without the higher rates to ophthalmologists, the health plan would not have enough ophthalmologists in its network “to serve the needs of [a new population of enrollees designated as “Children with Special Needs.]” <p class="articleBodyTitleCaps"Optometrists Challenge Health Plan’s DecisionA group of optometrists challenged NHP’s 2002 decision to pay higher reimbursement rates to ophthalmologists than it paid to optometrists. According to the optometrists, NHP’s decision violated section 5-35-21.1 of the Rhode Island General Laws, which has since been amended, but at the time of NHP’s decision stated “. . . where [any contracts providing for health care benefits] call for the expenditure of public finds involving Medicaid and Rite Care, for any purpose relating to eyewear . . . there shall be no discrimination as to the rate of reimbursement for such health care provided by an optician for like services as rendered by other professions [ophthalmologists] . . ..” The trial court determined that the health plan did not violate the state law, because NHP used private, rather than public funds to pay the physicians. <p class="articleBodyTitleCaps"Reimbursement to Providers Made from Private FundsAt issue was the meaning of the phrase “public funds.” According to the optometrists, payments to optometrists and ophthalmologists by the health plan were made from public funds because the initial source of the money was public, intended for the benefit of Medicaid beneficiaries. As a result, the optometrists argued, the health plan was required under Rhode Island law to pay the same rate to optometrists and ophthalmologists for the same service. The court disagreed with the optometrists about the nature of the funds in question. In particular, the court concluded that the funds became private funds after they were transferred by DHS to NHP’s bank account: “it is our opinion that once DHS wired the capitation payments to NHP’s operating account, that money ceased to be public.” The court cited in support of its decision the fact that the health plan was not subject to the direction of DHS with respect to how it used its resources. The court affirmed the decision of the trial court that the health plan did not violate the provisions of section 5-35-21.1 as it existed at the time of NHP’s decision to pay different reimbursement rates to optometrists and ophthalmologists for services provided to Rite Care Medicaid managed care participants. 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