Case Law Update: The Iowa Supreme Court Bars Dentists from Recovering Denied Reimbursement Claims for Covered Services from Medicaid Patients
On February 8, 2019, the Iowa Supreme Court, in Colwell v. Iowa Department of Human Services1 , limited dentists’ billing rights under Iowa Medicaid (“Medicaid”) by concluding that dentists cannot charge Medicaid patients when the managed care organization (“MCO”) denies reimbursement for covered services.
In 2014, Iowa’s Medicaid expansion program began providing certain dental benefits to Medicaid patients. The Iowa Department Human Services (“DHS”) contracted with Delta Dental of Iowa (“Delta Dental”) to serve as the MCO for these dental benefits. As the MCO, Delta Dental was responsible for paying providers for all covered services rendered. After being denied reimbursement for numerous claims, Dr. Colwell (“Colwell”), a dentist practicing out of Council Bluffs, Iowa petitioned DHS for a state fair hearing on the denied claims pursuant to the formal appeals process in his MCO-Provider Agreement. DHS denied Colwell’s petition, citing a lack of subject matter jurisdiction. Colwell sued DHS in Iowa district court arguing, among other things, that he was entitled to a state fair hearing and a ruling that he could seek reimbursement from Medicaid patients for claims not covered or reimbursed by Delta Dental. The district court found in Colwell’s favor and DHS appealed the district court’s ruling to the Iowa Supreme Court.
The Iowa Supreme Court addressed several issues, one of which was whether or not the Medicaid regulations (the “Regulations”) allowed Colwell to bill Medicaid patients for services not covered by Delta Dental. The court held that a provider cannot bill a Medicaid patient for covered dental services when the MCO denies the provider’s reimbursement claim for such services rendered. The court began its analysis by establishing that the Regulations allow a provider to bill a Medicaid patient for noncovered dental services as long as the provider informs the patient that he or she may be financially responsible for the noncovered services prior to performing the procedure. Because of this, the court explained that the issue presented turned on the definition of a “covered services.”
Colwell argued that the court should define “covered services” as it did in Iowa Dental Ass’n v. Iowa Insurance Division2 as “services that are ‘actually reimbursed’ under a plan, rather than services that are reimbursable or generally reimbursed under a plan.” The court dismissed Colwell’s argument, noting that Colwell’s reliance on Iowa Dental was improper because Iowa Dental involved insurance regulations and a private insurance contract for medical services and “Medicaid is not insurance.” Ultimately, the court reasoned that if it held that providers could charge Medicaid patients for services that were normally covered by Medicaid but were not reimbursed for whatever reason, doing so would frustrate Medicaid’s purpose of providing “federal financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons.”
While the Iowa Supreme Court’s decision in Colwell seems narrowly tailored to dentists providing Medicaid dental services, the court’s deference to the purpose of Medicaid serves as a good reminder for providers, and lawyers, that public policy still plays an important role in the court room.
1 Colwell v. Iowa Dep’t of Human Services, ___ N.W.2d ___, No. 18-0464, 2019 WL 494062 (Iowa Feb. 8, 2019).
2 831 N.W.2d 139 (Iowa 2013).