Tensions between providers and payers are increasingly spilling over into the courtroom, with health systems and provider groups turning to the legal system for relief from what they see as unfair payment rules and excessive policies.
Here are three recent examples of health care providers suing insurers for alleged underpayment.
California Hospital Association sues Anthem
California Hospital Associationwhich represents nearly 400 hospitals across the state, filed a trial Monday against Anthemchallenging the payer’s “network penalty policy.”
Under this policy, Anthem reduces its payments to hospitals by 10 percent when patients are treated by out-of-network doctors, even if the hospital itself is in-network, effectively penalizing hospitals that do not agree to the payer’s terms, the complaint states.
The association says these payment reductions go beyond normal out-of-network reimbursement rules and harm hospitals’ ability to cover the cost of care. More broadly, the association argues that politics puts pressure on hospitals to accept lower in-network rates during contract negotiations.
“We are confident that the courts will recognize Anthem’s decision as a blatant attempt to increase their profits at a time when millions of Californians are at risk of losing their health care coverage,” Daron Tooch, legal counsel for the association. “This policy is unethical and illegal, and we look forward to a court decision that protects not only hospitals, but also Anthem enrollees who trust that their insurance company will respect their right to choose their own doctor.”
The lawsuit seeks to block the policy and recoup payments that hospitals say were improperly reduced, and asks the court to declare that Anthem’s approach violates state reimbursement requirements.
In a statement sent to MedCité News On Tuesday, Anthem maintained its policy.
“Unfortunately, some out-of-network providers are undermining the protections and goals of the No Surprises Act and charging working families and their employers tens of thousands of dollars more than Medicare and in-network providers receive for the same medical care in the hospital. This out-of-network billing is not fair, and our policy encourages hospitals to stop it,” the payer wrote in its statement.
Broward Health sues Florida Blue
Based in Fort Lauderdale Health Broward continued Florida Bluethe state’s main payer. Broward alleges that Florida Blue has systematically underpaid for emergency services since the health system went out-of-network on July 1 after contract negotiations failed.
THE complaintfiled April 7, claims that Florida Blue reimbursed emergency department claims at rates lower than the fees charged and what Broward considers “usual and customary,” rather than the fair, market-based reimbursement levels required by state and federal law.
“Broward Health did not agree to any form of discounted pricing from Blue Cross or to be bound by Blue Cross’s payment policies or fee schedules with respect to medical services provided by Broward Health to Blue Cross members. Despite the absence of such an agreement, Blue Cross unilaterally applied an unlawful discount to its payments to Broward Health for such services,” the suit states.
Broward is seeking payment plus 12 percent annual interest and is also asking the court to set interim reimbursement rates while the litigation is pending.
A Florida Blue spokesperson said MedCité News As of Tuesday, the company had made no comment on the matter.
Jefferson Health sues Aetna
Based in Philadelphia Jefferson Health filed a complaint April 6 against Etnaclaiming the payer is unfairly reducing payments for certain hospital stays under Medicare Advantage.
The lawsuit focuses on Aetna’s “inpatient acuity level payment policy” for Medicare Advantage beneficiaries, which took effect January 1. Under this policy, some hospital stays that are technically approved as inpatient are paid at a lower “observation level” rate if Aetna decides the patient was not sick enough. This mainly applies to hospital stays lasting between midnight and four hours, even when a doctor has hospitalized the patient.
Jefferson argues that this policy “cheaps” legitimate hospital care, thereby reducing hospital revenues and creating additional administrative burdens for providers when they tap into the lower payments. The health system also said Aetna unilaterally created a new payment tier that was never negotiated under their shared Medicare Advantage contract.
The complaint also claims the policy violates CMS’s two-midnight rule, which requires Medicare to cover hospital stays as an inpatient when a doctor expects the patient to need care for at least two midnights. He says Medicare Advantage plans must follow the same standard.
Jefferson is seeking an injunction preventing Aetna from using the policy, as well as compensation for legal fees and damages.
Aetna is defending its policy, according to a statement shared with a company spokesperson. MedCité News last month.
“Aetna’s policies, including the Inpatient Acuity Level Payment Policy, are consistent with all applicable federal laws and regulations as well as the terms of our provider contracts. Aetna disagrees with the allegations in the lawsuit and will respond in the appropriate forum,” the statement said.
Photo: Svenja-Foto, Getty Images
