Tensions between providers and payers are increasingly spilling into the courtroom, with health systems and provider groups turning to the legal system for relief from what they say are unfair payment rules and policy overreach.
Here are three recent examples of healthcare providers suing insurers over alleged underpayment.
California Hospital Association sues Anthem
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The California Hospital Association, which represents nearly 400 hospitals across the state, filed a lawsuit on Monday against Anthem, challenging the payer’s “network penalty policy.”
Under the policy, Anthem decreases its payments to hospitals by 10% when patients are treated by out-of-network physicians, even if the hospital itself is in-network, which effectively penalizes hospitals for not agreeing to the payer’s terms, the complaint said.
The association contends that these payment reductions go beyond normal out-of-network reimbursement rules and hurt hospitals’ ability to cover the cost of care. More broadly, the association argues the policy puts pressure on hospitals to accept lower in-network rates during contract negotiations.
“We are confident the courts will recognize Anthem’s move as a flagrant attempt to increase their profits at a time when millions of Californians are projected to lose their health care coverage,” Daron Tooch, the association’s legal counsel. “The policy is unethical and unlawful, and we look forward to a decision from the court that protects not just hospitals, but also Anthem enrollees who trust that their insurance company will respect their right to choose their own doctor.”
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The lawsuit seeks to block the policy and recover payments that hospitals say were improperly cut, as well as asks the court for a declaration that Anthem’s approach violates state reimbursement requirements.
In a statement sent to MedCity News on Tuesday, Anthem stood by its policy.
“Unfortunately, some out-of-network providers undermine the protections and goals of the No Surprises Act and charge working families and their employers tens of thousands of dollars more than what Medicare and in-network providers are paid for the same in-hospital medical care. That out-of-network billing is not fair, and our policy creates an incentive for hospitals to stop it,” the payer wrote in its statement.
Broward Health sues Florida Blue
Fort Lauderdale-based Broward Health sued Florida Blue, the state’s most dominant payer. Broward alleges that Florida Blue has systemically underpaid for emergency services since the health system went out of network on July 1 after contract negotiations failed.
The complaint, filed April 7, claims Florida Blue reimbursed emergency department claims at rates below both billed charges and what Broward considers “usual and customary,” rather than the fair, market-based reimbursement levels required under state and federal law.
“Broward Health has not agreed to accept any form of discounted rate from Blue Cross or to be bound by Blue Cross’s payment policies or rate schedules with respect to any of the medical services provided by Broward Health to Blue Cross’s Members. Notwithstanding the absence of any such agreement, Blue Cross has unilaterally applied an unlawful discount to its payments to Broward Health for such services,” the lawsuit reads.
Broward is seeking payment plus 12% annual interest, and is also asking the court to set interim reimbursement rates while the dispute is ongoing.
A Florida Blue spokesperson told MedCity News on Tuesday that the company had no comment on the matter.
Jefferson Health sues Aetna
Philadelphia-based Jefferson Health filed a complaint on April 6 against Aetna, claiming the payer is unfairly reducing payments for some hospital stays under Medicare Advantage.
The lawsuit centers on Aetna’s “level of severity inpatient payment policy” for Medicare Advantage beneficiaries, which took effect on 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 wasn’t sick enough. This mainly applies to hospital stays lasting between one and four midnights, even when a physician has admitted the patient as an inpatient.
Jefferson argues that this policy “downcodes” legitimate inpatient care, therefore reducing hospital revenue and creating additional administrative burdens for providers to deal with as they appeal the lower payments. The health system also said that Aetna unilaterally created a new payment tier that was never negotiated as a part of their shared Medicare Advantage contract.
The complaint also claims that the policy violates CMS’ two-midnight rule, which requires Medicare to cover hospital stays as inpatient when a physician expects the patient to need care for at least two midnights. It asserts that Medicare Advantage plans must follow the same standard.
Jefferson is seeking an injunction stopping Aetna from using the policy, as well as compensation for legal fees and damages.
Aetna is defending its policy, according to a statement a company spokesperson shared with MedCity News last month.
“Aetna’s policies, including the Level of Severity Inpatient Payment Policy, comply with all applicable federal law and regulations and with the terms of our provider contracts. Aetna disagrees with the allegations in the lawsuit and will respond in the appropriate forum,” the statement read.
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