Blue Cross Accused of Deceptive Practices

     LOS ANGELES (CN) – A federal accuses Blue Cross of a wide-ranging scheme to underpay claims from out-of-network hospitals. Methodist Hospital of Southern California claims Blue Cross refuses to let it transfer patients from emergency rooms, then underpays the hospital and sticks patients with hefty bills, falsely claiming the patients “requested” to stay put.




     Methodist Hospital of Southern California accuses Blue Cross and Anthem affiliates in 10 states of RICO and ERISA violations. The insurance company faces similar actions in courts across the country.
     The scheme follows a well established pattern, according to the hospital, which quit the Blue Cross network in 2008, citing low payback rates that were “onerous and one-sided in favor of Blue Cross.”
     The hospital is still required by law to treat any Blue Cross patient brought to its emergency room with life-threatening injuries. After the patient is stabilized the hospital must call Blue Cross to ask if it wants the patient transferred to an in-network hospital.
     In nearly every instance, the hospital says, Blue Cross refused to transfer the patient to an in-network hospital, then underpaid the Methodist Hospital for care, in wildly fluctuating amounts, sticking the hospital and the patient with an unfair financial burden.
     When questioned, Blue Cross fires off a curt letter stating that the patient had “requested” to stay at the out-of-network hospital and therefore had to pay more of the claim, even though it was Blue Cross that made the decision not to transfer the patient, the hospital says.
     Methodist Hospital claims that Blue Cross uses “two flawed databases or systems to determine unilaterally what amounts hospitals should charge for their services.” One is the Ingenix database, for determining reimbursement amounts on out-of-state claims. The Ingenix database has been investigated by the New York Attorney General and the U.S. Congress, and is the subject of numerous class actions, from the AMA and others.
     Methodist Hospital says that Blue Cross “manipulates the data in the systems to calculate incorrect and inappropriately low amounts in paying hospital claims.”
     In a case that the hospital says is representative of the scheme, a patient with Blue Cross insurance was treated in the emergency room, and Blue Cross approved six days of out-of-network treatment over the phone, and refused to transfer the patient to an in-network hospital. Blue Cross then sent a letter authorizing care that stated: “You have chosen to receive services from a provider that is a non-participating network provider. Your services could result in significant out-of-pocket expenses.”
     That bill care came to more than $55,000, of which Blue Cross paid just over $3,000 – about 6 percent – the hospital says.
     Blue Cross “priced this claim on the grounds that the patient chose to receive treatment at a non-contracted hospital, even though this is not true,” Methodist Hospital says, adding that such cases are common.
     “The patient was presumably rushed to the nearest emergency room because she believed her life or health were in immediate jeopardy, and it was Blue Cross who chose not to transfer the patient to a participating provider after her emergency condition had been stabilized.”
     Methodist Hospital wants a jury trial, restitution, and unspecified damages. It is represented by Daron Tooch of Hooper, Lundy & Bookman.

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