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SoCal Medical Centers Say Blue Cross Cheats

SANTA MONICA (CN) - Four Southern California medical centers sued Anthem Blue Cross on Wednesday, claiming the giant insurer refuses to pay for medical care it pre-authorized, and underpays "out-of-network" providers when it does pay.

Orthopedic Specialists of Southern California, Integrated Surgery Center Number 101, San Diego Advanced Orthopedic Center and Inland Valley Surgery Center sued Anthem Blue Cross Life and Health Insurance Co. dba Blue Cross of California, in Superior Court.

"This complaint arises out of the failure of Blue Cross to pay orthopedic specialists in the amounts required by law to be paid for services rendered by orthopedic specialists; in the amounts promised to be paid by Blue Cross during conversations and interactions with orthopedic specialists; in the amounts required to be paid to orthopedic specialists as set forth in the applicable written agreements with Blue Cross' members and insureds; and in the amounts historically, ordinarily, customarily and routinely paid to out-of network providers such as orthopedic specialists for surgical care, treatments and procedures provided to numerous patients, all of whom were insureds, members, policyholders, certificate-holders or were otherwise covered for health, hospitalization and major medical insurance through policies or certificates of insurance issued and underwritten by defendant Blue Cross," the medical centers say in the 29-page lawsuit.

Anthem Blue Cross has been sued repeatedly on similar charges.

The medical centers claim that Blue Cross "pre-authorized" the medical procedures, which the medical centers' doctors performed, after which anthem Blue Cross stiffed them.

"In recent years, Anthem's contracted rates for in-network providers have been so meager, one-sided and onerous, that many providers like orthopedic specialists have determined that they cannot afford to enter into in-network contracts with Blue Cross," the complaint states. "As a result, a growing number of medical providers have become non-contracted or out-of-network providers, refusing to contract with Blue Cross.

"For non-contracted, out-of-plan, or out-of-network providers, Blue Cross has unlawfully underpaid these providers for the medically necessary and appropriate services they have rendered to insureds of Blue Cross. Blue Cross has used flawed databases and systems to unilaterally determine what amounts it pays to medical providers and has colluded with other insurers to artificially underpay, decrease, limit and minimize the reimbursement rates paid for services rendered by non-contracted providers. This issue has been investigated by the U.S. Congress and New York Attorney General and has been the source of numerous lawsuits and class action suits filed in connection with the databases utilized by Blue Cross."

The medical centers claim that "Among other flaws, Blue Cross:

"a. Does not determine the numbers or types of providers in any geographic area;

"b. Does not determine the actual types of procedures performed within a geographic area;

"c. Collects charge data which is not representative of the actual number of procedures performed within a geographic area;

"d. Does not collect sufficient data to enable its users to determine whether the data reflects the charges of providers with any particular degree of expertise or specialization;

"e. Does not collect sufficient provider-specific data to enable its users to determine whether the charges are from one provider, from several providers, or from only a minority subset of the providers in a geographic area;

"f. Fails to compare providers of the same or similar training and experience level and, instead, combines and averages all provider charges by procedure code without separating the charges of physicians and non-physicians;

"g. Does not collect patient-specific information such as age or medical history or condition;

"h. Does not ascertain the most common charge for the same service or comparable service or supply;

"i. Does not determine the place of service or type of facility rendering services;

"j. Does not collect sufficient data to enable it or its users to determine an appropriate medical market for comparing like charges;

"k. Combines ZIP codes inappropriately, and uses ZIP code prefixes instead of appropriate medical markets;

"l. Fails to compare procedures that use the same or similar resources (and other costs) to the provider, but rather, indiscriminately combines all provider charges by procedure code without regard to such factors;

"m. Fails to compare procedures of the same or similar complexity by, among other things, failing to record of account for CPT code modifiers;

"n. Does not use an appropriate statistical methodology;

"o. Does not properly consider charging protocols and billing practices generally accepted by the medical community or specialty groups;

"p. Does not properly consider medical costs in setting geographic areas;

"q. Lacks quality control, such as basic auditing, to ensure the validity, completeness, representativeness, and authenticity of the data submitted;

"r. Is subject to pre-editing by data contributors;

"s. Reports charges that are systematically skewed downward;

"t. Uses relative values and conversion factors to derive inappropriate usual, customary and reasonable amounts;

"u. Uses a methodology that does not comply with Blue Cross' contractual definition of usual, customary and reasonable;

"v. Calculates rates based upon Medicare and/or MediCal payments and/or computes rates based upon amount paid to preferred providers; and

"w. Purports to be confidential and/or proprietary, which prevents access too, and scrutiny of, the data by members or their employers.

"These and other flaws render defendants' use of its data system invalid and unlawful for determining usual, customary and reasonable rates. By systematically and typically making usual, customary and reasonable rate determination without compliant and valid data to substantiate its determinations, defendants have breached their obligation to reimburse orthopedic specialists for out-of-network services. Accordingly, all past usual, customary and reasonable rate determinations based on Blue Cross' data system should be overturned."

The plaintiffs seek payment for services rendered and damages for breach of implied contract, breach of oral contract, legal violations, negligence and other charges.

They are represented by Gary Tysch, of Encino.

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