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Blue Cross ordered to pay $400 million for short payments

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A New Orleans jury recently ordered Blue Cross Blue Shield to pay $400 million to a surgical center for claims the insurer short paid, according to The Advocate.

“The whole purpose was to underpay my clients,” said attorney James Williams, who represents St. Charles Surgical Hospital and Center for Restorative Breast Surgery, according to the article. “Blue Cross had a policy of slow pay, low pay, or no pay.”

While the suit focuses on the battle between a health provider and an insurance company, it will likely sound familiar to short payment issues some collision repair shops face.

The surgical hospital told a jury in Louisiana District Court that Blue Cross committed fraud when it authorized nearly 7,800 surgeries from 2015-2023 but only paid about 9% of the bills, according to The Advocate.

Blue Cross denied the claims and said the hospital is not a member of its provider network. This kept it from a contractual obligation to pay, according to the article.

Kim Sport, a breast cancer advocate who launched a nonprofit group, Breastoration, told WWLTV that insurance companies must pay for reconstruction and cannot reduce benefits for the patient nor the reimbursement owed to the physician.

“We have seen a trend nationwide and by insurers in the state of Louisiana to try to discourage or disincentivize access to these advanced surgeries for women that need breast reconstruction following their mastectomy,” Sport said in the interview.

Whiney Arch, a mother of four who was diagnosed with breast cancer in her mid-forties, told WWLTV that’s exactly what Blue Cross tried to tell her when she attempted to have surgery at St. Charles Surgical Hospital.

“I was not going to go anywhere else because these are the doctors that are pioneers in this industry and they teach other surgeons around the world how to do my very surgery,” Arch said in the WWLTV story.

Blue Cross called her with names of in-network doctors who would cost less, she told the TV station.

The insurance company told multiple media outlets it planned to fight the verdict.

“We strongly disagree with the jury’s verdict,” the company said in a prepared statement reported by The Advocate. “We will quickly appeal and expect to be successful.”

The advocate says Louisiana insurers have said the case could have “repercussions in the local market.” It says it also brings attention to the difference between what doctors believe they should be compensated and what insurance companies pay.

“It also delved into the complicated relationship between insurers and doctors’ groups, particularly when doctors decline to join insurance networks,” the article says.

Insurance company networks are pervasive across multiple industries, and while the challenges may have different nuances, they may not feel dissimilar to practitioners. The network of doctors and hospitals agree to offer discounts on their rates for procedures in return for access to patients covered by the insurers’ plans, the article says.

“Patients who go to providers outside of their insurance company’s network typically agree to pay higher out-of-pocket costs,” the article says.

The Advocate reports that 93% of doctors and hospitals in the state are in the Blue Cross network. However, St. Charles Surgical Hospital opted out of the network in 2007.

“The surgery center treats about 1,000 cancer patients a year, performing cutting-edge reconstructive surgical techniques,” the article says. “[Founder Frank] Dellacroce said they have developed a national reputation for procedures like the Apex Flap breast reconstruction and the 4D nipple. More than 80% of their patients come from outside the state.”

Dellacroce said they stopped being a part of the network because the reimbursement rates were too low.

“In the years that followed, the hospital continued to treat Blue Cross patients because the surgeries were authorized by Blue Cross,” the article says. “But the surgeons only received a fraction of the charges they billed, Williams argued in court.”

The article says Williams also argued that Blue Cross companies repriced reimbursement rates that the company had negotiated.

“In court documents, Blue Cross argued that authorizing a treatment does not guarantee payment. Insurers do not have a set reimbursement rate that they pay out-of-network providers. Rather, they negotiate individual deals with brokers or employers,” the article says.

According to The Advocate, the award is one of the largest in the state. It says insurance industry officials said it could potentially drive up premiums.

“This verdict is baffling and makes no sense,” said Wesley Watkins, president of the Louisiana Association of Health Underwriters, which advocates for the insurance industry, in the article. “If insurance companies were on the hook to pay whatever any provider charged, no provider would ever belong to a network and rates would be sky high.”

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Photo courtesy of RiverNorthPhotography

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