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In a significant escalation of tensions between healthcare providers and insurers, Anthem Blue Cross has filed a lawsuit against 11 Prime Healthcare hospitals, accusing them of orchestrating a sophisticated fraud scheme related to the No Surprises Act. The legal action, filed this week in a California federal court, alleges the hospitals submitted thousands of fraudulent claims through the independent dispute resolution (IDR) process.
According to Anthem, the hospitals knowingly submitted more than 6,000 ineligible disputes over the past two years, resulting in improper awards exceeding $15 million. The insurer claims the average award was more than six times what contracted providers would typically receive for the same services.
“We are holding billing companies and out-of-network providers accountable for what we believe are fraudulent and abusive practices that result in excessive health care costs, burden consumers and undermine the integrity of our health care system,” an Anthem spokesperson told Becker’s Hospital Review. “This legal action is another powerful step in our efforts to shield consumers from these harmful practices and restore trust.”
The No Surprises Act, which went into effect in January 2022, was designed to protect patients from unexpected medical bills when they receive emergency care or scheduled treatment from out-of-network providers at in-network facilities. The law established an independent dispute resolution process to settle payment disagreements between insurers and healthcare providers.
The lawsuit details several specific allegations of impropriety. Anthem claims that more than 75% of the submitted claims were not eligible for the resolution process in the first place. Additionally, the insurer alleges the hospitals knowingly submitted false claims for services already covered by California’s Knox-Keene Act, services not covered by patients’ health plans, disputes where required open negotiations never occurred, and even services provided while the hospitals were in-network with Anthem.
Beyond the $15 million in improper awards, Anthem claims the scheme cost the company more than $2 million in administrative fees related to processing the disputes.
The lawsuit further alleges that the hospitals deliberately created administrative barriers that made it difficult for Anthem to respond to the high volume of disputes. According to the insurer, the defendants routed all related notices through a restrictive online portal that only one Anthem employee could access at a time. Messages in this portal were automatically deleted after 30 days, making it “all but impossible” for Anthem to efficiently address the flood of claims.
Prime Healthcare strongly denies the allegations, dismissing the lawsuit as meritless. A spokesperson for the hospital system countered that the legal action “ignores the reality that certain large health plans, including Anthem, amass record profits by underpaying providers, delaying or denying care, and burdening patients with administrative barriers, practices that have eroded the public trust.”
The case highlights growing tensions in the healthcare industry as providers and insurers navigate the implementation of the No Surprises Act. Since its enactment, the law has faced numerous legal challenges and implementation hurdles, with providers arguing that the IDR process favors insurers while insurers claim providers are exploiting loopholes.
Anthem Blue Cross is one of the nation’s largest health insurers, serving approximately 40 million members across 14 states. Prime Healthcare, headquartered in Ontario, California, operates 51 hospitals in 14 states, making it one of the country’s prominent hospital systems.
In its lawsuit, Anthem is seeking monetary damages, cancellation of the disputed IDR awards, and an injunction to prevent the hospitals from continuing to submit what it characterizes as fraudulent claims. The case could have far-reaching implications for how disputes under the No Surprises Act are handled in the future.
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6 Comments
Anthem’s claims of widespread abuse of the No Surprises Act’s IDR process by these hospitals are quite serious. If proven true, it could undermine public trust in the system and lead to higher costs for consumers.
I’m curious to learn more about the specific evidence Anthem has to support its allegations of fraudulent behavior by these hospitals.
This lawsuit highlights the complexities and challenges in implementing the No Surprises Act. Both insurers and providers have a vested interest in the process, and finding the right balance will be critical.
It will be important for the courts to carefully examine the evidence on both sides to determine if Anthem’s claims have merit.
This is an interesting development in the ongoing tension between insurers and healthcare providers over the No Surprises Act. It will be important to see how the courts rule on Anthem’s allegations of fraudulent billing practices by these hospitals.
Ensuring the integrity of the dispute resolution process is crucial for the Act to work as intended and protect patients from surprise medical bills.