Blue Cross, Health Net allegedly conspire to underpay hospitals

Three insurers--Blue Cross of California, Health Net and Anthem Blue Cross Life and Health Insurance Company--have been sued for a "scheme" to systematically underpay San Francisco General Hospital and other public hospitals for emergency services provided to their policyholders, reports the San Francisco Examiner.

According to the lawsuit, the insurers are refusing to make payments based on the full amount of charges for services and are instead making arbitrary reductions to the bills they receive. "This business practice is not only unfair and illegal, it jeopardizes the city's ability to provide critically necessary emergency healthcare," San Francisco City Attorney Dennis Herrera, who filed the lawsuit, told the San Francisco Appeal.

The suit also alleges that the insurers have "engaged in a demonstrable and unjust pattern of payment delays and underpayment of claims submitted by SFGH and other public hospitals." It seeks an injunction to halt the companies' unfair business practices, along with restitution for the alleged underpayments and civil penalties of up to $2,500 for each violation.

"The insurers we've sued are shortchanging public hospitals and sticking taxpayers with the bill," Herrera said.  "Unfortunately, Blue Cross and Health Net are flouting their own obligations under the law, refusing to fully reimburse public hospitals for the emergency medical treatment their policyholders receive." He added that he plans "to move aggressively to make these insurers pay every dollar they owe to San Francisco General and other public hospitals."

Anthem Blue Cross spokesman Peggy Hinz said it hadn't yet seen the suit but it denies all of the allegations. "Based on what we understand the allegations to be, we dispute the city attorney's claim that Anthem has 'illegally' been paying less than the full billed charges of the hospital," Hinz said. "Where California law requires that an insurer pay a reasonable value for the emergency services rendered, we believe we have followed this requirement."

Health Net spokeswoman Amy Sheyer said her company had received the suit and is evaluating it, but as a policy does not comment on pending litigation, the Appeal notes.

To learn more:
- read the city attorney's statement and lawsuit
- check out the San Francisco Examiner article
- see the San Francisco Appeal story