Insurance specialists told this news organization that the September 20 verdict is unusual. If upheld on appeal, one said, it could give out-of-network providers more power to decide how much insurers must pay them.
The case, which the St. Charles Surgical Hospital and Center for Restorative Breast Surgery first filed in 2017 in Louisiana state court, will be appealed and could ultimately land in federal court. The center has seen mixed results from a similar case it filed in federal court, legal documents show. Physicians from the center declined comment.
At issue: Did Blue Cross fail to fully pay the surgery center for about 7000 out-of-network procedures that it authorized?
The lawsuit claimed that the insurer’s online system confirmed that claims would be paid and noted the percentage of patient bills that would be reimbursed.
However, “Blue Cross and Blue Shield of Louisiana either slow-paid, low-paid, or no-paid all their bills over an eight-year period, hoping to pressure the doctors and hospital to either come into the network or fail and close down,” the surgery center’s attorney, James Williams, said in a statement.
Blue Cross denied that it acted fraudulently, “arguing that because the hospital is not a member of its provider network, it had no contractual obligation to pay anything,” the Times-Picayune newspaper reported. Authorization of a procedure doesn’t guarantee payment, the insurer argued in court.
In a statement to the media, Blue Cross said it disagrees with the verdict and will appeal.
Out-of-Network Free For All
Paul B. Ginsburg, PhD, professor of the Practice of Health Policy at the Price School of Public Policy, University of Southern California, Los Angeles, said out-of-network care doesn’t come with a contractual relationship.
Without a contract, he said, “providers can charge whatever they want, and the insurers will pay them whatever they want, and then it’s up to the provider to see how much additional balance bill they can collect from the patients.” (Some states and the federal government have laws partly protecting patients from balance billing when doctors and insurers conflict over payment.)
He added that “if insurance companies were on the hook to pay whatever any provider charges, nobody would ever belong to a network, and rates would be sky high. Many fewer people would buy insurance. Providers would [then] charge as much as they think they can get from the patients.”
What about the insurer’s apparent authorization of the out-of-network procedures? “They’re authorizing them because they believe the procedures are medically warranted,” Dr. Ginsburg said. “That’s totally separate from how much they’ll pay.”
Dr. Ginsburg added that juries in the South are known for imposing high penalties against companies. “They often come up with crazy verdicts.”
Mark V. Pauly, PhD, MA, professor emeritus of health care management at the Wharton School of the University of Pennsylvania, Philadelphia, questioned why the clinic kept accepting Blue Cross patients.
“Once it became apparent that Blue Cross wasn’t going to pay them well or would give them a lot of grief,” Dr. Pauly said, “the simplest thing would have been to tell patients that we’re going to go back to the old-fashioned way of doing things: You pay us up front, or assure us that you’re going to pay.”
Lawton Robert Burns, PhD, MBA, professor of health care management at the Wharton School, said the case and the verdict are unusual. He noted that insurer contracts with employers often state that out-of-network care will be covered at a specific rate, such as 70% of “reasonable charges.”
A 2020 analysis found that initial breast reconstruction surgeries in the United States cost a median of $24,600-$38,000 from 2009 to 2016. According to the Times-Picayune, the New Orleans clinic billed Blue Cross for $506.7 million, averaging more than $72,385 per procedure.
Dr. Ginsburg, Dr. Pauly, and Dr. Burns had no disclosures.
A version of this article first appeared on Medscape.com.