The practice of sending reimbursements to patients forces health providers to seek money directly from patients, a costly and time-consuming prospect. (Photo: Diego M. Radzinschi/THE NATIONAL LAW JOURNAL.)
A health system is suing Anthem, saying that the health insurance giant paid patients directly for services in an effort to force the health system to join an Anthem network.
California-based Sovereign Health had facilities in five states that offered behavioral health and substance abuse treatment services. The system closed last year due to financial troubles, but has an ongoing federal lawsuit against Anthem and its subsidiaries.
The lawsuit says Anthem made $1.3 million in direct payments to patients for services provided by Sovereign programs, which were not part of its network. The patients are supposed to then pay Sovereign for the services, but sometimes, that doesn't happen.
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In a CNN story, the lawsuit is described as a practice by insurers targeting providers who don't agree to join an insurance company's network at lower reimbursement rates. The practice forces health providers to seek money directly from patients, a costly and time-consuming prospect.
The sums of money are substantial: the story recounts a case where a patient received approximately $375,000—the Sovereign lawsuit says the patient never reimbursed the system with that money. Another individual received $130,000.
An attorney representing Sovereign Health in the case, Lisa Kantor, said the practice raises concerns since the patients are part of a vulnerable population.
“One of the things we have to worry about is that kind of money getting into the hands of someone who has an addiction problem,” Kantor said, adding that in some cases, Anthem sent checks to patients who were still in rehab. “They were trying to get better,” she said of patients, “and Anthem was giving them every opportunity not to.”
The practice is made possible in some insurance contracts due to language regarding out-of-network services. “Assignment clauses” allow out-of-network providers to be paid by a patient's insurer—but some contracts have “anti-assignment” language that allows insurers to send the payment to the patient instead.
The article quotes Arthur Caplan, the director of medical ethics for New York University's School of Medicine, as calling the idea of insurers sending money to patients “insane.”
“'My overall, moral reaction is: Are you kidding me?' he said of the notion of paying patients. 'It's almost like winning the lottery, it seems to me. So, I'm not surprised that there are misuses — and I'm enormously surprised that anyone would think this is a doable approach.
“'Only in our crazy, market-driven, bureaucratic mess of a system,' Caplan added, 'would we think about this kind of a solution.'”
Anthem also said that previous court decisions determined that 'anti-assignment' provisions are legal and that the insurer is doing nothing wrong: “Indeed, courts in many other jurisdictions have held that anti-assignment clauses in ERISA plans are valid and enforceable,” the insurer said in court filings.
Provider groups have blasted the insurance industry's practice in this case. Barbara L. McAneny, president of the American Medical Association, called the practice “bully tactics” to force providers to join networks—and said insurers have been increasing such tactics in recent years.
“Physicians want the ability to negotiate fairly with larger health insurers without fear of strong-arm tactics that antagonize patients,” McAneny said in a statement to CNN.
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