The practice of sendingreimbursements to patients forces health providers to seek moneydirectly from patients, a costly and time-consumingprospect. (Photo: Diego M. Radzinschi/THE NATIONAL LAWJOURNAL.)

|

A health system is suing Anthem, saying that the health insurancegiant paid patients directly for services in an effort to force thehealth system to join an Anthem network.

|

California-based Sovereign Health had facilities in five states thatoffered behavioral health and substance abuse treatment services.The system closed last year due to financial troubles, but has anongoing federal lawsuit against Anthem and its subsidiaries.

|

The lawsuit says Anthem made $1.3 million in direct payments topatients for services provided by Sovereign programs, which werenot part of its network. The patients are supposed to then paySovereign for the services, but sometimes, that doesn't happen.

|

Related: Why U.S. health care is like OPEC and why networksmay disappear

|

In a CNN story, the lawsuit is described as apractice by insurers targeting providers who don't agree to join aninsurance company's network at lower reimbursement rates. Thepractice forces health providers to seek money directly frompatients, a costly and time-consuming prospect.

|

The sums of money are substantial: the story recounts a casewhere a patient received approximately $375,000—the Sovereignlawsuit says the patient never reimbursed the system with thatmoney. Another individual received $130,000.

|

An attorney representing Sovereign Health in the case, LisaKantor, said the practice raises concerns since the patients arepart of a vulnerable population.

|

“One of the things we have to worry about is that kind of moneygetting into the hands of someone who has an addiction problem,”Kantor said, adding that in some cases, Anthem sent checks topatients who were still in rehab. “They were trying to get better,”she said of patients, “and Anthem was giving them every opportunitynot to.”

|

The practice is made possible in some insurance contracts due tolanguage regarding out-of-network services. “Assignment clauses”allow out-of-network providers to be paid by a patient'sinsurer—but some contracts have “anti-assignment” language thatallows insurers to send the payment to the patient instead.

|

The article quotes Arthur Caplan, the director of medical ethicsfor New York University's School of Medicine, as calling the ideaof insurers sending money to patients “insane.”

|

“'My overall, moral reaction is: Are you kidding me?' he said ofthe notion of paying patients. 'It's almost like winning thelottery, it seems to me. So, I'm not surprised that there aremisuses — and I'm enormously surprised that anyone would think thisis a doable approach.

|

“'Only in our crazy, market-driven, bureaucratic mess of asystem,' Caplan added, 'would we think about this kind of asolution.'”

|

Anthem also said that previous court decisions determined that'anti-assignment' provisions are legal and that the insurer isdoing nothing wrong: “Indeed, courts in many other jurisdictionshave held that anti-assignment clauses in ERISA plans are valid andenforceable,” the insurer said in court filings.

|

Provider groups have blasted the insurance industry's practicein this case. Barbara L. McAneny, president of the American MedicalAssociation, called the practice “bully tactics” to force providersto join networks—and said insurers have been increasing suchtactics in recent years.

|

“Physicians want the ability to negotiate fairly with largerhealth insurers without fear of strong-arm tactics that antagonizepatients,” McAneny said in a statement to CNN.

|

Read more: 

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.