Jackson Hospital is suing Blue Cross and Blue Shield of Alabama, alleging the insurer underpaid the Montgomery hospital for years and pushed it toward insolvency. The hospital is seeking $250 million in damages.
The hospital, which employs roughly 1,800 people, filed for Chapter 11 bankruptcy in February after defaulting on $60 million in bonds. Since then, it has been working to secure $293 million from state, local, and federal sources to remain open, according to local news reports. In November, Jackson asked Blue Cross to contribute $91 million to that goal but was reportedly offered just $35 million, according to Action 8 News, the Montgomery-area CBS affiliate.
The lawsuit, filed last week in Alabama’s Middle District Bankruptcy Court, alleges that Blue Cross has consistently paid Jackson Hospital lower reimbursement rates than other comparable hospitals in the state. It also said Alabama hospitals receive among the lowest payments in the country from Blue Cross, which it said has destabilized Alabama’s health care system.
The hospital claims these underpayments prevented fair negotiations, caused millions in financial harm, and contributed directly to its bankruptcy. Hospital leaders warn that a closure would increase strain on surrounding hospitals and potentially limit patient access, including emergency care and specialty services.
“Doing what is necessary to keep Jackson Hospital open is literally a matter of life or death,” the complaint said. “Blue Cross Alabama knows all this. But Blue Cross Alabama does not care.”
Blue Cross and Blue Shield of Alabama responded in a statement saying it has negotiated with Jackson Hospital in good faith and has repeatedly increased reimbursement rates in recognition of the hospital’s financial difficulties.
Blue Cross customers make up only about one-quarter of the patients treated at Jackson Hospital, Blue Cross said, suggesting the hospital is trying to make the insurer and its customers pay for the hospital’s own mismanagement. The insurer also emphasized that it is a tax-paying nonprofit health plan, paying out more than 90% of every premium dollar to hospitals and other providers.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.