I’m sure Blue Cross Blue Shield of Georgia is beginning to hate me, if they didn’t already. (Oh, I’ll bet they did, though.) In my defense, if they’d just followed through on the promise made by incoming President Jeff Fusile in January 2016 to “soften the approach” and move away from the image of the cold-hearted insurer who was a “bruising adversary” in contract negotiations and pay disputes with hospitals, we all could have avoided this post. “We have a long way to [go to] build the trust you need to build up with medical providers,” he told Georgia Health News in an interview last year.
Well, that seems to have gone out the window rather quickly.
On April 10, 2017, Cornerstone Medical Center of Fort Oglethorpe and ApolloMD Business Services, the company that runs Cornerstone, sued Blue Cross Blue Shield in Walker County Superior Court, alleging that the insurer has refused to pay contractually agreed upon rates for services, which has severely damaged the financial stability of the hospital. This case made its way into trade association news outlets late last week, such as The Daily Report and Becker’s Hospital Review, because BCBS filed to remove the case to federal court — the Northern District of Georgia — and subsequently filed a motion to dismiss.
In case you’re thinking, “gosh, this seems familiar,” it’s because this is the exact playbook used by Blue Cross Blue Shield of Texas in a 2011 suit brought by Mid-Town Surgical Centers, which accused BCBS of underpaying by $12 million. That case was not dismissed, and the judge found in favor of the medical center on 10 of 12 counts.
Of course, there’s case after case where hospitals have sued (often successfully) the insurer over undercutting rates. This doesn’t even begin to address the way BCBS treats out-of-network hospitals, like Polk Medical Center in Floyd County, which sued BCBS in 2016 after the insurer started sending reimbursements directly to patients, not the hospital, leaving it up to Polk to collect from patients. As you’d might guess, not all of the patients paid the hospital, and one guy in particular learned to game the system, earning a windfall of $70,000 in six months for himself.
The case with Cornerstone is particularly egregious given that it is the only hospital in Walker County, 60% of the patients either cannot or will not pay for services, and as Charlie pointed out yesterday, the state of Georgia underfunds Medicaid. Cornerstone had just recently been saved from closing in 2015 by a $4.1 million buyout. The hospital was previously known as Hutcheson Medical Center, and it was operating a $1 million per month loss prior to its bankruptcy filing.
As part of the agreement when ApolloMD bought out the hospital, all previous contracts were to be honored. That meant that BCBS was contractually obligated from an agreement in place with the previous owner since 1992 to reimburse at a rate of 79.81%. Yet, court documents show that this rate was sometimes more than halved when actual reimbursements were paid, if and when they were paid at all. One example provided was a procedure that should have been reimbursed at $1,600 for HMO patients and $1,800 for PPO patients was actually reimbursed at $430 and $640, respectively.
BCBS isn’t alone in this kind of behavior. They’re just the standout, as they insure 3 million out of 10 million Georgians — the most of any private insurer in the state. Further, in many instances, it is the only choice for many who have either employer-sponsored insurance or insurance through the Obamacare exchanges. As I’ve written fairly recently, BCBS is the only choice on the exchange in 96 Georgia counties.
I want to reiterate that BCBS is one of many culprits in Cornerstone’s struggle to stay afloat. It’s terrible that there are 60% of patients going to the ER without any means to pay when we have a federal law meant to prevent that. It’s also terrible that Medicaid and Medicare aren’t able to protect this and every other hospital in Georgia and the country at large by reimbursing for their patients at market rates, though Medicare comes much closer than Medicaid. (Also, are people in Walker County who are eligible for one of the two not taking it? If so, why?) Further, I do honestly believe it’s myopic that the Georgia General Assembly has elected not to expand Medicaid under the Affordable Care Act because that’s not only been the law of the land for eight years, but it’s more importantly how hundreds of thousands of working Georgians are supposed to subsidize the ridiculously high monthly premiums offered on the exchange, but instead, they go without. And then they go to the ER, which is required to stabilize a patient under a federal law called EMTALA (the Emergency Medical Treatment and Labor Act). Many doctors will tell you because of the possibility of lawsuits, it’s preferable to treat beyond “stabilization,” even when they know the patient is indigent. So, our state has exacerbated the cycle of the uninsured seeking care in ERs, and this hits rural communities particularly hard.
However, the issues of Medicare, Medicaid, and indigent patients aren’t going to be resolved in a manner timely enough to help Cornerstone and ensure that Walker County residents have a hospital at which to seek care. On the other hand, there’s a problem that is more easily fixed — the issue of private insurers not living up to the terms of their contracts.
Anthem, BCBS of Georgia’s parent company, turned a profit of $1 billion in the first quarter of 2017. Yes, the first quarter. This makes the undercutting of payments to struggling rural hospitals nonsensical. It’s one thing to make that kind of profit fairly and honestly. It’s quite another to do that by swindling your customers. Premiums on and off the exchange for Blue Cross Blue Shield have risen, often sharply, in the past few years. If they’re not paying out for services hospitals and other medical providers give to their well-charged customers, exactly what is their purpose? It brings to mind the robber barons of the Nineteenth Century. We all know how that ended.
As I hinted at the beginning of the post, I feel like I’ve started (not purposefully, I promise) a series on the ills of private insurance. I’m going to continue talking about them, though, because it’s important, and with the messy, confusing, and admittedly frustrating system of health care delivery we have, health insurance is vital, particularly to hospitals. If insurance companies in general and BCBS in particular are secretly hoping to usher in a second period of public outcry for government intervention that could — and in my opinion will — include a demand for single payer health care, they are on the right course. If, however, that is decidedly not the outcome they are hoping for (and anyone with an ounce of self-preservation would assume it is not), abiding by contracts is a good start toward maintaining goodwill with those customers your are purported to serve. Settling up those payments with Cornerstone outside of court would be a good first step.