Blue Shield Lawsuit Takes Aim at Reimbursement Rates
Blue Shield of California on Thursday announced that it has filed a lawsuit against Alvarado Hospital in San Diego to enforce a contract that provides reimbursement increases at a lower rate than the hospital is demanding, the San Diego Union-Tribune reports.
Blue Shield alleges that the hospital is required to abide by a contract amended in March 2006 that calls for a 10% "blended" reimbursement rate increase to the hospital in 2007 and 2008.
According to the lawsuit, the hospital's owner, Plymouth Health Investments, is not abiding by the contract and instead demands a nearly 40% reimbursement rate increase for 2007.
The contract with Alvarado stems from an agreement with the hospital's previous owner, Tenet Healthcare. Blue Shield maintains that the hospital's new owners agreed to the transfer of the original contract when they purchased Alvarado in January.
Alvarado, however, contends that the old contract expired in January when the hospital was sold.
Pejman Salimpour, a leader of Plymouth Health, said Blue Shield reimburses the hospital at half the rate it offers most other hospitals in the region. He added, "All we've been asking for is fair rates."
The hospital in 2005 and the first half of 2006 lost money, according to the latest data.
Blue Shield also alleges that Alvarado is notifying employers, patients and others that the hospital does not have a contract with the insurer and that Blue Shield refuses to negotiate one (Crabtree, San Diego Union-Tribune, 7/27).