Hospitals, Physicians Line Up Against California Blue Cross
The California Hospital Association and the California Medical Association on Thursday joined a lawsuit filed last year alleging that Blue Cross of California illegally canceled patients' individual health policies and refused to reimburse hospitals for medical services, the Los Angeles Times reports.
The organizations represent about 430 hospitals and more than 35,000 physicians, respectively. Coast Plaza Doctors Hospital and Methodist Hospital in October 2006 filed the lawsuit (Girion, Los Angeles Times, 4/20).
The suit alleges that when claims meet a certain dollar amount for a member with individual health insurance coverage, Blue Cross examines the member's medical records and looks for discrepancies in the application that justify revoking coverage (California Healthline, 10/16/06).
Blue Cross says it has the right to cancel policies only after determining that a policyholder's coverage application was incomplete or inaccurate. The insurer says that in such cases, members must pay their own medical bills.
The lawsuit alleges that unpaid medical bills are putting a financial strain on the state's health care system, of which Blue Cross is largely involved.
According to the lawsuit, state law requires insurers to pay for authorized care regardless of whether health insurance coverage is revoked.
Shannon Troughton -- spokesperson for WellPoint, Blue Cross' parent company -- said the authorizations are based on medical necessity but do not guarantee reimbursement. She added, "We do not revoke these authorizations. When we rescind coverage due to fraud, we are rescinding the member's contract" (Los Angeles Times, 4/20).
The lawsuit seeks payment for all hospitals involved in such cases over the past four years, as well as interest and punitive damages. The lawsuit also seeks an injunction barring Blue Cross from continuing the practice (California Healthline, 10/16/06).
The Department of Managed Health Care is drafting regulations addressing the circumstances under which insurers can rescind coverage (Los Angeles Times, 4/20).