Anthem Blue Cross wins appeal over Children's Hospital Central California bill

The Fresno BeeJune 16, 2014 

Anthem Blue Cross has scored a victory in a multimillion-dollar dispute between the health plan and Children's Hospital Central California that seven years ago forced many poor Valley families to travel miles for care.

But a recent court ruling in Blue Cross' favor doesn't end its five-year-old legal fight with Children's. Instead, the 5th District Court of Appeal in Fresno ordered a new trial between the health insurer and the hospital to settle damages.

An attorney for Children's Hospital says the dispute could undercut managed health care if Blue Cross ultimately wins. The hospital is considering its options, including taking the case to the state Supreme Court.

The dispute is over what the hospital charged Blue Cross for medical services from July 31, 2007 to June 1, 2008 when the health plan and Children's were haggling over a contract.

During the 10-month contract gap, the hospital provided emergency and stabilization services to 896 Blue Cross Medi-Cal patients, according to court documents. Medi-Cal is the state-federal insurance for people with low incomes.

Under state and federal law, the hospital was required to provide the emergency services and Blue Cross was obligated to reimburse Children's for the work. Those charges have not been disputed.

But the hospital also provided treatment to stabilize the patients and payment for those services has been in contention.

Blue Cross paid the hospital $4.2 million for the post-stabilization services based on Medi-Cal rates, but Children's wanted what it billed -- $10.8 million.

The hospital sued Blue Cross for the additional $6.6 million that it said the insurer owed for the services -- and a Madera County Superior Court jury awarded Children's the full amount.

Blue Cross appealed.

The appeals court says in its ruling issued last week that Blue Cross didn't get a chance to put on a complete defense. The appeals court spells out key points in the jury case:

The hospital argued that its full billed charges were generally in the mid-range or below and thus represented the reasonable and customary value of the services provided.

Blue Cross argued that in 2007 and 2008, "less than 5%" of the insurers paid the hospital the full billed charges.

The appeals court says Blue Cross should have been allowed to present evidence of the range of fees the hospital accepts for post-stabilization care in determining the "reasonable value" of the services.

"It is reasonably probable that a result more favorable to Blue Cross would have been reached if such evidence had been admitted," the ruling says.

An Anthem Blue Cross spokesman said Monday the court decision is a win for patients.

"Health care consumers are the ones who end up bearing the cost when a hospital succeeds in collecting fees according to their unsupportable charge master fees," said Darrel Ng, director of public relations.

"This decision is a significant victory for those like Anthem who are working to keep health care affordable," Ng said.

But Glenn Solomon, an attorney representing Children's Hospital, said the decision undercuts a health plan's incentive to have contracts. And if fewer health plans seek contracts, other providers also will be less inclined to do so.

"It will impact the number of providers available to patients in managed care plans," Solomon said.

For now, Children's and Blue Cross have a contract. But a hospital spokesman, citing the pending litigation, declined to say when the current contract ends or whether at that time Children's will negotiate a new deal.

Seven years ago, when the hospital and the insurer could not agree on a contract, thousands of families changed their insurance providers when Children's stopped accepting their Anthem Blue Cross coverage. And many families traveled as far as the Bay Area to see specialists.

Before the 10-month dispute was resolved and a contract signed, concerned parents carried placards to a meeting of the Fresno County Board of Supervisors to request its intervention.

The reporter can be reached at (559) 441-6310, banderson@fresnobee.com or @beehealthwriter on Twitter.

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