WellPoint has won the right to challenge a hospital's chargemaster billing practices, but the ultimate resolution could still disrupt relations with a key provider in a large market.
California's 5th District Court of Appeal in Fresno has ordered a new trial for a suit filed by Children's Hospital Central California against WellPoint's Anthem Blue Cross, granting the insurer a chance to reverse a Superior Court trial verdict requiring repayment of $6.6 million.
The dispute dates back to 2007 and 2008, during a 10-month period when the two organizations did not have a contract and were trying to craft a new one.
During that time, the 356-bed Children's Hospital, located north of Fresno, provided emergency and stabilization care to about 900 patients covered under Anthem's Medicaid managed care plan, and ended up billing $10.8 million for the post-stabilization services.
Anthem paid for the emergency care, but disagreed with the total sum of the post-stabilization care charges, paying only $4.2 million -- which prompted Children's Hospital to sue.
A Madera County Superior Court jury sided with Children's Hospital, concluding that Anthem's refusal to pay the total sum amounted to a breach of contract and ordering the insurer to pay the remaining $6.6 million.
Anthem appealed, arguing that it was not required to pay the full amount billed for post-stabilization services but rather rates consistent with reimbursement set by geographical areas by the California Medical Assistance Commission, as the insurer did for the emergency care.
Now, California's 5th District Court of Appeal has decided that Anthem should get a new trial.
Uneasy relationship
The appeal court agreed with Anthem's argument that the lower court too broadly interpreted the state's regulation for "reasonable and customary" reimbursement for non-contracted providers and relied on it as the exclusive standard.
"The jury should have been permitted to hear and consider evidence on the full range of fees that Hospital both charges and accepts as payment for similar services in determining the reasonable value of the post-stabilization services provided to the Blue Cross Medi-Cal beneficiaries," the appeal court wrote.
While Children's Hospital argued that the full billed charges for post-stabilization services were in the middle range, Anthem argued that in 2007 and 2008 less that five percent of California insurers paid the hospital the full bills originating from its charge master.
As the case goes back to trial, the relationship between Anthem and Children's Hospital California remains to be seen. The two currently have a contract, but depending on the outcome of the trial, relations could sour.
In California, as elsewhere, Anthem has faced pressure to broaden its provider networks. Children's Hospital Central California is one of 13 pediatric hospitals in the state and one of two in the Central Valley, with the closest being in Sacramento or the Bay Area, in either case more than 100 miles from Fresno.