Sutter Health settles overbilling claims
One of California's largest health systems, Sutter Health, is paying $46 million to settle allegations of overcharging payers with obscured anesthesia billing practices.
The $46 million settlement stems from a 2011 whistleblower suit brought by a Rockville Recovery Associates auditor accusing the 21-hospital network of billing insurers and patients three separate but overlapping charges for anesthesia — for an outside anesthesiologist, the operating room and another charge listing services already covered in other charges.
California insurance commissioner Dave Jones joined in the whistleblower suit, and called the $46 million a “record payment” and a "groundbreaking step in opening up hospital billing to public scrutiny." The settlement amount will largely be split between Rockville Recovery Associates and the state, with the California government receiving $20 million.
"The settlement requires Sutter to disclose on its website every component of its anesthesia billing and what those services cost Sutter," Jones said. "Patients, insurers and the public will now be able to compare Sutter's costs to what it charges for anesthesia. They will see any mark-ups.”
Along with the practice of submitting three overlapping anesthesia bills, the whistleblower suit alleged that Sutter charged for anesthesia on a time-based basis when only outside anesthesiologists were present. The suit, filed under the False Claims Act, also said that some of Sutter’s payer contracts restricted insurers from contesting the bills.
As part of the settlement, Sutter will start charging for anesthesia strictly on a fully-disclosed flat-fee basis, describe every component of the bills to insurers and patients, publish on its website anesthesia costs for each hospital, and allow payers to more easily contest bills.
The health system will also be clarifying “the relationship between its master schedule of charges and the bills that consumers and insurers receive."
“This new transparency should lead to lower prices and point the way to similar billing reforms for all types of hospital services,” Jones said.
He also said that several other defendants are settling similar allegations and have agreed to institute similar reforms, including Marin General Hospital, a Bay Area facility that was a member of Sutter until 2010, and MultiPlan, Inc and Private Healthcare Systems, whose contracts with Sutter included the policies that were said to have restricted insurers from appealing Sutter’s bills.
