Bon Secours Mercy Health sues Anthem over $93 million in unpaid claims

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Healthcare provider Bon Secours Mercy Health (BSMH) escalated its ongoing dispute with regional Elevance Health by filing a lawsuit against insurer Anthem on Monday.

The lawsuit alleges Anthem owes more than $93 million in unpaid claims.

BSMH's Virginia health systems have been pressing local Anthem Blue Cross Blue Shield to settle outstanding claims for nearly four years, with efforts initiated in October 2019.

Despite numerous attempts to secure reimbursement, the situation remained unresolved. Bon Secours Mercy Health asserts that Anthem's denial practices have intensified since July 2021, prompting legal action.

The suit notes Anthem's parent is a for-profit company with annual revenues of more than $150 billion, which posted a $7.8 billion profit in 2022, while BSMH reported an overall loss of $1.2 billion, including an operating deficit of $323.5 million.

"Anthem is more than able to meet the payment obligations that it agreed to with hospitals and doctors, including BSMH," the suit argues. "These repeated payment failures constitute resources diverted away from BSMH Virginia's nonprofit mission in the Richmond and Hampton Roads communities and into the pockets of Anthem's corporate shareholders. BSMH Virginia cannot sit idly by and let healthcare dollars that belong to its community be taken away by Anthem's refusal to honor the payment terms in its agreements with BSMH Virginia."

The conflict between the health system and insurer spans multiple states -- Elevance operates BCBS subsidiaries across 14 states -- encompassing unpaid claims and concerns over unsustainable provider rates.

The lawsuit notes Anthem's parent company, Elevance Health, generated $7.8 billion in profits during 2022, which raised questions about its ability to meet payment obligations.

The ongoing feud led BSMH to terminate its Medicare Advantage contract with Anthem in Virginia and consider similar actions for Medicaid.

THE LARGER TREND

The legal battle sheds light on the rising tensions between hospitals and insurers over reimbursement issues.

The lawsuit comes amid a backdrop of increased scrutiny on health insurers' practices, with allegations of improper claims denial policies and strict utilization management requirements. Anthem has faced similar disputes in various states, indicating a broader industry trend.

In October 2022, Anthem was accused of not verifying the accuracy of diagnosis codes it submitted when seeking reimbursements over a four-year span, resulting in a federal judge ordering the insurer to face a lawsuit from the U.S. government.

As enrollment in the Medicare Advantage program grows, so do concerns and uncertainty over the profits providers are reaping and whether "overpayment" is an issue.

Federal audits released in November 2022 show widespread overcharges and other errors in payments to Medicare Advantage health plans for seniors, with some plans overbilling the government more than $1,000 per patient a year on average.

A report from the Brookings Institution also indicated the five major insurers -- UnitedHealthcare, Humana, Aetna , Kaiser Permanente and Anthem -- are allegedly padding their bottom lines by disguising profits as costs. 

Meanwhile, settlements and judgments under the False Claims Act exceeded $2.2 billion in the fiscal year that ended on September 30, more than $1.7 billion of which pertained to matters that involved the healthcare industry.

ON THE RECORD

"This complaint seeks redress for Anthem's slow pay and no-pay tactics resulting in an enormous volume of BSMH Virginia claims being arbitrarily denied, downgraded and/or pended, thereby forcing BSMH Virginia to spend an inordinate number of hours responding to excessive and unreasonable requests for additional information, and undertaking extraordinary efforts to secure payment of properly payable claims for medically necessary care rendered to Anthem members," BSMH Virginia said in the filing.