Archive for December 7th, 2009

4% “Hidden Fee” Basis of Lawsuit

Monday, December 7th, 2009

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A lawsuit filed in October 2007 by Oakland County against Blue Cross & Blue Shield of Michigan may have a wide ranging impact on PPO contracts. In 2006 Blue Cross presented their client with a new administrative contract on renewal. What caught the attention of Oakland County officials was the following language:

“A portion of your hospital savings has been retained by BCBSM to cover costs associated with the establishment, management and maintenence of BCBSM’s participating hospital, physician and other health care provider networks. The ASC Access Fee also covers any subsidies, surcharges and contributions to reserves order by the State Insurance Commissioner as authorized pursuant to P.A. 350.”

This was new language in the contract and was not in previous contracts in prior years. According to the lawsuit, “Since this proposed contract provision was significantly different than prior proposals, Plaintiff requested from Defendent an explanation regarding the new language and especially the ASC Access Fee. Among other things, Defendent responded, in essence, that the ASC Access Fee had been charged to Plaintiff for many years, but was not disclosed. Defendent stated that it “retains a portion of the provider reimbursement savings that it achieves for it’s group.” In other words, when Defendent received a discount on a bill from a hospital, it did not pass the entire discount on to Plaintiff.”

Oakland County estimates that this alleged “hidden fee” amounted to about 4% . In researching their claims since the initial inception of the BCBS health plan for their employees, Oakland County projects that the 4% fee amounts of over $10,000,000, a sum for which they are now seeking reimbursement.

http://blog.mlive.com/oak_business_review/2008/03/oakland_county_sues_blue_cross.html

Editor’s Note: In reviewing a BCBS hospital contract, we noticed the ASC terminology within the contract. Yet, how many of our readers have ever seen a BCBS hospital contract? We would guess none. (It took us 7 months to track one down – an effort well worth the time). For a copy of the original pleading, email Riskmanager@sbcglobal.net . The outcome of this lawsuit may have wide ranging implications for all PPO networks.