Hospitals Sue Blue Cross Over Payments

Ten Mississippi hospitals, including several in metro Jackson, claim in a breach-of-contract lawsuit that Blue Cross Blue Shield of Mississippi shortchanged them by more than $13 million in improperly reduced inpatient payments for a range of medical services.

The suit, filed Tuesday in Hinds County Chancery Court, contends Blue Cross Blue Shield reduced its inpatient payments to the hospitals, each owned by Health Management Associates, by rewording certain sections of its policy manual to reflect those changes instead of negotiating any payment adjustments with the hospitals, which HMA said the insurer is obligated to do.

Local hospitals that are plaintiffs include Jackson’s Central Mississippi Medical Center, Crossgates River Oaks Hospital in Brandon, Madison River Oaks Medical Center in Canton, and River Oaks Hospital and Woman’s Hospital, both in Flowood. The lawsuit seeks to recover the amount it says the hospitals have been underpaid.

“It’s a contractual issue between the parties. They just made changes without notifying the hospitals. They made it unilaterally,” said Tom Kirkland, an attorney for the plaintiffs.

Blue Cross Blue Shield would not comment on the allegations.

The lawsuit says Blue Cross Blue Shield and the hospitals typically enter into contracts, which are regularly renewed, that govern the services the insurers provide, including the amount of money it pays each hospital for inpatient care.

Any changes to what is paid, the suit contends, is to be agreed to “by mutual written consent” of each party, and that any changes Blue Cross Blue Shield wants to make need to be addressed with each hospital “in writing at least 30 days before the proposed changes are to become effective.”

But after an impasse in 2011 between the hospitals and Blue Cross Blue Shield over payment rate increases, the insurer inserted new language into its policy manual reflecting the payment reductions, the suit claims. The underpayments, Kirkland says, apply to the treatment of “a large number of patients,” although he couldn’t provide a specific number.

“It is unfair for insurers like Blue Cross Blue Shield to not honor the amount they agreed to pay,” said Bill Williams, HMA’s division CEO for the hospitals, said in a news release announcing the lawsuit. “That may benefit the insurance company and its executives, but it harms our hospitals and the communities we serve.”

The other hospitals involved in the lawsuit are Biloxi Regional Medical Center, Gilmore Regional Medical Center in Amory, Natchez Community Hospital, Northwest Mississippi Regional Medical Center in Clarksdale and Tri-Lakes Medical Center in Batesville.

To contact Jeff Ayres, call (601) 961-7050. He is @jeffayres71 on Twitter.