Two hospitals, one in Georgia and another in California, charge in lawsuits that BCBS of Georgia sends payment directly to patients instead of paying the hospitals for care provided. The patients often do not know they are supposed to sign the checks over to cover the cost of their care, and the hospitals end up without payment.
If Blue Cross and Blue Shield of Georgia was trying to punish hospitals outside its network, as a lawsuit alleges, the insurer found an effective hammer: sending checks directly to patients, and leaving it to them to make payment where they received care.
According to Kaiser Health News, the practice by BCBS of Georgia has created outrage and 2 lawsuits from hospitals that blame the insurer for a tactic they say is unfair to the providers and, at best, confusing for patients.
KHN reported that Polk Medical Center, located in northwest Georgia, and Martin Luther King Jr. Community Hospital in Los Angeles filed separate suits over the practice. In both cases, patients treated at the hospitals received checks that were supposed to be signed over to pay for their care, but patients either didn’t understand the process or seized the opportunity to pocket the cash.
Either way, the suits say, the money is often long gone by the time the hospital finds out what has happened, leaving the provider with the option of suing patients or writing off the loss. If the patients are indigent, there's no way to recover the payments once they are spent, the suits argue. BCBS of Georgia declined comment.
Polk Medical Center says that BCBS of Georgia is purposely squeezing the hospital because it refused to agree to “unreasonable and unfair” terms to be in the insurer’s network. MLK is also not part in-network for any Blue Cross plans in California.
Healthcare experts interviewed by KHN said the practice is common among the Blues, who take the legal position that claims between providers and patients are “private pay” issues once the facility is out of network. A spokesman for the Blue Cross Blue Shield Association declined comment to KHN.
How does this occur? Franklin J. Rooks Jr., PT, MBA, JD, wrote an essay in 2013 about this problem for Physician’s News Digest. Rooks writes that even if the physician or hospital asks a patient to sign an “assignment of benefits” directing payment to the provider—and most patients do—there may be language in the patient’s subscriber agreement rendering this declaration “null and void.”
Most providers are unaware of such language, especially if dealing with a patient from another state, and patients are equally unaware of the language, Rooks states. For the language to work, he said, it must intentionally “prohibit the power of assignment.”
Rooks goes on to state that some insurers consider the ability to override assignment of payment a crucial part of their ability to maintain their network and hold down costs.
While some providers who offer discretionary care—such as optometrists or dentists—may require payment upfront to avoid losses from this effect, the hospitals suing BCBS of Georgia say that there’s no such thing when providing emergency care. Under federal law, patients who come to the emergency department must at least be stabilized and treated whether or not they have the ability to pay.
Some states have attempted to protect hospitals from overriding assignments through legislation, and Rooks’ 2013 piece states that Georgia was among them. But he said the best way to address the problem is to educate patients upfront about the need to forward any checks to the provider.