Anthem's California companies are suing 11 Prime Healthcare facilities, alleging that the hospitals committed fraud by "knowingly flooding" the No Surprises Act's dispute resolution process.
The health insurer said in a complaint filed Monday that the defendant facilities submitted more than 6,000 ineligible claims to the independent dispute resolution, or IDR, which led to millions in "wrongfully obtained awards." Anthem said that, in aggregate, the Prime hospitals received $15 million more than the insurer would have paid originally.
The typical award through IDR was six times what a contracted provider would have been paid, according to the lawsuit.
Anthem alleged in the complaint that Prime Healthcare has acquired facilities that would then cancel contracts with insurers and that the hospitals under its umbrella "aggressively pursued collection" of out-of-network claims.
"But IDR opened a lucrative revenue stream for defendants, which were all out-of-network with Anthem for at least some period since the NSA was enacted, and the upside of abusing the process was too profitable for them to ignore," Anthem wrote in the complaint.
In the court filing, Anthem said the facilities have initiated IDR against Anthem for claims that were not related to Anthem members, and for claims that were in-network under contract.
Providers must certify the eligibility of claims submitted for IDR, but oversight of the process has been lacking, much to the dismay of insurers who are largely the losers in dispute resolution. A study released in August found that providers won 85% of IDR decisions since the third quarter of 2023.
Under the No Surprises Act, patients are protected from surprise balance bills, and providers and payers must instead come to the table to negotiate a payment. The process was designed with the expectation that most disputes would be resolved in this initial negotiation, where payers would offer a qualifying payment amount, or QPA, that's based primarily on the median in-network payment rate.
When payers prevail in IDR, payouts tend to hew more closely to that established QPA, the study found. However, when providers win, the median payout was three times higher than the QPA.
In the lawsuit, Anthem alleges the Prime hospitals are knowingly making false statements and falsified key parts of the process to initiate IDR in a bid to secure those higher payments.
"These misrepresentations force payers like Anthem into costly dispute resolution proceedings in cases that the system was designed to weed out," the insurer said.
In a statement to Fierce Healthcare, a spokesperson for Prime Healthcare said the lawsuit is "meritless."
"The No Surprises Act was created to protect patients from balance billing and to ensure providers delivering necessary care are treated fairly," the spokesperson said. "Prime Healthcare does not balance bill any patients and acted in compliance with the Act and its independent dispute resolution process, which Congress established to promote equity and transparency."
"We are holding billing companies and out-of-network providers accountable for what we believe are fraudulent and abusive practices that result in excessive healthcare costs, burden consumers, and undermine the integrity of our healthcare system," the company said. "This legal action is another powerful step in our efforts to shield consumers from these harmful practices and restore trust. Every dollar lost to these practices is a dollar that could have gone toward delivering care, investing in prevention, or keeping health coverage within financial reach for families."