Blue Cross and Blue Shield of Georgia has overcharged customers for health insurance while at the same time cutting payments to doctors outside of their coverage “network,” according to a lawsuit filed this week that seeks class-action status.
Former Georgia Insurance Commissioner John Oxendine filed the lawsuit on behalf of 11 surgical centers, their patients and a claims filing service. It argues that the state’s largest health insurer cut payments to doctors but continued charging consumers a premium rate as if they were still making the higher provider payments.
Oxendine, who said hundreds of millions of dollars may be at stake, has also asked his successor to investigate.
Blue Cross and Blue Shield of Georgia, the leading health insurer in the state with about 3 million members, has called the accusation untrue.
In a statement, the company responded: “Blue Cross and Blue Shield of Georgia does not discuss the details of pending litigation. Nevertheless, the allegations are unfounded. Further, we believe these surgery centers were properly compensated for their services.
“Our goal at all times is to serve the best interests of our customers, ensuring that they have access to the best, most advanced health care available.”
When doctors were paid more, ‘it made sense’
Oxendine said Blue Cross has justified charging higher premiums and having consumers pay a bigger percentage of their bill out of pocket when seeing out-of-network doctors because the company paid those providers more for services.
However, the lawsuit says Blue Cross began paying those doctors less but kept the premiums high.
“When they were paying doctors more, it made sense to charge you more money for the product,” said Oxendine, a lawyer. “Now they are paying less, and they have still kept the same charging structure.”
When a medical provider is “in-network,” they agree to accept a contracted rate for services. Consumers may pay more for “out-of-network” care because providers outside of networks have not agreed to a set rate with insurers and may charge more. Also, plans may require higher co-pays, deductibles and co-insurance for out-of-network care.
Oxendine said he’s contacted the office of the current insurance commissioner, Ralph Hudgens, in hopes he’d investigate the issue. Hudgens’ office told The Atlanta Journal-Constitution that it plans to do just that.
‘I had no idea I had to check out doctors’
The former commissioner said 11 clinics from across the state collected signatures from hundreds of Blue Cross patients who agreed to be part of the lawsuit.
Dr. Douglas Elleby of the Austell Center for Foot and Ankle Surgery said his facility’s business is off more than 50 percent since the group decided to go out of network. Elleby switched to being out-of-network — without an agreement with an insurer — because “We wanted to establish a relationship with the patient, and not the insurance company. We want to do what is necessary for the patient.”
Laura Thomas Lowe, a retired Gwinnett County educator, found out the difference between what it costs for “in-network” and “out-of-network” care the hard way last year when she had heart problems. She and her family had been paying premiums on the most expensive Blue Cross and Blue Shield coverage offered last year through the State Health Benefit Plan. Blue Cross is the leading insurer of the plan, which covers 650,000 teachers, state employees, retirees and their families.
Lowe said she had to go to an emergency room in Gwinnett four times last year, and she stayed overnight once. She paid co-pays for the emergency room visits. The hospital was in the insurer’s network, so it covered her hospital stay. But she said her emergency room physicians were not, and she wound up with about a $3,000 bill.
“I have always been told you have to go to the nearest emergency room if something like this happens,” she said. “This was ridiculous. I had no idea I had to check out the doctors.”
The physicians group told her last week that it would write off what’s left of the bill.
Oxendine, Blue Cross have battled before
Blue Cross officials said as of Jan. 1, in-network and out-of-network doctors at the hospital are paid the same for services.
Oxendine said Blue Cross started phasing in changes in how it paid out-of-network doctors in late 2012.
“I don’t know if it’s happening outside of Georgia,” Oxendine said. “Knowing how the company operates, I suspect it’s happening in other states.”
This isn’t Oxendine’s first fight with Blue Cross. While insurance commissioner in 2010, he battled with Blue Cross over clauses the company included in contracts with hospitals to keep them from making better deals with other health insurers. Oxendine said that the practice stifled competition and kept prices high. Blue Cross said it helped consumers.
In another case that year, he ruled that under state law, Blue Cross couldn’t prevent a cancer treatment center from joining the company’s health maintenance organization network.
A year earlier, Oxendine joined a national dispute over medical rate-setting and launched an inquiry into how Georgia health insurers calculate payments to physicians for out-of-network care. At the time, state and national medical groups were suing insurers such as Blue Cross’ parent company over such payments.
A political comeback could be in the works
For Oxendine, the lawsuit also has the potential to launch a public comeback of sorts since it has the possibility of being a high-profile case.
Oxendine burst onto Georgia’s political scene in 1994 when the former Democrat ran as a Republican and ousted Insurance Commissioner Tim Ryles.
Oxendine won re-election statewide three times. For most of his 16 years in office he was known as a politician adept at garnering high-profile media coverage of his consumer protections efforts while at the same time ginning up millions of dollars in campaign contributions from people he directly or indirectly regulated.
When he ran for governor in 2010, Oxendine had the most money and the greatest name recognition at the beginning of the campaign, and he led in most polls until just a few weeks before the GOP primary. But he finished fourth in a race eventually won by Nathan Deal.
After leaving office he started his own business, doing legal work and being paid to serve as an expert witness on insurance cases.
He received some unwanted publicity in 2011 when The Atlanta Journal-Constitution reported that, in his last full day in office, he issued himself several licenses to sell insurance and adjust claims without taking mandated classes or licensing tests. The AJC story quickly led to legislation to prevent future commissioners from being able to do that.
Still, some Georgians remember his time in office fondly. When the AJC recently wrote a story about rising auto insurance premiums, some readers responded that they missed his willingness to take on insurers.