Montgomery, Ala.-based Jackson Hospital filed a lawsuit against Blue Cross and Blue Shield of Alabama over its reimbursement rates, according to a Dec. 18 complaint in the U.S. Bankruptcy Court for the Middle District of Alabama.
Jackson Hospital is in the middle of its own bankruptcy proceedings. In the lawsuit, Jackson Hospital claimed the insurer reimburses at roughly 120% of Medicare. The hospital is seeking damages in excess of $250 million and a court order to raise rates, at least to the level of Montgomery, Ala.-based Baptist Medical Center.
“Blue Cross Alabama did what it always does: Value profits over people,” the complaint said.
Jackson Hospital filed for Chapter 11 protection in February. The original filing specifically noted how a planned affiliation or sale with a partner had collapsed in 2024. Recently, Jackson Hospital has been faced with either planning to restructure or close. Montgomery County, home to the hospital, declined a request for additional funding. However, a judge had previously permitted an emergency loan to keep the facility afloat through the holidays.
“From the start, Blue Cross has negotiated with Jackson Hospital in good faith and has repeatedly increased Jackson Hospital’s reimbursement rates in recognition of its financial difficulties,” a BCBS of Alabama statement shared with Becker’s said. “Jackson Hospital is more than fairly compensated by Blue Cross for the services it offers. Although Blue Cross customers make up only 25% of the patients that Jackson Hospital treats, Jackson Hospital’s Texas lawyers seek Blue Cross customers to pay for the hospital’s mismanagement.”
The spokesperson for BCBS of Alabama said the insurer pays more than 90% of every premium dollar to providers. The insurer added that the payer’s personnel costs make up less than 4% of revenue, and the organization has paid more than $400 million in taxes over the past five years into the state’s main operating fund.
“We know this is a challenging environment for both patients and healthcare providers. The cost of healthcare — what providers charge, including Jackson Hospital, continues to rise rapidly each year,” the insurer said. “We are obligated to our premium-paying employers and families to provide high-quality, cost-effective healthcare. We know our members come to us by choice and we don’t take that for granted.”
Becker’s contacted Jackson Hospital and will update this story if more information becomes available.
