A federal judge in Pennsylvania denied Aetna’s request for arbitration Nov. 4 in a lawsuit from Philadelphia-based Jefferson Health and Lehigh Valley Physician Hospital Organization regarding the insurer’s “level of severity inpatient payment policy” for Medicare Advantage beneficiaries.
The lawsuit concerns an Aetna policy that authorizes lower payments for inpatient stays that do not meet certain screening criteria. After a delay, the policy went into effect in 2026.
The hospitals alleged the policy violated CMS’ “Two Midnight Rule,” which generally stipulates Medicare coverage for stays that are expected to last at least two midnights. The complaint included breach of contract and declaratory judgment claims.
In May, Aetna tried to compel arbitration, a private alternative to resolving disputes in court. Aetna’s filing said the causes of action did not qualify for the “equitable relief” exception to the arbitration clauses in the parties’ agreements.
However, the judge determined otherwise, finding that the lawsuit does not directly concern any specific reimbursement decisions but focuses more broadly on the policy that informs payments.
“We are thrilled that the court denied Aetna’s motion to compel arbitration and will keep fighting for our patients and the doctors and care teams who serve them,” a Jefferson statement shared with Becker’s Nov. 6 said. “Nothing should come between patients and their doctors — including insurance company payment policies.”
Jefferson filed a separate lawsuit against Independence Blue Cross in July, also concerning inpatient stays. That lawsuit is ongoing.
Aetna declined to comment.
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