Memorial Hermann sues BCBS Texas over alleged $3M owed in payments

Memorial Hermann Health System says Blue Cross Blue Shield of Texas owes it over $3 million in claims payments, according to federal court documents filed May 5.

Houston-based Memorial Hermann claims that in 2015, BCBS sought to shift hundreds of millions in health plan losses to the health system "by wrongly denying hundreds of valid Blue Advantage and MyBlue Health claims for emergency services and post-stabilization care."

Memorial Hermann then sued BCBS in 2017, seeking more than $30 million in damages for BCBS's alleged claim denials and breach of contract. The two parties resolved that lawsuit in 2019. 

Memorial Hermann now says BCBS has continued to operate improperly and has cost the system "more than $3 million in additional healthcare reimbursements for approximately 100 additional BAV members who came to Memorial Hermann with emergency conditions, which were not part of the prior lawsuit."

The original BAV plan payment contract between the two parties began in 2013. The lawsuit claims BCBS agreed to pay Memorial Hermann at an agreed rate for members who came to the hospital with emergency medical conditions.

But after facing losses of $400 million in 2014 on the state's ACA marketplace, Memorial Hermann says the payer increased denials in 2015 "for anything beyond what BCBS deemed 'emergency care', on the basis that Memorial Hermann is 'out-of-network' for BAV members." The hospital alleges that denied claims for emergency care rose from an average of one per month to 40 per month.

According to the lawsuit, BCBS justified the denied claims by saying BAV members needed to seek emergency care with in-network providers and that Memorial Hermann was required to transfer members to an in-network facility once the patient's condition had stabilized. Memorial Hermann allegedly asked BCBS whether it was supposed to transfer BAV plan members to different facilities against their will, and BCBS responded, "that's what you have security for," according to court documents.

Memorial Hermann says that by denying its claims and refusing to pay the agreed rate, BCBS violated its contract and Texas law.

Memorial Hermann is seeking a jury trial and to recover all appropriate damages for BCBS' breach, including the $3 million in additionally denied claims plus interest, available damages in the form of a statutory penalty, consequential damages, costs incurred from BCBS' actions and attorneys fees.

The hospital is also seeking a ruling on the current dispute regarding whether BCBS is allowed to deny Memorial Hermann's claims about post-stabilization treatment rendered to a BAV plan member. BCBS says it can deny such claims after the fact, while Memorial Hermann maintains it cannot because it violates the parties' agreement and because BCBS did not comply with Texas law.

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