On Sept. 24, the New Orleans-based St. Charles Surgical Hospital and Center for Restorative Breast Surgery was awarded $421 million by a jury in a lawsuit that alleged Blue Cross and Blue Shield of Louisiana failed to fully pay for out-of-network charges.
The jury awarded the payout after a seven-year legal fight between the payer and the surgery center. BCBS Louisiana was accused of shortchanging the center on thousands of breast reconstruction surgeries. The jury determined that BCBS' failed payment amounted to fraud, as it had authorized around 7,800 surgeries from 2015 to 2023 and paid out roughly 9% of the related claims.
BCBS denied that it acted fraudulently, stating they "strongly disagree with the jury's verdict" in a statement to Becker's, and that they plan to appeal the decision. St. Charles Surgical Hospital has not been in the BCBS network since 2007, when they departed from the payer and alleged that reimbursement rates were too low.
However, the surgical hospital continued treating BCBS patients because the surgeries were authorized as out-of-network procedures, but founders of the center told the jury that surgeons only received a fraction of the charges they were billed.
BCBS has countered by saying that authorizing a treatment does not guarantee payment. The $421 million award is one of the largest ever in a state known for large jury awards.
Insurance specialists told Medscape Medical News in an Oct. 7 report that the verdict is "unusual," demonstrating a gray area in out-of-network authorizations.
Paul Ginsburg, PhD, a professor of the practice of health policy at the University of Southern California in Los Angeles, said that out-of-network care does not come with a contractual relationship.
When functioning out-of-network, "providers can charge whatever they want, and the insurers will pay them whatever they want, and then it's up to the provider to see how much additional balance bill they can collect from patients," he said.
While some states have laws that partially protect patients from balance billing, Louisiana does not. Dr. Ginsburg also drew a distinction between the authorization of out-of-network procedures and the agreement of payment by insurers.
"They're authorizing [the procedures] because they believe the procedures are medically warranted," Dr. Ginsburg said. "That's totally separate from how much they'll pay."
Another insurance specialist, Lawton Burns, PhD, professor of healthcare management at the Wharton School in Philadelphia, said that out-of-network agreements usually have a specified rate, such as 70% of "reasonable charges."