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CarePoint Sues Horizon BCBS for $76 million in Alleged Unpaid Claims

Horizon and healthcare advocates claim Hudson County hospital chain is at fault for driving up cost of care

Bayonne Medical Center
Bayonne Medical Center

A long-simmering dispute between a for-profit hospital chain and New Jersey’s largest health insurance company was back on the boil this week, as CarePoint Health filed a federal lawsuit claiming that Horizon Blue Cross Blue Shield owes $76 million in unpaid bills and has essentially been harassing patients who seek care at its Hudson County facilities.

CarePoint said the insurance giant violated its contract with patients and state and federal laws by not reimbursing the hospitals for treatments provided to more than 7,000 patients between June 2015 and September 20, 2016, according to papers filed Monday in U.S. District Court, in Newark. The suit also claims Horizon contacted patients while in the hospital to say they would deny coverage; encouraged recently admitted patients to transfer to lower-cost facilities; and continues to urge Hudson County residents to seek care elsewhere.

Horizon quickly fired back, insisting CarePoint has a history of “price gouging” and calling the lawsuit part of a deliberate strategy to maximize its profits. Instead of negotiating with the insurance company to determine reasonable rates, Horizon said CarePoint has instead billed customers and insurance companies excessive charges that drive up the cost of healthcare for everyone, regardless of their insurance coverage.

While the insurance company did not address the specific claims in CarePoint’s filing, Horizon, which represents more than 3.5 million customers in New Jersey, pledged to file a countersuit.

Horizon’s sentiment was echoed by leaders of NJ For Health Care, a consumer coalition that seeks to establish a more equitable, transparent system for determining hospital rates at facilities that are not part of a health insurance network. CarePoint’s facilities — in Bayonne, Hoboken and Jersey City — will be the only New Jersey hospitals not included in any Horizon insurance network, come January, the insurer said. Various studies have shown the hospitals have charged rates far above the state or national average for some procedures, but company representatives said this is necessary to cover the costs of those without insurance — and that they rarely collect the full amount.

Statewide, out-of-network charges cost consumers nearly $400 million a year and add up to $1 billion annually to the cost of insurance premiums, according to the coalition. And CarePoint is a main driver of this problem, explained Maura Collinsgru, a healthcare policy expert with Citizen Action, a leader in the campaign. “We’re all paying the freight for CarePoint and others like that,” she said. “And they are standing in the way of commonsense consumer protections.”

According to the lawsuit, CarePoint purchased the three struggling facilities between 2008 and 2012, reviving each from bankruptcy to protect jobs, the local economy, and community health. In order to improve economic stability, the company cancelled its contract with 20 private insurance companies — including Horizon — that it said were paying “inadequate rates” to remain part of these insurance networks.

In 2009 Horizon “retaliated” by refusing to pay for patient care and suing CarePoint’s Bayonne facility for submitting false claims, the filing states. Bayonne Medical Center filed a counterclaim, stating Horizon owed it $100 million and, after two years of costly litigation, the parties came to an agreement in 2011 that called for Bayonne — and eventually the Hoboken and Jersey City hospitals — to be part of a Horizon network for the next four years.

CarePoint claims in papers it continued to struggle financially and, since it was unable to re-negotiate the contract with Horizon, the hospitals chose to opt out of the network once again, starting last May. Since then, patients covered by Horizon have continued to seek care at the three facilities, but the insurance company has essentially refused to acknowledge the bills it has received from CarePoint, to participate in meaningful negotiations, or pay up.

"Being out of network is not a business strategy it is a survival strategy,” added Jarrod Bernstein, CarePoint’s senior vice president for communications.

CarePoint isn’t the first to suggest Horizon’s enormous market share gives it outsized negotiation power when it comes to setting provider rates. The insurance company beat back a handful of lawsuits and a wider public relations campaign launched late last year by a group of hospitals that said they were excluded from a preferential tier of providers in Horizon’s new OMNIA plan. While all the providers in question were technically in Horizon’s network, those that objected feared they would lose business as patients flocked to hospitals in the higher tier that could offer them additional savings. (The lower-cost OMNIA plan appears to be popular with consumers.)

In this case, CarePoint claims it remains open to network participation with Horizon and, perhaps ironically, the two parties had recently initiated a new round of discussions. But Horizon officials said it is time for state officials to step in and stop the underlying concern: out-of-network billing practices that scare patients, inflate costs, and maximize profits.

“CarePoint’s suit is a $70 million slap in the face to our members and the employers, labor unions, and taxpayers of New Jersey we serve,” said Tom Wilson, Horizon’s director of public affairs, noting how rising costs impact everyone. “This is the most blatant, despicable example of CarePoint’s out-of-network price gouging and the clearest sign yet why New Jersey must follow the lead of other states to end this abusive practice.  Failure to do so will only encourage others to follow CarePoint’s model and further drive up the cost of health insurance for everyone.”

NJ For Health Care said the solution is grounded in a controversial proposal designed to better protect consumers and balance the needs of healthcare providers and those paying the bills. The latest version (A-1952/S-1285) calls for greater transparency around network restrictions and establishes a mechanism to resolve payment disputes, either through binding arbitration or a rate structure.

While the measure has been championed by healthcare advocates and labor and business groups, healthcare providers and insurance companies have expressed reservations about how it resolves billing disagreements. Discussions continue and Sen. Joseph Vitale, (D-Middlesex) said he hopes stakeholders can resolve their disagreements so the bill can get a hearing in the coming weeks.

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