Last week, the California Hospital Association (CHA), which represents more than 400 hospitals, filed a lawsuit against Anthem Blue Cross (Anthem) alleging that Anthem’s untimely arrangement for, and authorization of, medically necessary post-acute care for Anthem’s members resulted in Anthem’s members being forced to need additional acute-care days in hospitals in violation of California laws. The lawsuit alleges that this practice, in combination with Anthem’s refusal to pay for the additional, avoidable days in the hospitals that Anthem required to occur, constitutes an unfair business practice in violation of California law.

Hospital Survey Reveals Insurance Delays are an Industry Problem
If a patient needs post-acute care, a hospital cannot discharge the patient until the patient’s health plan authorizes and arranges for such care. Hospitals allege that Anthem and other health plans routinely fail to authorize and arrange for such care, leaving patients in acute hospital beds when the patients no longer need such acute care and while those beds could be used for other patients who require acute care. According to a recent survey from CHA, an estimated 4,500 Californians daily spend unnecessary time occupying hospital beds waiting for their discharges to be approved for transfer to a more appropriate care setting after acute care. In the aggregate, these discharge delays result in a significant burden on California’s hospitals:

• California hospitals provide an estimated 1 million days of avoidable inpatient care;
• California hospitals provide an estimated 7.5 million hours of avoidable emergency department care; and
• $3.25 billion in hospital costs are expended that could otherwise be avoided.

The survey notes that discharge delays place a particular burden on the hospitals because insurers typically do not reimburse the hospital for patient stays for patients who have been medically cleared for discharge to a post-acute care setting.

California Hospital Association Seeks Injunctive Relief Against Insurance Delays
According to the complaint filed by CHA, the California’s Knox Keene Act “precludes Anthem from unilaterally discontinuing authorization for ongoing acute care before there is an agreement between Anthem and the treating provider for post-acute care.” The complaint alleges that Anthem ignores this obligation by failing to arrange for post-acute care for its members and simultaneously discontinuing authorization and payment for the ongoing care that the hospital is still providing to the patient awaiting transfer.

The complaint contains four patient examples of Anthem failing to timely arrange for post-acute care while at the same time denying payments to the hospital while the patient had to remain in the hospital receiving acute care. For those patient examples, the complaint alleges Anthem denied payment to hospitals for between 7 to 28 days even though Anthem had forced the additional acute care to be needed rather than care at a post-acute facility.

According to CHA, the alleged practices amount to unlawful and unfair business practices under California’s Unfair Competition Law. Resultingly, CHA seeks an injunction to stop these alleged practices by Anthem from continuing.

CHA is represented by King & Spalding in its lawsuit against Anthem.

The complaint filed by CHA can be accessed here.