Featured Health Business Daily Story, Dec. 28, 2016

Court Can’t Stop Anthem From Moving PPO Members Into EPOs

Reprinted from THE AIS REPORT ON BLUE CROSS AND BLUE SHIELD PLANS, a hard-hitting independent monthly newsletter on new products, market share, management strategies, profitability, strategic alliances and executive compensation of BC/BS plans. (Not affiliated with the Blue Cross and Blue Shield Association or its member companies.) Sign up for a $72 two-month trial subscription today.

By ,
December 2016Volume 15Issue 12

At a Nov. 15 hearing in Los Angeles Superior Court, a judge denied a temporary restraining order that would have prevented Anthem, Inc.’s California subsidiary from moving some of its individual PPO members into exclusive provider organization (EPO) plans, which don’t include coverage for out-of-network services. The judge, however, did acknowledge that Anthem Blue Cross violated federal law when it discontinued 2016 PPO policies and replaced them with EPO products for the 2017 plan year, says Laura Antonini, staff attorney at California-based Consumer Watchdog Group. The advocacy group recently filed a class-action suit on behalf of members who would lose PPO coverage at the beginning of the year. Anthem spokesperson Daryl Ng says the suit is “without merit.”

During the 45-minute hearing, the court determined the plaintiff lacked standing to bring the suit under California law (Proposition 64, passed in 2004), which says a plaintiff cannot bring suit for a violation of law until they have lost money or property, which won’t occur before Jan. 1 when the PPO coverage is discontinued, Antonini tells The AIS Report.

“Anthem didn’t disagree with our analysis of their federal violation, and the judge acknowledged that they violated the law, but said that because our plaintiffs had not yet lost money, his hands were tied,” she said.

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The class-action suit, filed Oct. 31 by Consumer Watchdog and attorneys for Shernoff Bidart Echeverria LLP, alleges Anthem violated federal and state law by sending policy renewal notices without adequately warning members that the new policies don’t include coverage for out-of-network providers. The lawsuit contends the change could leave some customers with large medical bills for services that would have been covered by the PPO in previous years.

Anthem: Change Keeps Rates Low

In a prepared statement, the health insurer explained that PPOs sold in some regions for 2016 were replaced with an EPO for 2017 in an effort to mitigate rate increases and keep monthly premiums affordable. The new coverage was approved by the California Dept. of Managed Health Care (DMHC) and Covered California, and complies with federal guidance, the company said. Affected members were sent a written notice of the change so they could make an informed decision during the open-enrollment period, according to Anthem.

The advocacy group, however, says the carrier should have sent discontinuation notices to members rather than renewal letters. Consumer Watchdog attorneys told the court that Anthem used a similar “bait and switch” tactic in 2014 when it replaced PPO coverage with EPOs with no out-of-network benefits. As a result, “people’s health suffered and we heard from families whose loved ones died because they could not find doctors participating in Anthem’s network,” Antonini says.

In August, Shernoff Bidart Echeverria helped to secure a $15 million settlement in four class actions, which alleged Anthem Blue Cross misrepresented its ACA-compliant coverage in 2014, leading some consumers to seek services from providers they believed were in the network. Those consumers later had to pay for those services out of pocket.

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