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Illinois Court Orders Blue Cross to Pay Almost $3M to Surgery Center in Out-of-Network Case

Becker's ASC Review has learned of a recent decision in the Illinois courts regarded as an important step forward in ASCs' efforts to achieve reasonable out-of-network payments.


A trial court in Chicago has upheld a local podiatric surgery center’s claim for out-of-network payments from the largest payor in the state, Blue Cross Blue Shield of Illinois, awarding the center almost $3 million in damages.


The case, Chatham Surgicore v. Health Care Service Corporation, involves Blue Cross' refusal to pay for out-of-network services even though Chatham had made sure to get preauthorization approval for services and submitted claims on time.


Ruling will embolden ASCs

The ruling, made in late April but not publicized until now, will embolden ASCs across the country to use their out-of-network option and be paid at fair market rates, says Tom Pliura, MD, JD, a legal counsel for some Illinois surgical centers and manager of several ASCs in central Illinois.


"This case highlights that if you're willing to challenge an aggressive insurer on out-of-network status, you can win," says Dr. Pliura, who is not involved in the case. Other aspects of Illinois Blue Cross reimbursement policies are being challenged in two related Illinois lawsuits. Dr. Pliura encouraged ASCs in other states to launch similar legal challenges against insurers attempts to reduce payments for out-of-network ASCs or not recognize them at all.


Blue Cross is appealing parts of the Chatham Surgicore ruling to the state appellate court. The higher court had earlier directed the trial court to hear the case, which a trial judge had originally refused to hear in 2002. If Blue Cross loses its appeal, Dr. Pliura says the insurer is likely to ask the Illinois Supreme Court for a hearing, but that higher legal body grants very few requests, he added.


What it means for ASCs nationwide

The trial court decision in April recognized that if a surgery center makes a preauthorization call to an Illinois insurer and the insurer verifies coverage, the insurer must pay the claim. The ruling is based on the legal concept of "promissory estoppel," which enforces an oral promise even when there is no written contract between the parties. Dr. Pliura says courts in at least 13 states recognize some form of promissory estoppel, and the rest of the states have other legal concepts that might be used to challenge insurers' treatment of out-of-network status.


The Chatham Surgicore case was outlined in a 2005 Illinois Appeals Court decision, Chatham Surgicore v. Health Care Service Corporation, clearing the way for the 2010 trial. Because the trial court decision did not go into details of the case, the appeals decision is the only public document to lay out the facts of the case.


Chatham Surgicore made many preauthorization calls to Blue Cross to verify coverage for each of its Blue Cross patients and "Blue Cross' agents repeatedly represented to Chatham that those individuals were covered for services rendered at Chatham," the court stated. The insurer did not disclose any limitations on coverage. After providing treatment, Chatham sent in its claims on time. However, "Blue Cross refused altogether to pay Chatham for the treatment," the court noted.


The court stated, "Blue Cross' promises to pay were unambiguous because they were both definite and complete." It continued, "When Blue Cross made its assurances, it knew who would be providing the services, what services would be provided and who would be receiving those services." The opinion then directed the lower court to hear the case.


Appeal to stay out-of-network

Dr. Pliura says payors across the country have been pressuring ASCs to sign contracts and go in-network, signing agreements where they sometimes make even less than Medicaid rates. However, centers are now reaching a point where they have go out-of-network to survive, he says. While staying out-of-network is a little more difficult, because centers have to make a preauthorization call to the payor and get confirmation of coverage for each case, they can in some cases get double or triple the reimbursement compared with in-network, he says.


Even if ASCs decide to stay in-network, they may still want to renegotiate rates, Dr. Pliura says. In Illinois, "Blue Cross will tell you we don’t negotiate rates, but it will negotiate. Blue Cross caused its own problems because it was greedy," he says. "It ratcheted its rates down so low that the providers have no choice but to go out-of-network."


More Illinois cases to come

Two entities related to Chatham Surgicore are plaintiffs in two other cases that are awaiting trial in the Illinois courts:

* Rosner Podiatric Services v. Health Care Service Corporation involves both in- and out-of-network payments and alleges promissory estoppel and breach of contract. It is scheduled for trial on Dec. 1.

* Chatham Foot Specialists v. Health Care Service Corporation involves in-network payments to a podiatric practice. In this case, the Illinois Supreme Court has directed the trial court to address fraud and breach of contract complaints against the insurer. No date for trial has been set yet, but it is expected to take place next summer or fall.


Read the Illinois Appeals Court decision on the ASC out-of-network case.


Contact Tom Pliura at

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