Payers don’t lose. That’s been true in the health care space for, pretty much, forever. But I’m tracking a handful of developments that kick at discrete moments of accountability for health plans.
The health insurance industry is a land of leviathans. Today, there are four, maybe five, companies that truly matter in the grand scheme. For behavioral health, the oft-forgotten middle child of the health care industry, facing down any one of these companies is like lining up in front of a team of professional football players.
On one side, stands you, lacking all the characteristics required for success — other than interminable hope and a life calling. On the other side, stands a handful of the largest, most sophisticated and most powerful players in the world.
Down, set, hike?
But then, there are shining moments that make these demi-god-like entities look quite mortal.
For example: Last week, a group of Blue Cross Blue Shield entities agreed to pay $2.8 billion and reform several policies to settle a class action lawsuit by clinicians challenging whether or not the Blue Cross Blue Shield territory system constituted an antitrust action, specifically a violation of the late 19th century trust-busting Sherman Antitrust Act.
Billion. With a “B.”
This compounds with several less-heralded developments in the courts. The optimist in me wants to see a new era of accountability for payers. But not even the pluck of the industry that has rubbed off on me can hold out hope for that imagined future.
The developments that I’ll explore for the most part don’t directly involve behavioral health. Still, their generality makes them applicable to all of health care. In one case, it’s disproportionately relevant to behavioral health.
Here’s what I’ll get into in this week’s exclusive, members-only BHB+ Update:
— The potential impact of the huge Blue Cross Blue Shield settlement
— A smaller but vital judgment regarding out-of-network charges
— A new case tackling ghost networks
A sweeping antitrust settlement
A quick diversion, then I’ll get to the point.
A billion is a huge number. Our proximity to business and finance warps our understanding of the scale of numbers in reality. Here’s what I mean: If you were to line up $2.8 billion in American bills end-to-end, they would wrap around the Earth 34.2 times. I’m not good enough with math to account for how the 30-some-odd-thick layers of cash would potentially shorten this literal greenbelt.
Back on track …
The 12-year-old legal battle saw the delivery of a settlement agreement to the courts on Oct. 14. The plaintiffs in the case alleged the BCBS system of licensing exclusive territories violated Sections 1 and 2 of the Sherman Antitrust Act. While denying wrongdoing, 32 of the 60 BCBS licensees agreed to the settlement.
On top of the dollars in settlement, the settling defendants are committed to reforming how they interact with health care providers and each other.
The BlueCard program, the mechanism that providers must use when they treat members of Blue health plans they are not contracted with, will be reformed. In short, those promised reforms will result in better member information sharing. (You can get the plaintiff memo supporting the settlement here.)
The BCBS entities involved lost at their own game. The time it takes to grind out litigation often crushes plaintiffs. And if something like this ever does make it to trial, it seems so often that the law itself skews in the favor of plaintiffs. Judges and juries don’t seem eager to buck what they are told is legal, especially in such a complicated and archaic realm as health plan regulations. What’s more, higher courts, who ostensibly act as referees for the lower courts, seem likely to uphold the status quo. And when it comes to political slants, the U.S. Supreme Court has never been more pro-big business.
Reuters reports that the Blues settled to “put years of litigation behind us.” The defendants denied the allegations in their response to Reuters and in the settlement documents.
It can be hoped that this settlement will fundamentally change the experience of behavioral health providers working with Blue plans. If they do back off the potentially antitrust behavior of coordinated noncompetition, new patients could be in-network for providers. This would increase providers’ access to patients, and vice versa.
The settlement also highlights how one-sided the consolidation conversation has been.
All while payers and other watchdogs have decried health system consolidation, the payers have consolidated to something nearing black hole levels of density in certain markets.
Nationwide, just five payers account for 54% of all insured lives, the largest two being UnitedHealth Group (NYSE: UNH) and Elevance Health (NYSE: ELV), according to the American Medical Association. Collectively, the Blues — a cadre of affiliated and coordinating health plans under a common identity and interest — account for 43% of all insured lives. That’s a mind-boggling level of market dominance that is typically reserved for the Wonderland that is the tech industry.
Payer consolidation has put behavioral health — which is largely not consolidated and tiny to boot — at notable disadvantage in the health care game. And providers effectively have no choice but to play the game. How else will behavioral health providers be able to provide services at an accessible price point? How realistic is it for behavioral health providers to opt out of this game when about half of American markets examined by the AMA have a health plan that holds a 50% or higher market share? About 11% of markets have health plans that hold a 70% or higher market share.
While lightyears away from a bully 19th century monopoly breakup, the mechanisms of accountability digested a health insurance antitrust case, and the Blue opted not to take it to the bitter end and pay out a huge amount of money.
Combine this with the interest in the federal government when it comes to tech and health care consolidation and competition overall, and you can feel the winds incrementally shifting toward greater accountability for monopolistic behavior.
Where behavioral health is disproportionately impacted
At the end of September, Blue Cross Blue Shield of Louisiana found itself on the wrong side of a $421 million jury verdict.
The plaintiffs in the case — the St. Charles Surgical Hospital and Center for Restorative Breast Surgery in New Orleans — alleged that the plan only paid approximately 9% of the reimbursement for about 7,000 out-of-network procedures performed.
Instead, BCBS of Louisiana negotiated individual payment deals with brokers or employers, according to a blog by Epstein Becker & Green. Local news media also reports that BCBS of Louisiana would get a cut of the savings in reimbursements if it paid the Louisiana rates instead of the rates of the out of state plan.
BCBS of Louisiana intends to appeal, according to WWL-TV.
Epstein Becker & Green noted that the verdict, if it stands, could have wide implications for health care providers. It also points to other cases that it’s involved in that involve payers trying to underpay providers, both involving UnitedHealth Group: a $60 million verdict in Nevada in 2021 and a $111 million arbitration award in Florida in 2023.
“These verdicts show that there is a path forward for providers to be reimbursed for the services they render and the care they give to patients,” the firm said in a blog post “Meanwhile, for insurance companies, it calls into question their tactics, business strategy, and ultimate treatment of out-of-network providers.
“The threat of large verdicts plus attorneys’ fees, interest, etc., will force insurance companies to decide whether refusing to pay providers is worth the risk.”
Behavioral health benefits are used on an out-of-network basis much more often than physical health benefits. In no small part, this is caused by payers’ underinvestment and disregard for the space.
A study by RTI International and The Bowman Family Foundation finds that “patients went out-of-network 3.5 times more often to see a behavioral health clinician than a medical/surgical clinician.” Patients are 9 times more likely to go out of network for visits with a psychiatrist than they are for other specialist physician visits. In terms of payment, the average reimbursement for a physician assistant visit is 19% higher than for a psychiatrist visit and 23% higher than for a psychologist visit on an in-network basis.
If payers invested in resolving these disparities, profitability for those operations would increase because of relief on two fronts:
1) Providers won’t have to spend as much to chase claims.
2) A likely reduction in missed revenue will boost the bottom line.
That in turn would lead to additional investments by providers themselves into clinicians or investment from outside capital to grow the totality of the industry. It would also require payers to act in good faith to attract providers to their networks.
A nearly half-a-billion-dollar judgment against a local health plan entity is a great sign of the overall treatment of health care providers; behavioral health providers inevitably benefit from this.
Parity, ghost networks and timely access to care
Earlier this week, attorneys with Pollock Cohen LLP and Walden Macht Haran & Williams sued Anthem Blue Cross Blue Shield of New York over its alleged ghost network of behavioral health providers. It further alleges this constitutes a violation of several state and federal laws.
Anthem Blue Cross Blue Shield of New York is a part of Elevance Health. A representative of BCBS of New York told BHB: “We do not comment on pending litigation.”
Potentially impactful litigation has to start somewhere. Its filing may get a lot of attention. But forecasting the outcome of cases like this is pretty much impossible. A case like this faces steep odds of ultimately being successful. But that may be changing given recent legal trends.
The plaintiffs state in the suit they are seeking monetary damages and an injunction against the company requiring the cessation of alleged illegal activity. At least when it comes to the money part, class actions have never been more productive.
An analysis by the law firm Duane Morris LLP finds that class actions and government enforcement lawsuits generated $51.4 billion in settlements in 2023. The same report finds that courts granted or maintained class certifications at a rate of 72%. The total dollar amount in class action and government action settlements in the first half of 2024 totaled $22.9 billion. But to get there, this case very well might have to grind out a decade’s worth of law work. No small task, to be a bit glib.
Lawsuits like this may themselves be transformative. If nothing else, it forces the powers that be to reckon with the ghost network problem. It also helps make them more tangible. Putting something in a lawsuit has the effect of making an idea real in a way that other venues don’t have the power to do so. Further, the adversarial legal process proves facts in a unique way. That outcome can itself be publicly beneficial even if the plaintiffs ultimately don’t get what they want out of the process.
The plaintiffs’ stories also add another chapter to the story of ghost networks. Further, the plaintiffs’ attorneys did their own secret shopper investigation of the BCBS of New York behavioral health provider network. Staff called the first 100 providers in the network in the area of Yonkers. Ninety-two locations had correct, working phone numbers. But staff could only get appointments with seven of them. The rest weren’t in-network, weren’t actually behavioral health providers or booked out six months or more in advance.
“Providing a member who is in need of mental health services with a directory that is so inaccurate is little more than an invitation for the member to dive into Alice’s rabbit hole,” the test of the suit states.
In my mind, ghost networks are the rule, not the exception. There have been several examinations of ghost networks specifically and other network adequacy issues that are the spiritual cousins of ghost networks. Here are a few:
— 65% of Medicare Advantage plans had psychiatrist networks that were considered narrow.
— Psychiatrists listed in Blue plans in Boston, Chicago and Boston were only reachable 33% of the time.
Greater accountability for ghost networks is on the horizon, if not in the far distance. They have been shown to represent violations of, if not the letter, the spirit of the law behind parity, network adequacy, surprise billing and timely access to care regulations.
So far, behavioral health and other care specialties have been so looked down upon that payers would rather light piles of cash on fire to pay attorneys, settlements and other court-related fees than reform their businesses. But how much longer can that last if accountability for those actions arrives at an accelerated clip? While discrete and not altogether connected, or earth shattering, they show that power dynamics are fluid and can ebb and flow. Maybe that should give hope for a time when the industry can stand on better footing when facing this uncertain world.
Companies featured in this article:
Anthem Blue Cross Blue Shield of New York, Blue Cross Blue Shield Association, Blue Cross Blue Shield of Louisiana, Duane Morris LLP, Elevance Health, Epstein Becker & Green, Pollock Cohen LLP, UnitedHealth Group, Walden Macht Haran & Williams
