Insurers, Private Hospitals in Houston Fighting over Patients’ Rates

Insurance companies and private hospitals are facing off in Houston over how much to charge patients for “out-of-network” surgeries and procedures.

According to the Houston Chronicle at least a dozen lawsuits have been filed in Houston in recent years over what insurers allege is an incorrect practice: private hospitals offering patients lower rates that compete with “in-network” facilities by billing the insurance company more.

Insurers have in some cases responded by refusing to pay the claims, leading to lawsuits and protracted battles that often don’t have a clear resolution.

In one lawsuit, the insurer Aetna refused to pay for surgeries at the private North Cypress Medical Center over a fee dispute.

The medical center is physician-owned and does not participate in any insurance networks, according to the newspaper. But when Aetna officials noticed a spike in patient claims from the hospital, it found that patients were being charged what they would have paid at an in-network facility — while Aetna was being billed at prices higher than it would typically pay to an in-network provider.

When Aetna started to reject claims made by North Cypress, the hospital sued and accused the insurer of “blacklisting” it. Aetna counter-sued with allegations that North Cypress doctors had inflated charges and used its emergency room to admit patients for non-emergency procedures.

Neither side received a clear victory. Aetna didn’t get $225 million in refunds it sought from North Cypress, and a jury said the hospital wasn’t entitled to higher reimbursement rates from Aetna.

Such disputes are closely watched in a health care industry that remains in upheaval and where “managed care” — in which insurers draw contracts limiting patients to certain doctors or hospitals — is being emphasized by many advocates as a way of keeping down costs.

“The model gets wrecked if the provider says we’re not going to charge you any money and we’ll just get our money from the insurance company,” said Seth Chandler, a professor of insurance law at the University of Houston.