Valley Health sues Anthem for $11.4 million in overdue payments (October 13, 2022)

Valley Health sues Anthem for $11.4 million in overdue payments
By JOSETTE KEELOR
The Winchester Star
Oct 13, 2022


WINCHESTER — Valley Health System is suing Anthem Blue Cross Blue Shield, now known as Elevance Health, for $11.4 million in past due payments, according to a news release.

The lawsuit was filed Thursday in Winchester Circuit Court. It includes two counts: breach of contract and violation of the Virginia Ethics and Fairness in Carrier Business Practices Act.

Mark Nantz, president and CEO of Winchester-based Valley Health, said the decision was “a last resort” and follows two years of attempts to resolve reimbursements that Valley Health says it is owed by Anthem, which is the largest health insurance carrier in Virginia.

“We’ve incurred the cost, we’ve performed the service, and we’ve not been paid,” he said on Thursday. “We had appealed to them. Some of these accounts are 2-plus years old.”

Valley Health, which operates six hospitals including Winchester Medical Center, has “worked in good faith to quietly resolve significant reimbursement issues with Anthem,” the release states, but “egregious delays in payment for healthcare services delivered to its members” has forced its hand.

“Anthem has left us no choice but to take legal action,” Nantz states in the release.

“We will not accept Anthem’s continued avoidance of the payments owed to our health system, which limits our resources to deliver the care our patients and their members pay for, expect, and deserve,” he adds.

Valley Health has tried for many years to work with Anthem on solving “its claims processing and payment deficiencies,” the suit reads, and has devoted “hundreds of hours of employee time” to meetings, calls, researching and “answering an endless stream of repetitive and unnecessary questions and data requests — but all to no avail.”

The suit goes on to say that this isn’t an isolated incident.

“In March 2022,” the suit states, “the Georgia Insurance Commissioner’s Office levied a multi-million dollar fine against Anthem’s Georgia affiliate for, among other failings, improper claims settlement practices and violations of the Georgia Prompt Pay Act requirements for paying healthcare providers.”

The Maine Insurance Department is also investigating and doing a market conduct examination of the payment practices of Anthem’s Maine affiliate.

Referencing media reports, the suit says Anthem owes more than $300 million in unpaid claims to VCU Health of Richmond and its Maine affiliate owes $70 million to a hospital system in Portland, Maine.

The suit was submitted by Kevin M. Rose, Michael W. Sharp and Mary Margaret Hawkins of BotkinRose PLC in Harrisonburg.

Valley Health recently announced concerns about its economic prospects following 2½ years of the COVID-19 pandemic, which has led to drastic staffing shortages, amid the country’s highest inflation rate since 1982.

The release also references “ongoing losses incurred from treating Medicare, Medicaid, and self-pay patients” while calling out Anthem for having recently announced record profits.

An information sheet provided by Valley Health on Thursday further explains why the health system has taken legal action, saying, “While the insurer continues to raise premiums and enjoys record profitability, every earned dollar Anthem/Elevance withholds from Valley Health jeopardizes access to sustainable, high-quality healthcare services available across the Shenandoah Valley.”

Anthem/Elevance made $6.1 billion in profits in 2021 alone, which Valley Health says is up 30% from 2020.

“Meanwhile, health systems are experiencing record losses,” Valley Health indicates.

According to Valley Health, its reimbursements from Anthem are overdue by $2.6 million in fiscal year 2019, $2.9 million in 2020 and $9.5 million in 2021. As of September 2022, $11.4 million is owed.

Meanwhile, it states, Anthem’s climbing profits amounted to $4.8 billion in 2019, $4.6 billion in 2020 and $6.1 billion in 2021. As of June 2022, it reached $3.5 billion in profits.

Furthermore, it states that Anthem/Elevance owns 43% of Virginia’s health insurance market, allowing it to “strong-arm health systems into accepting flagrant contract violations like this.”

Valley Health is far from alone in having to deal with failing to be reimbursed for services, Nantz said on Thursday. He explained that while Valley Health is making its judgments independently of what is happening elsewhere, he knows that other health systems around Virginia are experiencing the same types of problems.

Information provided by Valley Health also lists Indiana and Wisconsin as states with health systems or state regulators that have fined the insurance provider.

Conversely, Nantz said, Valley Health doesn’t have these issues with any other insurance provider.

“Every other payer we work with, we have nothing like this,” he said.

Valley Health renewed its three-year agreement with Anthem in January 2021 following lengthy contract negotiations. This enabled Valley Health to avoid terminating its relationship with Anthem, “which would have been highly disruptive to Anthem’s members,” the lawsuit states.

In a statement issued late Thursday, Anthem/Elevance called Valley Health’s claims overstated.

“We are aware of the lawsuit that was filed and are reviewing it,” the statement says. “We want to be clear that this action in no way impacts access to care, and Anthem Blue Cross Blue Shield members may continue to receive care at Valley Health. ...

“As to some of the specific claims being made, we believe they have been inflated based on inaccurate and incomplete data,” the statement continues. “It is a standard industry practice to review claims for medical services to ensure they are coded and billed appropriately. Anthem Blue Cross and Blue Shield in Virginia strives to process claims as quickly as possible and in accordance with our agreements, while also verifying billing accuracy, which requires the cooperation of our provider partners.”

The statement says the insurance provider will continue to work with Valley Health to resolve the issue as quickly as possible.

Valley Health, too, “will continue to do our part to serve our community and ensure patients have access to the providers and services of our health system,” Nantz states in the release.

“But we must hold Anthem — one of the nation’s largest health insurers and responsible for a large portion of Valley Health’s revenue — accountable for the harmful effects of their payment delays that ultimately impact our ability to sustain quality community healthcare services.”

Valley Health feeling economic pinch from pandemic, inflation (October 6, 2022)

Valley Health feeling economic pinch from pandemic, inflation
By JOSETTE KEELOR The Winchester Star
Oct 6, 2022

Faced with a vastly smaller staff, rising costs and the potential of cutting ties with insurance companies in the coming years, Valley Health is considering its options for how to weather the economic impact sparked by the COVID-19 pandemic.

Valley Health is not in danger of closing, said Mark Nantz, president and CEO of the not-for-profit healthcare company that serves more than 500,000 people and operates four hospitals in Virginia and two in West Virginia as well as more than 70 medical practices and urgent care centers, outpatient rehabilitation and fitness, medical transport, long-term care and home health.

However, he said they are cautious about the financial implications for them as health systems around the country struggle with many of the same issues.

“At some point, it would be difficult for any health system to keep the doors open,” he said.

For now, no essential services are in jeopardy, he said, but if inflation and job vacancies continue and they can’t get revenues to increase, they will have to look across their 15-county region to decide where they can reduce, consolidate or discontinue services.

Instead of six places for surgery, it might have to be four, he said. Instead of 150 doctor’s offices, it might be 100.

“We’re looking at every service we provide,” Nantz said. “How can we do that at a reasonable margin?”

Nantz credits federal funding over the last 2½ years with keeping the health system afloat.

In a news release earlier this week, he said that if Valley Health hadn’t received $126 million through assistance programs such as the federal CARES Act, the Virginia Department of Medical Assistance Services and the Federal Emergency Management Agency, then it would have lost $100 million over the last 2½ years.

But all of that funding is gone now, and he’s less sure about how the health system will remain in the black in the coming months and years.

“I would say that the biggest lasting impact is the cost of staffing,” Nantz said.

As with many other areas of business operations, he said the cost of salaries has gone up 20% from pre-pandemic rates.

Furthermore, Valley Health has about 800 job vacancies, whether full- or part-time, and most of them are in Winchester and the counties of Clarke, Frederick, Page, Shenandoah and Warren.

“Right now we’re making up for that shortfall by either asking people to work overtime, finding temporary agency [professionals] or combining units and services so that we can try to do more with less,” Nantz said.

Despite being short-handed, he said Valley Health is still providing necessary procedures and that the trauma centers are functioning at the capacity they must to provide that critical level of care.

“At all times during the pandemic, we’ve maintained a safe level of care and standard of care,” he said.

But asking staff to work more hours at premium rates while bringing in agency professionals to fulfill temporary assignments at higher rates has been costing a lot more than if Valley Health simply had a full staff, he said.

As of February 2020, Valley Health was averaging about $800,000 per month in premium pay, Nantz said. Now it’s averaging $3 million a month.

“It’s across the country. Everyone is feeling the same thing,” Nantz said.

“The labor has gone up significantly, and it doesn’t appear to be going back down.”

Another major problem, he said, is that most insurance providers are reimbursing health-care facilities based on pre-pandemic rates, not today’s rates, which are much higher because of the cost of labor and also the cost of doing business during a time of inflation with higher gas prices and various other products.

Historically, a health system looks to commercial insurance to make up the difference in the shortfall of Medicaid, Nantz said.

Valley Health has been negotiating higher rates with companies like Anthem, Aetna, Cigna and United, and since each insurance company’s contract period expires at a different time, he said this process could take until the end of 2024.

“In between contract periods we don’t really have the right … to cancel,” Nantz said. “As those negotiation rates come up for renewal, we’ve been requesting and receiving increases that are higher than normal.”

Also, regardless of what happens with the insurance companies, he said that Valley Health’s financial assistance program will remain.

Still, they’ll have to see if it’s all enough.

“We’re a long way from going out of network,” he said. But it is a possibility that they’re considering.

“Most health insurance companies have had record years in the last 2½ years,” Nantz said.

That’s at least in part because many patients have been avoiding going to the doctor, some even putting off necessary care. Insurance companies are still making money, Nantz explained, but they’re not having to pay out as many reimbursements as they would have done before the pandemic.

In the meantime, he said, hospitals are dealing with runaway inflation.

If the insurance companies refuse to give a rate of increase equal to Valley Health’s costs, he said, “Then we can’t afford to do business with that company.”

Whatever happens, though, Valley Health will “continue being the safety net for 15 counties," he said.

“Valley Health is strong; we’ve been here for a long time,” he said. “It’s important that the community know that we didn’t come through this without a mark.”

But, he’s proud of how they’ve responded throughout the pandemic.

“We’re gonna be here,” he said. “It’s not over for us yet.”