California Hospitals Sue Anthem, Alleging Delays Cost Billions

Blue Cross of California‘s failure to coordinate necessary longer-term care after hospital stays contributes to backlogs and at least $3.25 billion in preventable costs annually, alleged a suit filed Tuesday in California state court.

The insurance provider, which does business as Anthem Blue Cross, allegedly breaks California law by failing to arrange inpatient rehabilitation stays and other services, while leaving hospitals in the state to pick up the tab for longer-than-necessary stays, according to the complaint filed in Los Angeles County Superior Court.

About 4,500 patients wait in California hospitals and emergency rooms every day, even after they’ve been medically cleared for discharge, due to delays from Anthem and other insurance providers, complicating their recoveries, the complaint said.

Anthem also doesn’t pay hospitals for care they deliver to patients stuck “in limbo,” with the justification that those hospital services are no longer medically necessary, the complaint said.

But hospitals can’t let patients leave without an appropriate care plan, according to the complaint filed by the California Hospital Association, which represents more than 400 hospitals in the state.

Anthem declined to comment on the allegations.

The problem is endemic and spans across health insurance providers, said Carmela Coyle, president and CEO of the California Hospital Association, during a news conference Tuesday.

Anthem is named “because it is one of California’s largest insurance companies, an insurance company with the most contracts with hospitals in the state of California,” Coyle said. “But we are hopeful the action the court may take may influence the actions of other insurance companies and ultimately put an end to these harmful practices.”

King & Spalding LLP represents the California Hospital Association.

The case is California Hosp. Ass’n v. Blue Cross of California, Cal. Super. Ct., 4/23/24.