WellPoint pays hospitals $11.8M to settle bills from rescissions

Anne Zieger — Tue, 08 Jul 2008 20:32:01 -0400

Leading health plan WellPoint has agreed to pay $11.8 million to settle claims with hundreds of hospitals that it failed to pay after it dropped patients after treatment. WellPoint was sued by about 480 hospitals after it refused to pay them when it dropped policies of individual policyholders. The health plan had dropped these policyholders, it said, because the patients made mistakes on their applications or had pre-existing conditions. The patients, for their part, said that WellPoint subsidiary Anthem Blue Cross had improperly investigated their medical histories for evidence of such conditions after they'd submitted costly medical bills.

In their case, the hospitals said that Anthem should pay, given that the health plan authorized the care for patients who, at the time of treatment at least, were members in good standing. The fact that Blue Cross dropped the patients later had no bearing on the plan's obligation to pay these bills, the hospitals argued. Now the hospitals will be reimbursed for these bills. As part of the settlement, they've agreed to stop trying to collect these bills from the patients.

Anthem (and WellPoint's) legal troubles on this front are far from over, however. It still faces a separate class-action suit from the state's doctors over unpaid bills for patients with canceled policies. There's also a class-action pending that was filed on behalf of more than 6,000 patients whose policies were canceled since 2001. Meanwhile, the state's Department of Managed Health Care is considering piling on more fees, having already imposed a $1 million fine last year after it concluded the rescissions were illegal. The new fines could be as much as $200,000 per violation on about 1,700 disputed cancellations.

To learn more about these legal issues:
- read this Los Angeles Times article

Related Articles:
California hospitals, MDs join Blue Cross payment suit
BC of California fined $1M for cancellations
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Blue Cross of California settles plan-cancellation suits

Analyst says Tenet poised for major turnaround

Wed, 30 Apr 2008 06:59:57 -0400

This must be satisfying for Tenet execs to see: A major healthcare analyst has turned tail and upgraded the hospital company's rating dramatically, after slamming it less than a year ago and suggesting it would soon go out of business.

Eight months ago, leading healthcare analyst Ken Weakly of Credit Suisse Securities predicted that Tenet's stock would drop to $2 per share from its then-status of $3.67 per share, rating the stock as "under perform." At the time, Weakly noted that several threats, including the chain's reliance on Medicare outlier payments and lower-than-needed patient volumes, posed serious threats to the chain's survival, and predicted that within three years it would go bankrupt. Not only that, the company was still recovering from its protected legal troubles, which included a $725 million payment to settle Medicare billing charges.

Now, however, Weakly has done a complete turnaround, changing his rating to "outperform" and pushing his price forecast up to $8 per share from $6. With Tenet not only boosting patient volumes, but also seeing better pay from health plans, the company now has a "sustainable economic profile," Weakly wrote in a recent note to investors. In addition to taking in more money, Tenet has cut costs aggressively, eliminating almost 1,500 jobs in 2007, shed its poorer performing hospitals and re-structured services to focus on more profitable eras like neonatal care and cancer treatment.

To learn more about Tenet's situation:
- read this article from The Dallas Morning News
- read this piece from The Boston Globe

PLUS: Though Tenet may still be struggling, hospital operator Universal Health Services is going strong, with profits having jumped nearly 25 percent during the first quarter of this year.

Related Articles:
Tenet turning around: Admissions grow, losses fall
Tenet may be ready for comeback
Tenet execs detail turnaround progress
Tenet fights bankruptcy rumors