CalPERS’ and Anthem’s Breach of PEMHCA and Knox Keene Act
CalPERS and/or Anthem breached PEMHCA, including Government Code sections 22863, 22853, and 22864, including by failing to disclose the terms of the reduced “Allowable Amount,” by using reduced inappropriate “Allowable Amounts”, and failing to pay reasonable reimbursements.
CalPERS and/or Anthem breached the Knox Keene Act, including by failing to disclose the terms of the reduced “Allowable Amount,” by using reduced “Allowable Amounts”, failing to use UCR rates, and failing to pay reasonable reimbursements.
CalPERS and/or Anthem breached the regulations and statutes that require the use of usual, customary, and reasonable reimbursements.
CalPERS’ and Anthem’s reimbursement policies and practices also violate the applicable standards in the regulations, in (i) Cal. Code Regs., tit. 28, 1300 et seq, (ii) 2 CCR 500 et seq, including section 599.510, and (iii) section 1300.71 of title 28 of California Code of Regulations (which should be applied here in the nonemergency out-of-network contest because the terms in the EOC are otherwise so vague and without standards as to be illusory).
Reimbursement of Claims Amount Set Forth in EOC Cal. Code Regs., tit. 28, § 1300.71
(3) “Reimbursement of a Claim” means:
(A) For contracted providers with a written contract, including in-network point-of-service (POS) and preferred provider organizations (PPO): the agreed upon contract rate;
(B) For contracted providers without a written contract and non-contracted providers, except those providing services described in paragraph (C) below: the payment of the reasonable and customary value for the health care services rendered based upon statistically credible information that is updated at least annually and takes into consideration: (i) the provider’s training, qualifications, and length of time in practice; (ii) the nature of the services provided; (iii) the fees usually charged by the provider; (iv) prevailing provider rates charged in the general geographic area in which the services were rendered; (v) other aspects of the economics of the medical provider’s practice that are relevant; and (vi) any unusual circumstances in the case; and
(C) For non-emergency services provided by non-contracted providers to PPO and POS enrollees: the amount set forth in the enrollee’s Evidence of Coverage.
(Cal. Code Regs., tit. 28, § 1300.71.)
Anthem and CalPERS argue that only subpart C applies directly because these are non-emergency services, but CalPERS and Anthem ignore that the amount set forth in the enrollees’ Evidence of Coverage is otherwise without standards. Without standards, CalPERS and Anthem’s greatly reduced reimbursement fails under subsection (c) because that subsection cannot be administered consistently with the other terms and examples in the EOC.
In addition, the amount set forth in the EOC examples indicate that it would be an identical “Allowable Amount” whether in plan or out-of-network.
Anthem and CalPERS seek to apply only subsection (a)(3)(C) of reg 1300.71, and then point to the third subpart of the “Allowable Amount” to indicate that that one vague portion of the EOC gives them unfettered discretion to reduce the “Allowable Amount,” contrary to the more specific representations and terms in the EOC that the “Allowable Amount” will be identical whether in plan or out of plan.
However, the examples and the other subparts provide guidance, including as the third subpart and the overall definition of “Allowable Amount” in the context of all of the EOC is so ambiguous, contradictory, and unclear. For example under Subpart A, Dr. Walker was a contracted provider immediately prior to going NPP. However, CalPERS did not use the contracted rate in the “Allowable Amount” definition or reimburse Heinz at the prior agreed upon contract rate or anything close to it.
For example, under subpart B, CalPERS and Anthem failed to use the second subpart of the “Allowable Amount” definition and did not use the usual, customary, and reasonable rate for the health care services.
Under subpart C, CalPERS and Anthem failed to reimburse Heinz at the amount set forth in the enrollee’s Evidence of Coverage. In the examples in the EOC, the “amount set forth in the enrollee’s Evidence of Coverage” for the “Allowable Amount” indicates that the “Allowable Amount” should be identical for in-network as “out-of-network” providers.