CHA News Article

California Supreme Court Denies Review in Hospital Case Against Blue Cross
Case focused on calculating payment for authorized post-stabilization emergency medical services

Yesterday, the California Supreme Court denied review in Children’s Hospital Central California v. Blue Cross of California, and denied a request that the Court of Appeal’s decision be “depublished.” The case arose from a dispute between the hospital and Blue Cross over the basis for calculating the amount Blue Cross owed the hospital for authorized post-stabilization emergency medical services provided to beneficiaries enrolled in Blue Cross’ Medi-Cal managed care plan during a 10-month period when the parties were not in contract. Under the appellate court’s decision, hospitals may be paid less by non-contracted plans for authorized post-stabilization emergency medical services.

Specifically, title 28, Section 1300.71(a)(3)(B) of the California Code of Regulations defines “reimbursement of a claim” for non-contracted providers as the payment of the “reasonable and customary value for the health care services rendered,” and identifies six factors to be taken into consideration, including “the fees usually charged by the provider.” According to Blue Cross, the trial court incorrectly concluded that §1300.71(a)(3)(B) provided the exclusive standard for determining the “reasonable and customary value” of the medical services at issue; as a result, Blue Cross claimed, the trial court improperly limited the evidence of such value to the hospital’s full billed charges contained in its charge master. Blue Cross argued that it should have been allowed to develop (through discovery) and present at trial evidence of lower rates the hospital had contractually agreed to accept from other payors and received from the state (Medi-Cal).

The trial court ultimately awarded $6.6 million plus interest to the hospital, and Blue Cross appealed. The Court of Appeal agreed with Blue Cross, concluding that the trial court had erred in preventing Blue Cross from developing and presenting at trial evidence of the scope of rates accepted by or paid to the hospital by contracted payors and the state. Consequently, the appellate court reversed the trial court judgment and remanded the case for a new trial on damages. The hospital then petitioned the Supreme Court to review the matter, seeking to overturn the Court of Appeal’s decision. CHA filed an amicus letter in support of the hospital’s petition and requested that the Court of Appeal’s decision be “depublished,” which would have prevented it from being relied on as precedent in other cases. The Supreme Court determined that it would not review the matter and elected not to depublish the decision, thereby allowing it to remain published precedent.