Queen’s Health Systems asks court to dismiss lawsuit by Kaiser over billing

The Queen’s Health Systems is asking a federal court to dismiss a lawsuit filed by Kaiser Foundation Health Plan Inc. for unfair billing practices.

The payment dispute arose after a hospital services agreement expired on May 30 and the parties were unable to come to terms on a new contract. Queen’s said negotiations failed because of “Kaiser’s refusal to accept its responsibility to pay for the actual costs of services” for members with complicated medical conditions.

“Though Kaiser represents a small portion of our total volume, Queen’s cannot agree to contracts that place the financial burden of treating patients on the hospital,” said Mich Riccioni, the hospital’s chief financial officer, in a news release.

Kaiser filed a complaint in June in the U.S. District Court to stop Queen’s from directly billing its members, with the exception of deductibles and co-payments, and to allow the HMO to pay only the “reasonable value of Queen’s emergency serv­ices,” which is “not necessarily 100%” of billed charges. Queen’s provides emergency services for hundreds of Kaiser members each year at a cost of several millions of dollars, according to the complaint.

Health plans negotiate payment rates with hospitals and larger insurers have more leverage to “demand bigger discounts,” according to the American Hospital Association.

Hospital billing has come under fire in recent years because patients do not know the cost of care until after service is rendered. In some cases, patients have been billed exorbitant amounts, particularly if their health plans do not have contracts with the medical provider.

Queen’s said it will continue to send initial bills directly to Kaiser and that members will only receive invoices if the insurer refuses to pay. However, billing will be under the “industry standard process” for out-of-network services provided to Kaiser members after May 30.

“Since there is no longer an agreement with Kaiser, there is no longer a favorable negotiated rate and standard rates apply,” the hospital said.

Queen’s said it has had an agreement with Kaiser for more than five years that established the rates the health plan would pay for hospital services. But during the contract, Kaiser “systematically reduced the volume of its patients utilizing Queen’s services.” The agreement followed an earlier lawsuit between the parties over Kaiser’s failure to pay for services provided to its members, the hospital said.

“Queen’s continues to serve Kaiser members as they present on an emergency basis, and will continue to do so regardless of any dispute about payment. It is important for Kaiser members to know that they have the option to reschedule all non-emergency services with another provider if available,” Riccioni said.

Kaiser said it is disappointed that Queen’s “continues to put patients in the middle of a rate negotiation.”

The state’s largest health maintenance organization — both a medical provider and health insurer covering more than 250,000 members in Hawaii — said Queen’s is demanding it pay above market rates that exceed what other hospitals are charging.

“Queen’s plans to go after patients if Kaiser Permanente doesn’t pay these unreasonable rates. It is unacceptable for Queen’s to use patients, who may already be dealing with serious and stressful health issues, as bargaining tools,” said Kaiser spokeswoman Laura Lott. “While we remain committed to working toward a fair and equitable agreement, we cannot agree to Queen’s unreasonable demands that make health care increasingly unaffordable.”