An Arkansas jury ruled in favor of Southeastern Emergency Physicians, a TeamHealth affiliate, that alleged a Centene health plan underpaid the group for years and awarded $9.4 million in damages, according to the verdict in federal court for the Eastern District of Arkansas.
The insurer was paying for the services provided to its Ambetter policyholders but at rates too low, SEP argued. The charges though were considered “non-participating claims,” or out-of-network charges. Centene breached the “implied contract” by failing to pay “full value of its services,” according to the 2019 complaint.
Centene was not available for comment, though it denied the allegations in previous filings. CEO of private equity owned Team Health Leif Murphy argued “large and profitable health insurance companies are using their market power to systematically underpay doctors, cancel contracts, and further boost their record profits,” in a statement.
TeamHealth’s tactic lately has been turning to the courts to argue its emergency physicians have been underpaid by insurers. The staffing firm said it has filed more than 25 lawsuits across the country in an attempt to recoup funds.
The fight highlights a broader problem in American healthcare.
There is little incentive for physician staffing firms to come in-network with insurers and it can lead to surprise medical bills for patients, potentially a significant financial threat for patients. If a provider is out-of-network, it can bill the remaining balance to a patient even after collecting a portion of the bill from a patient’s insurer.
For example, the orthopaedic surgeon has an incentive to agree to in-network rates with insurers as it will likely result in a great volume of patients. Typically, patients don’t actively choose out-of-network orthopaedic surgeons, particularly in instances of non-emergent care. But that incentive does not apply to emergency services given the nature of their business — tending to emergencies, where there is little choice for patients who are subject to where the ambulance decides to drop them.
Emergency physicians “face inelastic demand from patients and will not see a reduction in their patient volume if they fail to negotiate contracts with insurers,” according to a 2018 Yale University research paper on surprise billing issues.
About two-thirds of America’s hospitals outsource the emergency room to physician staffing firms, according to the Yale researchers studying strategies behind TeamHealth and another staffing firm, and what happens when they take over a hospital emergency room.
When “TeamHealth receives a new hospital contract, physicians working for the firm go out-of-network for several months and then rejoin networks while using the now credible threat of out-of-network status to secure higher in-network payments,” according to the research paper.
TeamHealth’s CEO said in a statement that their “primary goal in every case is to obtain in-network contracts at reasonable rates as soon as possible, we are prepared to take cases to trial as we are confident that our position will be vindicated by a jury.”
Still, the firm has also been hit hard by the novel coronavirus. In April, ratings agency Moody’s downgraded it, noting an expectation of severe revenue declines coupled with being highly leveraged. The forecast remains negative for the firm as Moody’s expects a continued squeeze on profitability in part due to the squabble with the nation’s largest health insurer, UnitedHealthcare, which canceled its contracts and lowered out-of-network reimbursement to TeamHealth last year.