Blue Shield of California filed a lawsuit last week accusing CenCal Health — which provides medical services to 180,000 low-income patients — of “dumping” 38 of its sickest and most expensive patients by enrolling them into Blue Shield health insurance plans rather than covering the costs of treatment out of CenCal’s own revenues. According to the lawsuit, CenCal is paid a monthly fee to treat its patients by Medi-Cal. But beginning in 2014 — when the Affordable Care Act went into effect — the lawsuit alleges that CenCal began signing up its patients with illnesses like kidney failure, HIV, and AIDS with Blue Shield. The lawsuit, filed in San Francisco, claims this practice cost Blue Shield $11 million since 2014. Of those patients, all but one were from Santa Barbara.
The Affordable Care Act makes it illegal for insurance companies to deny coverage to anyone based on pre-existing medical conditions. CenCal chief Bob Freeman denied any wrongdoing on the part of his agency, but also said CenCal has stopped the practice of outsourcing its patients to Blue Shield. The patients under contention, he said, were part of a 25-year-old program designed to secure “premium assistance” for treatment-intensive patients already enrolled in other programs. He also said nothing in state law or health-care regulations barred CenCal from this practice.
Blue Shield spokesperson Steve Shivinsky objected that none of the patients in question had, in fact, been enrolled in any other health-care programs, adding that CenCal employees enrolled these patients into Blue Shield often without the knowledge of the patients themselves. Freeman denied this. Shivinsky noted that the California Department of Health Care Services ordered CenCal to stop this practice last December and again this year. Freeman insisted that CenCal opted to discontinue the program on its own because it had become administratively burdensome. The state orders, he maintained, only came after CenCal had abandoned the program. Blue Shield’s Shivinsky stated none of the patients would be denied coverage as the dispute winds down.