Insurer Takes Outpatient Clinics to Court Over Inflated Billings

San Jose, CAThe propensity for hospitals to inflate emergency room charges is a symptom of a much larger problem filtering through the nation's health care system: apparent greed. While some hospitals pad emergency room fees and other charges as a simple act of survival, or to offset losses incurred from treating the poor, other institutions carry out similar overbilling in spite of deep cash reserves. Others appear to look towards health care as a means to get rich.

A higher-than-normal emergency room cost is not far removed from a lawsuit involving alleged gross overbilling by various outpatient facilities. To that end, Aetna Insurance has launched a $20 million action against Bay Area Surgical Management, alleging outpatient facilities run by the Saratoga-based company charge exorbitant prices for medical procedures.

The San Jose Mercury News (6/2/12) reports the lawsuit includes allegations that doctors are recruited to invest in the management company, and to provide referrals to the outpatient facilities run by the defendant.

The lawsuit claims, as an example, that a bunion repair which runs, on average $3,677 at various in-network providers throughout Northern California, has been billed as high as $66,100 at the Bay Area Surgical Group facility in Santa Clara.

Other examples include a knee arthroscopy priced at $2,085 and a colonoscopy for $1,044 averaged over various centers elsewhere. It is alleged the same procedures have been billed as high as $6,642 at Forest Surgery Center in San Jose, and $23,301 at SOAR Surgery Center, respectively.

It is not known if patients have cared to dispute their medical bill. However Aetna has, hence the lawsuit.

The defendant has denied all charges.

"The affordability of health care is being jeopardized, and the ethical principle of social justice is being violated," said Dr. Steven Jackson of the Santa Clara County Medical Association's committee on bioethics. The clinics pass on the "higher cost of health care insurance to the citizens of California," he said.

There have been countless examples of hospitals inflating an ER bill according to the means of a patient being treated. While no patient is turned away from treatment, hospitals claim to lose money treating patients on Medicare or Medicaid, or those without health insurance. To make up the shortfall, hospitals have been known to inflate fees for drugs and services related to those patients with comprehensive health care coverage.

Such examples of hospital overcharging and heightened emergency room cost only add to the overall cost of health care for everyone, critics suggest.

As for the allegation that some are trying to pad their pockets on the backs of hard-working Americans, that's another matter entirely. Aetna also alleges fraud in its lawsuit, claiming that the defendants concealed financial stakes held in the enterprise by their physicians. Aetna alleges that Surgical Management, on average, billed seven times more what other clinics charged for equivalent procedures.

Surgical Management categorically denies the allegations. The overcharging lawsuit was filed in February. The doctors involved in the seven outpatient facilities were not named in the lawsuit.