Jefferson Health sued Aetna Monday over a controversial new policy that reduces payments for hospital stays for Medicare Advantage patients that Aetna decides aren’t sick enough to qualify for full payment.
The lawsuit filed in U.S. District Court for the Eastern District of Pennsylvania says Aetna’s new nationwide policy that took effect Jan. 1 for its Medicare plans violates federal law and breaches Aetna’s contract with Jefferson.
“Aetna’s policy shifts costs onto providers through unilateral payment changes,” Jeffrey Price, Jefferson’s chief managed care and payer relations officer, said in a statement.
“Federal law is clear about what qualifies as inpatient care, and payment policies should not undermine that standard or create confusion that pulls clinical teams away from patient care,” he said.
In a statement, Aetna rejected Jefferson’s claims, saying its policies “comply with all applicable federal law and regulations and with the terms of our provider contracts.”
When it announced the policy last August, Aetna said its goal was to ensure faster reimbursement for hospitals by avoiding appeals of denied inpatient stays.
Jefferson’s dispute with Aetna, which is among the nation’s largest private Medicare companies, is the nonprofit health system’s second with major insurer in recent months as tensions between insurances and healthcare providers intensify.
Jefferson’s Lehigh Valley Health Network went out of network with UnitedHealthcare Medicare plans in January and is scheduled to do the same with United’s private plans this month. Part of Jefferson’s dispute with United relates to the insurer not paying contracted rate, Jefferson has said.
National attention to Aetna’s policy
The American Hospital Association published a letter to Aetna urging the insurer based in Hartford, Conn., to rescind its “level of severity” payment policy.
The hospital trade group said the new policy is a substitute for insurers’ historic policy of denying many inpatient claims and then paying a lower rate for a what is called an “observation stay.”
Under the new policy, Aetna approves the inpatient claims but pays roughly the same lower rate for them — creating two tiers of inpatient stays based on Aetna’s judgment. The observation rate is usually at least 30% lower than standard inpatient rates.
“Aetna has unilaterally created a two-tier rate structure for inpatient stays,” Jefferson said in the complaint.
Jefferson is asking a judge to declare that Aetna must follow Medicare policy for inpatient services and issue an injunction blocking Aetna from implementing the new policy.