Sacramento-based Sutter Health has agreed to pay $46 million and make changes in billing as part of a settlement of a California Department of Insurance lawsuit concerning the health system's charges for anesthesia.
The suit, prompted by a 2011 whistle-blower complaint by billing auditor Rockville Recovery Associates, claimed Sutter often charged patients or their insurance companies up to three times for anesthesia, totaling thousands of dollars, even though the services were supposed to be covered under one charge.
“The settlement requires Sutter to disclose on its website every component of its anesthesia billing and what those services cost Sutter.” Insurance Commissioner Dave Jones said in a news release. “Patients, insurers and the public will now be able to compare Sutter’s costs to what it charges for anesthesia. They will see any mark-ups.”
As a result of the settlement, Sutter agreed to the $46 million payment, to stop billing for operating room anesthesia on a time-based basis and instead doing so with a flat fee, to describe every component of its anesthesia billing, to publicly disclose to patients and insurers the cost of anesthesia services, to clarify the relationship between its master schedule of charges for services and what’s on its bills, and to more readily permit payers to contest its bills.
The settlement also includes two other defendants, MultiPlan Inc. and Private Healthcare Systems Inc.. They must pay $925,000 and provide patients with notifications of their audit rights.
Of the $45 million, the state will receive $20 million to be used for investigating and preventing insurance fraud. Under state insurance law, whistle-blower Rockville is entitled to a portion of the settlement.
In the settlement agreement, Sutter, MultiPlan and PHCS do not admit to wrongdoing.
“Sutter Health’s method of billing for these services was, and still is, consistent with federal and state laws and regulations,” Duane Dauner, president and CEO of the California Hospital Association, said in a news release. “In fact, more than 90 percent of California hospitals, including hospitals operated by the state, bill for anesthesia services in this same manner.”
It was difficult to come to an agreement on the size of a monetary settlement, but given Sutter’s status as a not-for-profit health system, doing so was preferable to going to court, Sutter spokesman Bill Gleeson said in a news release.
A trial of the suit was scheduled to start this month in Sacramento Superior Court, according to Sutter.
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