Healthcare Business News

Seattle Children's sues after exchange plans fail to include it in network

By Joe Carlson
Posted: October 7, 2013 - 6:00 pm ET

Seattle Children's Hospital is seeking a court order that would remove two health plans from the new state insurance exchange because the plans don't include the area's only children's hospital in their provider network. The suit could foreshadow similar legal moves by other providers excluded from exchange plans.

In a petition for judicial review filed Friday (PDF), the 250-bed Seattle Children's is asking a judge in King County Superior Court to invalidate the approvals granted by the state insurance commissioner's office to health plans offered by Molina Healthcare of Washington and by the Coordinated Care Corp.

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The complaint says the two plans initially were rejected by state officials in July, but then approved with no further explanation in September, in time to be listed on the state exchange that went live Oct. 1, Washington Healthplanfinder. The lawsuit seeks an order invalidating the approvals of the adequacy of the plans' offerings.

A written statement from the hospital said some specialized services are available regionally only from Seattle Children's, including acute cancer care, Level IV neonatal intensive care, and transplantation of the heart, liver and intestines.

“We are very concerned about the limited networks being offered by some exchange insurance plans,” said Dr. Thomas Hansen, CEO of Seattle Children's, in the statement. “Omitting coverage for care at a facility like children's prevents families from accessing vital services they may desperately need.”

Coordinated Care Corp. did not respond to a request for comment by deadline. But Dr. J. Mario Molina, CEO of Molina Healthcare, disputed some statements by Seattle Children's. For example, Molina noted that his plan's network on the insurance exchange includes Mary Bridge Children's Hospital and Children's Health Services at Providence Regional Medical Center.

“We would welcome the opportunity to add to that network by including Seattle Children's if we can agree to terms that allow us to provide an affordable option for our members,” Molina said in an e-mailed statement. “While our preference is to use local hospitals whenever possible, we do partner with nationally recognized pediatric hospitals (e.g. Children's Hospital of Los Angeles) for transplantation and other tertiary services when necessary.”

Across the country, children's hospitals are expressing similar concerns, though Seattle appears to be the only market where the controversy has boiled over into litigation. The conflict pits the need for affordable pricing on the public exchanges against the federal requirement that the plans include sufficiently large networks. One common way insurers are making their exchange plans less expensive is to offer narrow networks.

Children's hospitals tend to have more expensive cost structures because of the complex needs of their patients, said Jim Kaufman, vice president of public policy for the Children's Hospital Association. “Children's healthcare is different,” he said. “I think you need to ensure that children have appropriate access to the services they need.”

Families are likely to seek care at Seattle Children's even if their health plan doesn't cover it, exposing them to large out-of-pocket costs for out-of-network care.

The Seattle Times and Kaiser Health News reported that of the seven insurers offering plans in King County, only two—Group Health Cooperative and Community Health Plan of Washington—are offering plans on the state exchange that include Seattle Children's in their network.

Follow Joe Carlson on Twitter: @MHJCarlson

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