Trinity Health sued a Michigan anesthesiology group for allegedly compromising operations at a handful of its hospitals amid rate disputes with several insurers.
The lawsuit filed in a Michigan federal court Tuesday alleged that Anesthesia Associates of Ann Arbor, which employs more than 100 doctors and is the exclusive provider for six Trinity hospitals, and its parent company, Siromed Physician Services, are terminating contracts with Blue Cross and Blue Shield, Aetna and Priority Health and have sued or are pursuing litigation against those insurers.
The rate disputes have led to the doctors being dropped from the insurers' networks, which would likely cause many consumers to seek care elsewhere, allegedly costing Trinity at least several millions of dollars a month in losses. It could also produce major administrative headaches as well as higher out-of-pocket costs for patients, the lawsuit claimed.
This is an alleged breach of Anesthesia Associates and Trinity's contract, which requires the group to be in-network with those insurers, according to the lawsuit. Trinity alleged the move is a strong-arm strategy that would render its current contract meaningless. The health system requested an injunction to enforce its contract and declaratory relief finding the doctor group in violation of state and federal antitrust laws.
Even if Trinity tries to hire anesthesiologists that leave the group, those physicians have noncompete agreements that forbid them from practicing for one year at any location within 10 miles of where they practiced for Anesthesia Associates and for five years at a site previously managed by Anesthesia Associates, according to the lawsuit. Trinity asked the court to lift the noncompete clauses.
Livonia, Mich.-based Trinity Health said in a statement that its chief concern was for its patients and the lawsuit aims to help them receive "timely, quality and safe care without incurring additional costs that should be covered by their insurance."
Anesthesia Associates did not respond to requests for comment.
Anesthesia is required for virtually all surgeries and many other procedures. Blue Cross and Blue Shield is also the dominant insurer in Michigan, and "no hospital could afford to be out of network with BCBSM," Trinity said in the complaint. This dynamic would financially and competitively jeopardize Trinity if the anesthesiologists were to remain out of network, the health system said.
Blue Cross and Blue Shield of Michigan has allegedly already told employers that their use of Trinity Health Michigan hospitals will involve, at minimum, complications in coverage of anesthesia procedures and the possibility of additional financial liability for patients. Anesthesia Associates allegedly has not been willing to commit to Blue Cross and Blue Shield that it would not "balance bill" members for out-of-network care.
Anesthesiologists are a focal point of the ongoing surprise billing debate as they are often out of a commercial insurer's network. Anesthesiology accounted for the largest share of out-of-network professional claims associated with an in-network admission at 16.5%, according to a recent Health Care Cost Institute analysis that found that about 1 in 7 patients received a surprise bill despite obtaining care at an in-network hospital.
Meanwhile, health systems and physician groups often get locked in contract disputes regarding noncompete clauses. In one instance, around 90 physicians who were employed by Atrium Health in the Charlotte, N.C., area sued the health system after it allegedly included overbearing noncompete clauses in a new contract.
Anesthesia Associates is allegedly banking on Trinity not being able to replace it quickly in a tough market to recruit in, meaning Trinity would have to contract with them on the group's terms, the health system claimed. Revenue from the affected services at the six Trinity hospitals involve at least 20 times the revenue from Anesthesia Associates services at those hospitals, according to the lawsuit, detailing that damages could amount to millions of dollars per month. A loss of just 20% of the impacted surgery cases could translate to more than $30 million in losses a year, according to the lawsuit.
Trinity aims to establish Anesthesia Associates' liability for all financial losses due to declines in hospital patients. The service agreements between Anesthesia Associates and Trinity expire in early September and will unlikely be renewed, Trinity claimed.