Judge says Highmark wrongly passed along reimbursement reductions

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A Pennsylvania court has ruled that health insurer Highmark was not permitted to pass along reimbursement reductions imposed by Congress' budget sequestration under Medicare Advantage contracts, according to a Law360 report.

In September 2014, a group of Pennsylvania hospitals filed a lawsuit against Highmark and its subsidiary Keystone Health Plan West over reimbursement for Medicare Advantage patients.

Sequestration cuts — a 2 percent across-the-board cut in Medicare provider payments — took effect in April 2013 under the Budget Control Act of 2011. In October 2013, Highmark informed hospitals it was going to cut payments by 2 percent as part of sequestration.

The issue in the lawsuit brought by the hospitals was whether Highmark was permitted to pass along the 2 percent reduction. A judge has now ruled that the health insurer was not allowed to do so under the Medicare Advantage contracts Highmark had with the hospitals.

A Highmark spokesman issued a statement to Law360 saying, "We disagree with the judge's decision and are evaluating our options."

Highmark is not the only health insurer that has passed along the sequestration cuts, as other insurance companies across the U.S. have done so as well, leading to a number of other lawsuits being filed concerning the issue, according to the report.

The lawsuit was filed in the Allegheny County Court of Common Pleas.

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