A Shift in the Healthcare Provider Reimbursement Landscape

In overturning a trial court decision made two years ago and ordering a new trial to establish damages, California’s Fifth District Court of Appeals has ruled that hospitals can no longer expect to seek reimbursement from health plans in amounts well in excess of the actual value of services rendered to plan members.

In issuing its decision in Children’s Hospital Central California v. Blue Cross of California, the appellate court shifted the state’s health care provider reimbursement landscape. Wilke Fleury’s Dan Baxter, a member of the legal team that tried the original case in 2012 on behalf of Blue Cross in Madera County Superior Court, explained the court’s ruling means the ‘charge master’ system—whereby providers sought, for example, $10.00 in reimbursement for the provision of two aspirin—will no longer stand as a legitimate, defining measure of expected compensation. The appellate court found the trial court erred in not allowing Blue Cross to present evidence of the reasonable value of the services rendered by Children’s Hospital Central California. The court ordered the case retried and awarded Blue Cross its appellate costs.