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Owens & Minor sues Anthem, accusing insurer of mishandling claims

Mechanicsville-based Fortune 500 health care logistics and supply company Owens & Minor filed a federal lawsuit against Anthem Blue Cross and Blue Shield this week, claiming that the Henrico County insurer mismanaged funds for Owens & Minor’s employee health insurance plan and allegedly violated the Employee Retirement Income Security Act, or ERISA.

According to the complaint filed Monday in the U.S. District Court for the Eastern District of Virginia, Owens & Minor requested its employee health care insurance plan’s claims data for an audit in September 2021, but Anthem “transformed what should have been a simple transfer … into a nearly two-year game of ‘hide the ball.'” In 2023, Owens & Minor sued Anthem to obtain the data and received a portion of the information in July, according to this week’s lawsuit.

“Plaintiff’s analysis to date has showed tens of millions of dollars of damages to the plan as a result of defendant’s neglect and misconduct,” the complaint says. Under ERISA, insurance companies must “act solely in [beneficiaries’] interests,” but Owens & Minor accuses Anthem of “boundless avarice and neglect,” including “paying more for health care claims than was even billed, securing kickbacks from providers, double-paying claims and pocketing rebates belonging to plaintiff,” according to the lawsuit.

Owens & Minor specifically claims that Anthem — hired by the company in 2017 to manage its self-funded insurance plans and health care claims for the plans — violated ERISA by “causing the [health insurance] plan to grossly overpay claims, including payments above 100% of billed charges; causing the plan to pay the same medical claims multiple times; improperly classifying affordable generic drugs as specialty pharmaceuticals; withholding pharmaceutical rebates from the plan; steering, requiring or otherwise encouraging plan participants and beneficiaries to use defendant-affiliated providers who charged more for the same or lesser quality of care and who passed on the excess of these payments to defendant or its affiliated companies,” among other alleged violations included in the complaint.

Owens & Minor seeks a jury trial and damages in an amount to be determined at trial, according to the lawsuit.

A spokesperson for Anthem Blue Cross and Blue Shield said Thursday it does not comment on pending litigation.

Owens & Minor announced in July it would be moving its headquarters from Mechanicsville to western Henrico County by the end of the year. The company reported $10.3 billion in 2023 revenues, up from $9.9 billion in 2022, and employs approximately 20,000 people worldwide.

Sentara to cut 200 jobs across workforce

Sentara Health is cutting approximately 200 positions across its workforce, officials told employees this week. Most of the affected employees work for Sentara Health Plans and are based in Virginia, according to a statement issued Friday by the Hampton Roads-based health system.

The cuts are related to the Medicaid redetermination process and associated decline in membership, according to Sentara’s statement. “There has been a significant decline in Medicaid membership across the U.S. and Virginia,” the health system said. “For Sentara Health Plans, this has resulted in a loss of over 115,000 members, which is approximately 16% of our Medicaid membership, in the past year. These workforce adjustments align our staffing levels with our health plan membership.”

The other affected jobs are in the corporate shared services department that support Sentara’s health insurance operations. The final number of impacted positions has not yet been determined, and Sentara officials are working to find other posts within the 34,000-member workforce for affected employees. About 40% of all positions are leadership posts, and impacted employees are across 10 states, although the majority live in Virginia, according to Sentara.

“These individuals have been dedicated and mission-driven team members, and we are grateful for their passion and contributions to the organization and to the community,” Sentara Health President and CEO Dennis Matheis said in a communication to Sentara employees this week. Matheis became Sentara’s CEO in 2022, and he previously led Sentara’s health insurance plans business. In 2023, Sentara’s Optima Health and Virginia Premier insurance brands combined to create Sentara Health Plans, which provides health insurance coverage to more than 1 million customers in Virginia and Florida.

Affected Sentara employees received 60 days’ notification, in which time some may move to other roles in the health system. “Sentara is making every attempt to find them another role within Sentara, upskill for other in-house positions, or offer severance and resources for those who are unable to find a new position within the Sentara family or who choose to transition elsewhere,” the statement says.

Sentara has 12 hospitals in Virginia and North Carolina. Over the past three years, the health system has been embroiled in an ongoing federal civil investigation over accusations that Sentara inflated insurance rates to maximize profits. Sentara, however, counters that it was unfairly targeted and was trying to keep vulnerable Virginians from losing health care coverage by offering Affordable Care Act plans while other insurers dropped them.

Bon Secours, Anthem reach agreement in $93M dispute

Bon Secours announced Friday it has reached an agreement with Anthem Blue Cross and Blue Shield in Virginia, which the health system sued in August, alleging the insurer owed Bon Secours $93 million in unpaid claims.

Although details were not released due to confidentiality agreements between the two parties, Bon Secours said it will drop the lawsuit, which was filed in Henrico County Circuit Court, and all Anthem Medicare Advantage and Medicaid health plan members will again have in-network coverage at Bon Secours. The agreement also extends coverage for employer-based Anthem customers and Affordable Care Act plan members until 2028.

“I’m proud that both organizations continued to focus on our shared priority: the communities we serve,” Anthem Virginia President Monica Schmude said in a statement. “We worked together to creatively address affordability for our members and the financial needs of an important care provider. This agreement provides long-term stable access to care at Bon Secours without cost increases for our members and employers.”

Anthem agreed to cover any claims that Medicare patients incurred at Bon Secours facilities since Aug. 1, when the health system was out of network.

“We understand that being out of network/potentially being out of network can be very difficult, and we are pleased that patients with Anthem insurance can now see our physicians and use our hospitals at an in-network cost,” Mike Lutes, president of Bon Secours Richmond, said in a statement. “We sincerely believe that access to quality health care services is vital for our communities. This new agreement protects our patients’ access to compassionate care close to home.”

The agreement also prevented Bon Secours from being out of network for Medicaid patients, which would have occurred Oct. 1 absent a deal.

In April, Winchester-based Valley Health and Anthem  settled a $15 million lawsuit filed by Valley Health over unpaid reimbursements. The terms of that settlement also were confidential.

On June 28, Anthem paid $300,000 to settle a finding from the State Corporation Commission’s Bureau of Insurance that it was not paying claims within the 40-day requirement. State regulators found that Anthem did not pay 347 claims of the 67,000 it received from December 2022 to February 2023 within the 40-day timeframe.

Bon Secours has 10 hospitals in the Richmond area and Hampton Roads and has more than 14,000 employees, including 820 physicians, according to the complaint.

Anthem, owned by Elevance Health, is the largest health insurance carrier in Virginia. Elevance reported $156 billion in total revenue for 2022, with net income of $6 billion.

Bon Secours sues Anthem for $93M

Health system Bon Secours filed suit against insurer Anthem Health Plans of Virginia Monday in Henrico County Circuit Court, alleging Anthem owes Bon Secours $93 million in unpaid claims.

The plaintiffs, collectively titled BSMH Virginia, allege that Anthem Health Plans of Virginia (doing business as Anthem Blue Cross and Blue Shield) failed to pay “in excess of $73 million” on claims older than 30 days, and that BSMH Virginia incurred more than $20 million in write-offs since 2020. In addition to $93 million, BSMH Virginia also seeks an injunction, up to three times the actual damages, attorneys’ fees and costs, plus interest.

“Today, we must share our belief that Anthem owes Bon Secours Mercy Health more than $93 million in outstanding unpaid and underpaid claims in Virginia alone, which significantly impacts our ability to provide sustainable, compassionate, high-quality care for our patients and communities,” Bon Secours said in a statement.

Anthem said in a statement, “We do not agree with the allegations stated in the lawsuit. This is the latest tactic in [Bon Secours’] efforts to demand double-digit price increases from employers and individuals — in the middle of an active [commercial] contract with Anthem.”

Bon Secours alleges that “Anthem’s slow pay and no-pay tactics [resulted] in an enormous volume of BSMH Virginia claims being arbitrarily denied, downgraded and/or pended, thereby forcing BSMH Virginia to spend an inordinate number of hours responding to excessive and unreasonable requests for additional information and undertaking extraordinary efforts to secure payment.”

BSMH Virginia alleges Anthem’s tactics included using a modified emergency visit pricing policy to downgrade emergency room claims and having its Special Investigations Unit make “onerous requests for medical records and unnecessarily audit emergency room claims.”

Under the Virginia Ethics and Fairness in Carrier Business Practices Act, a health insurance carrier has 40 days from receipt of a claim to pay it, except in cases where the carrier’s obligation to pay the claim is not “reasonably clear.” In October 2019, Anthem told BSMH Virginia that high-dollar reviews were backlogged for more than 90 days, according to the complaint.

Bon Secours alleges that despite multiple meetings between teams and executives of the health system and Anthem, the insurer failed to pay a growing amount owed in reimbursements and the two did not reach an agreement.

“We have exercised every possible nonlegal option available to us for nearly four years to address this issue privately,” Bon Secours said in a statement.

Earlier this year, Bon Secours and Anthem failed to reach an agreement on reimbursement rates that resulted in Bon Secours providers became out of network for patients with Anthem Medicare Advantage health insurance on Aug. 1. If Bon Secours and Anthem do not reach an agreement on Anthem Medicaid Advantage reimbursement rates by Sept. 30, Bon Secours providers will become out of network for patients with that plan on Oct. 1.

“This lawsuit is another attempt to distract from Bon Secours’ decision to leave Anthem’s provider network and deny access to care for Medicaid and Medicare Advantage members,” Anthem said in a statement.

“As recently as last Thursday, we reached out to Mercy Health national leadership for a meeting and Friday to Bon Secours’ Virginia leadership requesting that they rescind the Medicare Advantage termination and intent to terminate Medicaid access on [Oct. 1],” Anthem said in the statement. “We have not heard back.”

In the complaint, the plaintiffs allege that Anthem owes the system’s parent, Bon Secours Mercy Health, about $85 million in unpaid claims in Ohio and $6 million in Kentucky.

In April, Winchester-based Valley Health and Anthem Blue Cross and Blue Shield settled a suit that Valley Health had filed over unpaid reimbursements, initially seeking $11.4 million, which grew to $15 million. The terms of the settlement were confidential.

On June 28, Anthem paid $300,000 to settle a finding from the State Corporation Commission’s Bureau of Insurance that it was not paying claims within the 40-day requirement. The state regulators’ review found that Anthem did not pay 347 claims of the 67,000 it received from December 2022 to February 2023 within the 40-day timeframe.

BSMH Virginia has 10 hospitals in the Richmond area and Hampton Roads and has more than 14,000 employees, including 820 physicians, according to the complaint.

Anthem, owned by Elevance Health, is the largest health insurance carrier in Virginia, according to the complaint. Elevance Health reported $156 billion in total revenue for 2022 and a net income of $6 billion.

Va. chamber to offer small biz health coverage

Finding affordable health insurance has long been a difficulty for small business owners and employees.

Premiums may be affordable one year and could double the next. In 2020, Virginia’s average health insurance cost per person was $8,815, according to data from the Kaiser Family Foundation, and 36.1% of people polled reported that they did not seek mental health treatment because of cost. The average monthly cost of health insurance for small business owners is $547 per employee, which rises to $1,175 for family coverage, Kaiser reported in 2021.

The federal Affordable Care Act, passed in 2010, helped self-employed Americans negotiate affordable health policies, and in 2022, Virginia’s lawmakers passed legislation that aims to make similar strides for small businesses.

Small businesses with two to 50 employees will soon be able to join a self-funded health insurance consortium, or Multiple Employer Welfare Association (MEWA), through their local chamber of commerce or other business organization, such as the Virginia Farm Bureau. The ultimate aim is to lower the cost of insurance per person by creating a larger risk pool.

“I think this could be a game changer for small business,” says state Sen. Monty Mason, D-Williamsburg, one of the legislation’s sponsors. He predicts MEWAs will help small businesses attract more employees, noting that “80% of new jobs are offered by small businesses” in Virginia. “Other states that have these types of consortiums have seen premiums [go] down by 15% to 20%.”

According to state law, no one can be excluded from a MEWA based on preexisting health conditions, and insurance policies must cover emergency care, hospital stays, prescription drugs and other expenses typically covered by insurance. Any surplus revenue will be sunk back into the insurance plan at the end of the year, and associations must maintain a net worth of at least $4 million and deposit at least $50,000 of high-quality securities with the Virginia Department of the Treasury.

The first organization in the state expected to offer such a plan is the Virginia Chamber of Commerce, which is set to roll out its WiseChoice Healthcare Alliance this summer. Barry DuVal, the chamber’s president and CEO, says he anticipates about 3,000 people will join join in the first year — “similar to health coverage for a big company.” The only requirement for membership is that a business join a local chamber affiliated with the Virginia Chamber. Premiums will differ per business, DuVal notes.

The State Corporation Commission’s Bureau of Insurance will oversee the consortiums — as of May, the bureau had not yet received any applications for approval, but a spokesperson says it expects one soon from the Virginia Chamber. Any organization planning to create a MEWA must submit a three-year financial feasibility plan with enrollment projections, a methodology to determine premium rates, as well as a projection of balance sheets, cash flow statements showing capital expenditures, and purchase and sale of investments, the SCC says.

“We worked so closely with the Bureau of Insurance,” Mason says, “I think the structure is as sound as it can be.”

Mason’s first try at passing the legislation in 2019 was vetoed by Gov. Ralph Northam, who was concerned the bill would lower membership in the state insurance exchange.

“We argue that it would not hurt the state exchange,” DuVal says. Northam’s successor, Gov. Glenn Youngkin, a Republican, said before taking office in January 2022 that he would sign a bill if it were passed again by the Virginia General Assembly. He did so at a ceremony last year. 

Aside from stabilizing the cost of health insurance, DuVal says MEWAs will likely help boost membership in local chambers. Similar policies in other states have helped chambers grow, with health insurance consortiums including up to 40,000 members after a year or two in existence. Mason anticipates Virginia’s consortiums will include 10,000 to 20,000 people once they’ve existed for a couple of years.

“Ninety percent of Virginians work for small businesses,” DuVal notes. “The real benefit of this is to produce and promote a healthy Virginia. It also helps smaller businesses recruit. Now they can offer competitive health coverage for employees.” 

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Sentara Healthcare rebrands as Sentara Health

Sentara Healthcare is rebranding as Sentara Health, the Norfolk-based health system announced Thursday.

Additionally, in its health insurance division, Sentara will retire Sentara Health Plans’ subsidiary brands, Optima Health and Virginia Premier, unifying them under the Sentara Health Plans brand by the end of the year.

“It is an exciting day for all of us here at Sentara. Our new name and logo help us show our commitment to making health care simple, seamless, personal and more affordable,” Sentara President and CEO Dennis Matheis said in a statement. “By leveraging both health care services and a variety of health plan options, we are creating greater access for consumers to receive high-quality health care.”

The rebrand is the result of a year of market research, according to a news release, and reflects Sentara’s “enhanced focus on promoting the overall health and well-being of our consumers.”

Following Thursday’s announcement, Sentara will begin the multiyear process of updating its logo throughout its service areas. Sentara spokesperson Mike Kafka told Virginia Business in an email that the new branding for the health care system is effective immediately and the Sentara College of Health Sciences will receive its branding refresh this summer. The rest of the roll out will occur over time.

Sentara has 30,000 employees and 12 hospitals across Virginia and North Carolina. The organization’s health plans division has more than 1.2 million members in Virginia and Florida.

Vienna digital development firm acquires health tech company

Vienna-based digital development company 10Pearls has acquired Inspirant Group, a health care strategy consulting firm based just outside Chicago, 10Pearls announced Monday.

Financial terms of the transaction were not disclosed.

“We are delighted to welcome Inspirant Group to our team at 10Pearls. … The combination of our two teams will allow us to partner with our health care clients — payors, providers and health tech — together to deliver innovations, process improvements and automation,” 10Pearls CEO Imran Aftab said in a statement.

Inspirant Group provides scalable technology, like care management, clinical decision support and claims management solutions, for large and regional health care insurance providers, including Medicare Advantage plans. The company’s co-founders — CEO Meighan Newhouse, President and Chief Growth Officer Amir Azarbad and Chris VanAvermaete, managing partner of technology solutions — and their team will join 10Pearls’ health care division.

“Joining forces with 10Pearls allows Inspirant Group to leverage the global technology development and engineering scale of 10Pearls to provide a full suite of product development and health tech services to payors,” Azarbad said in a statement.

10Pearls helps clients create digital technology products. Aftab, one of the 2022 Ernst & Young LLP’s mid-Atlantic Entrepreneur of the Year Award winners, co-founded the company in Pakistan in 2004. Along with its Virginia headquarters, 10Pearls has offices in New York, Colombia, Costa Rica, Pakistan, Peru, United Arab Emirates and the U.K. It employed more than 1,200 people as of July 2022.

Sentara Health Plans names new leader

Virginia Beach-based Sentara Health Plans has named Colin Drozdowski as the next president of Sentara Healthcare’s health insurance division.

Drozdowski succeeds Dennis Matheis, who was named president and CEO of Sentara Healthcare in June. Drozdowski will also serve as executive vice president of Norfolk-based nonprofit Sentara Healthcare. His new role is effective Sept. 1.

Matheis takes over from Howard  Kern, also on Sept. 1. Kern is becoming the health care system’s CEO emeritus, stepping down after a 40-plus-year career. Kern oversaw the creation of Sentara’s first health insurance plan and first insurance business, Optima Health, which was placed under the Sentara Health Plans umbrella after Sentara acquired Virginia Community University Health’s Virginia Premier Health Plan in 2020.

Drozdowski has served as senior vice president of comprehensive health solutions and has been senior vice president of Sentara Health Plans since 2019.

“Colin is a growth-oriented and people-focused leader whose vision and commitments align with the future of our health system,” Matheis said in a statement. “He values innovation and has demonstrated his ability to effectively lead change throughout his time as senior vice president at the health plan. I look forward to continuing to work closely with Colin as the new leader of the health plan.”

Drozdowski helped bring Virginia Premier into Sentara Health Plans, the largest transaction in Sentara’s history. Under Sentara Health Plans, the Optima Health and Virginia Premier insurance plans serve more than 950,000 people, partnering with more than 25,000 physicians and more than 100 hospitals.

Before joining Sentara, Drozdowski spent 26 years with Blue Cross Blue Shield, most recently serving as senior vice president of provider solutions for Anthem, Inc.

“I am humbled and excited to transition to the role of president of Sentara Health Plans,” Drozdowski said. “I am honored to lead such a talented and dedicated team and look forward to growing together and delivering high quality service and care to our members and the communities we serve.”

Drozdowski has a bachelor’s degree in economics from Hiram College, in Ohio, and a master’s degree in economics from Cleveland State University. He serves on the board of Richmond-based Fit4Kids, a community coalition in Richmond that works to prevent and reduce childhood obesity, and Oklahoma-based health management company CareATC.

An $11 billion not-for-profit health system with 12 hospitals in Virginia and North Carolina, Sentara Healthcare employs about 30,000 workers, including 1,375 physicians. It was named one of the nation’s top five large health systems for 2021 in an annual ranking by Fortune and IBM Watson Health.