University of Maryland Medical System sues Medicaid provider for ‘improperly’ denying claims

The University of Maryland Medical System filed a lawsuit Monday against a company it claims “improperly denied” over $15 million in Medicaid payments for services the hospital group provided to more than 15,000 lower-income patients.

Those patients, according to the complaint, largely received high-cost emergency treatment for heart attacks, gunshot wounds and strokes, among other medical conditions. The medical bills for people suffering from COVID-19 and babies born prematurely were also rejected — patients who UMMS said were “among the most vulnerable” it served.

The lawsuit says Maryland Physicians Care MCO, one of nine Medicaid managed care organizations that manage Medicaid claims in the state, “wrongfully withheld” those payments to “unjustly enrich” itself.

“It is inexplicable and inexcusable for UMMS to not have been compensated for providing this care to thousands of Marylanders by an organization that has contractual and statutory responsibility to manage their members’ health outcomes,” said UMMS President and CEO Dr. Mohan Suntha.

UMMS provides more than 25% of hospital-based care in the state. And according to the Maryland Department of Health, about 1.5 million people, nearly one in four Marylanders, receive coverage through Medicaid.

The lawsuit was not available to review Monday afternoon through the Maryland Judiciary, though a UMMS spokesperson provided a copy to The Baltimore Sun.

Representatives for Maryland Physicians Care did not respond to a request for comment on Monday. The company is owned by Ascension Saint Agnes, Holy Cross Health, Meritus Health and UPMC Western Maryland.

The complaint, filed in Baltimore City Circuit Court, accuses Maryland Physicians Care of abusing the state’s trust and “pocketing the money” it refuses to compensate providers with.

According to MDH, Maryland Medicaid’s budget sits at $14.6 billion. While almost 60% is funded by the federal government, Medicaid makes up more than 20% of the state’s total budget.

Monday’s lawsuit states that Maryland Physicians Care receives over $1 billion annually in federal and state taxes to pay for its patients’ health care. It also states that the company’s profits primarily derive from the difference between those taxes and the amount it disburses for patient care.

In other words, according to the complaint, any money Maryland Physicians Core doesn’t spend on patients feeds directly into its bottom line.

“Each denial boosts MPC’s profits at the expense of Maryland Medicaid enrollees and the health care providers and facilities who serve them,” attorneys for the University of Maryland wrote.

UMMS states in the lawsuit that it began its partnership with Maryland Physicians Care in 2018 and that since then, the company has rejected claims at a higher rate than other management companies.

According to the complaint, 99% of claims for complex emergency services are rejected, as are 79% of emergency behavioral health claims, and 70% of COVID treatment claims.

UMMS said healthcare claims for services provided to unhoused persons are also “routinely” denied, primarily on the grounds that “the condition did not warrant care in the [emergency department].”

These “denial practices do not stem from a reasonable disagreement over medical judgment,” the UMMS suit says, “but reflect a broad, bad-faith refusal to acknowledge the realities of patient care — driven by a pursuit of profit.”

When looking to collect money for services, it is uncommon for medical providers in Maryland to file lawsuits against the insurance or management companies that oversee claims. Historically, hospitals and medical systems across the state have sued patients directly over unpaid bills — more than 145,700 times in a 10-year period, one report found.

Those lawsuits, the report stated, were over a median debt of $944.

However, since 2019, as health care costs have become an increasing subject of scorn, eventually budding into a national debate topic for presidential candidates, Maryland lawmakers established guardrails between patients and hospitals. A series of new laws limited collection actions and required hospitals to repay residents whose services should have been free or discounted.

But while $15 million is a small sum compared to the amount of money UMMS generates each year — over $5 billion in fiscal year 2023 — or the amount Maryland Physicians Care receives from the state, the university health system says the company has engaged in “longstanding, ongoing, deliberate and systemic practices” to trap them into its “onerous, time-consuming” appeals process.

The lawsuit states UMMS shouldn’t have to “absorb” those losses, but explains they aren’t the only ones who feel the effect.

“When for-profit entities like MPC wrongfully deny payment, the unpaid claims become unreimbursed health care, which is factored into future hospital and care costs and drives up the cost of care for everyone,” the complaint states.

Have a news tip? Contact Luke Parker at [email protected], 410-725-6214, on X as @lparkernews, or on Signal as @parkerluke.34.

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