Arbitrage in interstate Blue Cross Blue Shield billing

Dan Snow has a great article at Price Points, “Secretive vendors are exploiting a free money glitch in the U.S. healthcare system”. Here’s how it works:

When someone with Blue insurance travels to a different state and receives medical care, that care is covered and reimbursed by the “local” Blue via the BlueCard program. BlueCard lets providers bill the local Blue instead of the Blue from the patient’s home state, AKA the “home” Blue. This decreases the complexity of billing for providers while making the patient’s travel experience more seamless.

The trouble starts when a Blue-insured patient travels to a state with multiple Blues. In that case, the patient is covered by multiple insurers at the same time. Those Blue insurers may have different prices, even for the same service. After the patient receives care, providers typically bill one of the insurers at random, irrespective of price.

Whenever that happens, there’s an arbitrage opportunity for vendors. If the provider bills the cheaper of the two Blue insurers, a vendor can void or cancel the original claim, rebill the more expensive Blue, then take a cut of the difference in prices.

The scheme is limited to states where multiple Blue Cross Blue Shield plans overlap territorially, namely New York, California, Washington, Idaho, Pennsylvania, and Virginia. A reminder of the complexities of the American health care system. Read more over at Price Points.

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