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Insurer, Hospital Tangle About Cost Information

Stethoscope and gavel against a white backdrop.
Wikimedia Commons
The Florida Channel
Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.

The Florida Supreme Court is ready to wade into a dispute between State Farm Mutual Automobile Insurance and a major Jacksonville hospital about contracts and other documents that contain detailed information about how much the hospital charges for services.
State Farm began a legal battle with Shands Jacksonville Medical Center in an attempt to get information including copies of contracts between the hospital and health insurers. Under the state's personal-injury protection, or PIP, auto-insurance system, State Farm pays the hospital to care for accident victims. It contends the requested information could show whether the hospital is charging excessive amounts for PIP-related care.

But the hospital, now known as UF Health Jacksonville, has argued that its contracts with health insurers and related information are confidential and should not be provided to State Farm. The 1st District Court of Appeal last year agreed with the hospital, and the Supreme Court will hear arguments May 4.

"State Farm's assertions that it cannot determine from the information provided for in (part of the PIP law) whether a given charge is reasonable is simply not credible,'' hospital attorneys argued in a December brief in the Supreme Court. "As the largest PIP insurer in Florida, State Farm is certainly aware of the amounts it pays health care providers for services rendered across the state."

But State Farm argued in a brief that auto insurers are left with an "impossible decision" if they don't have adequate information about the validity of costs --- pay the bills in full or pay a reduced amount.

"The insured (customer) is harmed under either scenario," State Farm attorneys said in an October brief. "Paying more than a reasonable amount prematurely depletes the insured's limited PIP benefits, potentially leaving the insured without sufficient PIP benefits to pay for other medical care or lost wages. Paying less than the billed amount based on limited information is likely to result in litigation, increased claim expenses, and ultimately higher premiums to all insureds."

The arguments will come after months of Gov. Rick Scott hammering hospitals publicly about what he argues is a lack of transparency in pricing. Lawmakers last month approved a bill aimed at providing more information to patients about costs and quality of care.

But the Supreme Court case offers a glimpse of the complexity of pricing, as hospitals negotiate contracts with health-insurance plans and receive payments from other sources such as Medicare, Medicaid and auto insurers.

While Shands Jacksonville won at the 1st District Court of Appeal, a circuit judge had earlier ruled in State Farm's favor and ordered the hospital to turn over 37 contracts. In its brief, Shands Jacksonville also cited testimony from a hospital official who said health insurers receive different discounts for the same services.

In exchange for providing discounts, the hospital receives benefits such as being included in health insurers' networks and receiving larger numbers of insured patients. The brief said such benefits are not available from auto insurers for treating PIP patients.

In its brief, however, State Farm argued that it gets charged dramatically more than Medicare pays for patient care at the hospital.

Part of the state PIP law requires that health providers disclose information to auto insurers about treatment and costs of caring for accident victims. State Farm argued in its brief that the appeals-court ruling would blunt "the tools granted by the Legislature to investigate questionable claims, severely limiting insurers' ability to obtain the information necessary to protect their PIP insureds from unreasonable medical charges."

But Shands Jacksonville said the law entitles insurers to "basic, limited information" from hospitals and other health-care providers, not the broader types of information sought by State Farm.

In its brief, the hospital said state law doesn't "vest PIP insurers with a right to obtain, on demand, copies of confidential and proprietary third party payer contracts, and related discount information, from every hospital (or other health care provider) in the state based only on the suggestion that such confidential contracts may be useful to PIP insurers in evaluating billed charges."