Blue Cross, Blue Shield of N.C. removes Stokes hospital from its network

Editor’s note: This story has been updated to reflect statements provided by LifeBrite Community Hospital after the article was published.  

The state’s largest health insurance company is removing a community hospital in Stokes County from its network after an alleged scheme to score millions in insurance revenue.

The move is effective Aug. 21.

LifeBrite Community Hospital of Stokes took over Pioneer Community Hospital in 2017 and has since taken in 22,000 percent more in lab billing revenue than its predecessor, Blue Cross Blue Shield of N.C. says.

While under Pioneer management, the facility billed an average of $37,400 a month for tests. To date, LifeBrite has pulled in a monthly average of $8.5 million for the same services.  

A federal bankruptcy judge Dec. 27, 2016, approved the purchase of the operations for the Stokes hospital for $400,000 by LifeBrite Hospital Management Co., the Winston-Salem Journal has reported. The company is an affiliate of LifeBrite Hospital Group LLC of Lilburn, Georgia,

“LifeBrite has engaged in a fraudulent scheme to enrich itself at Blue Cross NC’s expense by billing for laboratory services that were not payable, were fraudulent, were in violation of Blue Cross NC’s contracts with LifeBrite, and were otherwise unlawful,” Blue Cross stated in legal claims filed May 16.

The company is seeking “compensation for the injuries it has incurred because of LifeBrite’s conduct,” the claims say.  “In addition, Blue Cross NC seeks punitive damages and injunctive relief prohibiting LifeBrite from further perpetrating its scheme.”

“We disagree with the decision by Blue Cross Blue Shield of North Carolina,” LifeBrite spokeswoman Sarah Mann told Carolina Journal. “It appears that Blue Cross has failed to take into account the role LifeBrite plays in providing high-quality health care to residents of Stokes and surrounding areas. We believe the decision reflects a fundamental misunderstanding about who we are and how we do business, and we are confident that our billing practices are lawful, appropriate and consistent with LifeBrite’s contract with BCBS of North Carolina. We intend to work with BCBS of North Carolina to address any issues in the hopes of continuing our relationship so we can keep providing vitally needed healthcare services to our community.”

The situation in Stokes County is one of many such scenarios playing out across the U.S.

Rural hospitals are endangered. Eighty-three have closed since 2010, a CBS investigation shows. Insurance companies, in an attempt to rescue local health care, reimburse community hospitals at higher rates. The action has been a magnet for money schemes. To date, insurance companies have paid nearly half a billion dollars in fraudulent billing charges.

In 2016, a Missouri state auditor discovered one such rip-off at Putnam County Memorial Hospital. With just 15 beds, the institution was at risk of extinction.

Auditors combed financial records to find millions of dollars flooding the hospital’s accounts. Officials discovered a management company called Hospital Partners had acquired the facility just weeks before it would have flatlined. To revive business, the Hospital Partners took advantage of Putnam’s higher reimbursement rates by billing lab tests from around the country through the rural hospital.

In Stokes County, LifeBrite, between August 2017 and April 2018, billed an average of 67,000 lab tests through its hospital, BCBSNC says. That tab totaled 525,000 tests and a total cost of $74 million. In contrast, Pioneer billed a monthly average of 267 between January 2015 and January 2017.

Danbury, the hospital’s locale, had a population of 189 residents in 2010. About 98 percent of the tests billed through the Stokes County hospital were for people living outside North Carolina, Blue Cross NC said.

In 2017, Empower iHCC Inc., an affiliate of the group that owns and operates LifeBrite, tried to acquire the failing Morehead Memorial Hospital in Eden. The deal fell through, and UNC Health Care bought the facility instead.

Most of the company’s plans allow customers to receive covered services from out-of-network providers, but customers will typically pay higher out-of-pocket costs, the company said in the release.