UMMS sues Medicaid insurer over $15M in unpaid reimbursements

The University of Maryland Medical System on Monday sued a Medicaid managed-care organization for failure to pay more than $15 million in reimbursements for care provided to low-income and vulnerable people.

UMMS, the state’s largest hospital system, sued Maryland Physicians Care, a Linthicum-based company that receives more than $1 billion per year from the state and federal governments to administer Medicaid benefits; it is one of nine Medicaid managed-care organizations in Maryland and is co-owned by four nonprofit Maryland hospital systems.

UMMS, which sued in Baltimore City Circuit Court, says Maryland Physicians Care violated its contract with the hospital system and unjustly enriched itself by refusing reimbursements for necessary care.

“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,” UMMS President and CEO Mohan Suntha stated in a news release.

In one case, UMMS was caring for a one-pound baby who was born three months prematurely and had been exposed to fentanyl and cocaine in utero. The baby “required continuous ventilatory support, nutrition support, and round-the-clock NICU monitoring for months.” The lawsuit states that MPC “consistently disputed and denied coverage.”

In another case, MPC denied the necessity of continued hospital care for a patient who had been shot and survived cardiac arrest. The lawsuit states MPC denied continued care “on the grounds that the member was no longer in enough pain to justify hospitalization.”

“When for-profit health plans like MPC boost their own profits by systematically failing to pay UMMS for services rendered to their members, that failure causes grave injury not only to UMMS and the members, but to the entire health ecosystem in the State,” the complaint states.

Most of the state and federal funds MPC receives are in the form of “capitation fees,” paid monthly based on the number of members.

“MPC must pay for the covered services and benefits received by MPC Members. But MPC’s profit derives primarily from the difference between the capitation payments it receives and the amounts it disburses for member care,” the lawsuit states. “When MPC wrongfully denies claims and refuses to pay for covered services, it retains the unspent capitation funds, rather than returning them to the State. Each denial boosts MPC’s profits at the expense of Maryland Medicaid enrollees and the health care providers and facilities who serve them.”

UMMS is represented by Baltimore-based lawyers with DLA Piper as well as lawyers with Proskauer Rose in Los Angeles and New York City.

In a statement, MPC CEO Jason Rottman said the company follows all laws and regulations, and that “rigorous reviews” by the Maryland Department of Health “consistently confirm that we meet regulatory requirements.”

“We have worked in good faith to address these concerns with the University of Maryland Medical System and have engaged in dialogue to seek resolution,” Rottman stated in an email provided by a spokesperson.

“Maryland Physicians Care strongly disputes the University of Maryland Medical System’s unfounded characterizations. Maryland Physicians Care is committed to being responsible stewards of Maryland’s Medicaid program, and we will continue to ensure our members receive the high-quality care they deserve.”

This story has been updated.