Blue Cross trying to recoup $4M in overpayments to therapists

Some mental health providers might be forced out of business because of a financial mistake made by the state's largest health insurer, the state's psychological association said Monday.

Mental health providers across the state began receiving bills last month from Blue Cross and Blue Shield of Minnesota, which is trying to collect $4 million it says it mistakenly overpaid to therapists who saw clients who were enrolled in the Blues' Medicaid HMO.

In a letter addressed to Blue Cross CEO Michael Guyette, the Minnesota Psychological Association said it was "requesting that you stop all efforts to recoup these funds," citing the financial burden that the repayments would place on therapists, who often practice solo or in small clinics.

Blue Cross discovered earlier this year it had been overpaying some therapists by nearly 24 percent for sessions for Medicaid clients and said that it would exercise a contractual clause that allowed it to recover incorrect payments going back 10 months.

Some clinics have been hit with bills from Blue Cross that are in the tens of thousands of dollars, the association said, noting that mental health providers who serve large numbers of Medicaid patients will be hit the hardest.

"This particular recoupment effort is particularly troubling because of the distinct possibility that some providers may not be able to make it through the financial crisis and continue to serve this vulnerable population of Minnesota residents," said Bruce Bobbitt, incoming president of the association.

In a statement Monday, Blue Cross said "As stewards of our members' health care dollar, Blue Cross has a fiduciary responsibility to ensure that we are paying correctly for services and to correct errors as soon as they have been identified."

Adding to the difficulty, clinics need to audit the amounts that Blue Cross is asking to be repaid, which will add more overhead costs to clinic operations.

"The amount of administrative time that they are going to have to spend just to track the accuracy of the recoupment is huge," said Robin McLeod, a former association board president. "And then they are going to have to find the money somewhere, but that is mostly money that has been spent."

The effort by Blue Cross to claw back the overpayments comes just as it is about to lower reimbursement rates for mental health therapy overall, something that will further squeeze clinic revenue.

"I have had providers even on my own staff start to wonder if they need to get a different kind of job because the reimbursement rates are declining," said McLeod, who runs a clinic in Woodbury with 13 providers. "It is having an impact on the behavioral health workforce and it will have a greater impact on Minnesota because it will create an access issue."

Several other professional groups representing mental health providers are also considering drafting a similar letter to Blue Cross, most likely as a collective group.