'Ghost networks' lawsuit may signal trouble for insurers

By Lauren Berryman / December 11, 2024

Health insurers have long faced criticism over inaccurate provider directories, and a recent lawsuit suggests more scrutiny could be on the horizon.

Anthem Blue Cross Blue Shield of New York, an Elevance Health subsidiary, is battling a trio of policyholders seeking class action status who allege the insurer deliberately includes out-of-network providers in its lists. These alleged "ghost networks" can deter patients from seeking care or increase their costs and can cause headaches for providers.

The complaint filed in the U.S. District Court for the Southern District of New York in October accuses Anthem of "knowingly" inflating its lists with out-of-network providers in order to fake compliance with network adequacy laws, especially for mental healthcare. The plaintiffs have Anthem coverage through the Federal Employees Health Benefits Program.

"Among other injuries, the defendant’s contractual breaches have caused millions of dollars in damages," the lawsuit says. The plaintiffs delayed or went without mental health services and incurred "significant" out-of-pocket expenses, according to the lawsuit. They seek unspecified damages, equitable relief and injunctive relief.

Pollock Cohen and Walden Macht Haran & Williams, the law firms representing the plaintiffs, conducted a "secret shopper" survey in March testing Anthem Blue Cross Blue Shield of New York's list of psychiatrists within 10 miles of Yonkers, New York, where one of the plaintiffs resides. Callers contacted 100 psychiatric practices, but only seven were in-network and accepting new patients, according to the lawsuit.

"The rest of the listings were either not in-network, not mental health providers, did not accept new patients, were not reachable or could not get an appointment in less than six months," the complaint says. The Senate Finance Committee and the New York State Attorney General have made similar findings, the lawsuit notes.

The Anthem lawsuit could inspire copycat cases, said Illinois state Rep. Bob Morgan (D), a partner at the law firm Benesch, Friedlander, Coplan & Aronoff who specializes in regulatory matters. “Everyone should expect and anticipate that these types of class actions are going to happen throughout the country,” Morgan said.

“Ghost networks are not limited to New York or a particular set of healthcare services. They’re ubiquitous,” said Morgan, who co-sponsored legislation in the Illinois House of Representatives this year that would require insurers to audit network directories.

Pollock Cohen is looking into whether health insurers including UnitedHealth Group subsidiary UnitedHealthcare, CVS Health subsidiary Aetna, Cigna and Centene use similar practices.

Anthem and Elevance Health did not respond to requests for comment, but the Blue Cross Blue Shield Association said providers are part of the problem.

“Health plans and providers share the responsibility of maintaining accurate directories,” the Blue Cross Blue Shield Association said in a statement. “We understand it can be a challenge for providers — especially those at smaller practices — to keep up with the volume of requests. However, it is critical that they respond and respond accurately.”

The health insurance trade group AHIP defended its industry. “Health plans fully comply with [Centers for Medicare and Medicaid Services] regulations to maintain accurate provider directories and offer many tools to help members access the care they need, including interactive provider directory apps, appointment finder services and care navigators,” AHIP said in a statement.

Lisa Henderson, strategic clinical advisor at Lynchburg, Virginia-based mental health provider Thriveworks has hit roadblocks when communicating network changes to insurers.

“I was getting calls from a former employee for two years after she left our company, saying, ‘Please tell them that I don't work there anymore. I'm getting calls about taking clients,’" Henderson said, referring to an incident at Nashville, Tennessee-based Synchronous Health, which Thriveworks acquired in October. "We did. That's part of our off-boarding process. But we don't have the ability to go in and do it ourselves.”

Mental health parity enforcement

The plaintiffs contend Anthem is violating a number of federal laws governing provider access, including the Mental Health Parity and Addiction Equity Act of 2008, the Affordable Care Act of 2010, and the No Surprises Act enacted in the Consolidated Appropriations Act of 2021.

The federal government has attempted to ensure comprehensive and accurate provider networks through various statutes and regulations.

Mental health parity laws, for instance, dictate that mental health be covered as well as other types of healthcare, including through adequate provider networks.

The Health and Human Services, Labor and Treasury departments issued a final rule in September strengthening enforcement of the law's network and cost-sharing requirements and broadening their reach to include the health insurance exchanges and state and municipal employee health benefits.

CMS has issued several final and proposed rules along the same lines over the past several years.

Access to mental health providers will be part of Medicare Advantage network adequacy reviews in 2025. In 2023, the agency announced a policy requiring insurers to notify members when their mental health providers exit networks.

Last month, CMS issued a draft regulation that would require Medicare Advantage and Medicare Part D carriers to update network directories within 30 days of providers joining or withdrawing. That proposed rule also would mandate that insurers submit network lists to CMS in a format suitable for the Medicare Plan Finder website.

Yet problems persist despite increased oversight, Maureen Maguire, associate director of payor relations and insurance coverage for the American Psychiatric Association, wrote in an email.

“We have urged legislators and regulatory bodies that the burden has to be on the plans to ensure that errors are fixed, and their directories are accurate,” Maguire wrote. “This cannot be added to the clinicians’ administrative burden.”

'Ghost networks' and providers

Providers suffer when patients are misinformed or misled, Maguire wrote.

Patients may blame providers for inaccurate network listings, and dealing with inquiries about network status is extra work, said Tim Clement, vice president of federal government affairs at Mental Health America, an advocacy organization.

“It creates hassles when you have people calling and saying, ‘Yes, I see you listed,’ and your administrative staff or you have to spend a bunch of time answering calls and telling people, ’I’m sorry, I don’t take your insurance,’" Clement said.

There are financial implications, as well, when providers must seek payment from patients who believed they were covered, Clement said.

Although workforce shortages can make it difficult for insurers to assemble broad provider networks, that doesn't eliminate their obligations, Maguire wrote.

“There continues to be concern that when insurers are listing clinicians and providers that are not in their networks or do not have any availability to see patients, it makes it appear that their networks are more robust than they really are,” Maguire wrote.