Blue Cross Pays For Out Of Hospital Birth

By Kimberly Rivers

All of us need to ask for what we want. Birthing women must let hospitals, doctors, nurses, midwives, doulas, family members and insurance companies know what they want. They must keep asking, over and over in some cases. This is my story of how I sued my insurance carrier Blue Cross, when they refused to pay for my birth at a birth center. I won, and they paid.

My Investigation Begins

I knew that I wanted an out of hospital birth before I was pregnant. And I interviewed midwives before I got pregnant. I had a standard PPO plan with Blue Cross. We had made sure that the policy I had included maternity coverage as we planned to get pregnant.  We understood that the midwife I had chosen was willing to bill Blue Cross, but she prepared us to expect very little in the way of compensation, even less than the 50% it states the insured is entitled to when they visit a “non-participating provider”.

During the first month of my pregnancy, I realized I had to actually read my policy. You know that thick booklet that is constantly being revised and updated.  A daunting thought I know, especially with the early pregnancy nausea and “placenta” brain.  But I only had to read the pages pertaining to maternity care. The most important part for me ended up being in the list of definitions at the end of the booklet. When I looked up the definition of “licensed care provider”, I was happy to find that it included midwives. There was no distinction made in the booklet between Certified Nurse Midwives (CNM) who usually attend births in the hospital, and Certified Professional Midwives (CPM) or Licensed Midwives (LM). The only requirement was that they be licensed to practice in the state. My midwife was an LM. 

Next I needed to know if there were any midwives in my area, who attended births out of the hospital and who were participating providers for Blue Cross. Imagine my complete lack of surprise when I found none. I wanted to put this finding “on the record” so I called Blue Cross customer service. Luckily I spoke with a very helpful and seemingly competent man who understood exactly what I was looking for. He assured me that he could find a participating provider for me. I waited. And I waited some more. He spoke and said something like “Well there doesn’t seem to be any midwives in your area who are on the list. Here’s what you can do…” He proceeded to tell me to write a letter and request a ‘special grant’. The letter should explain why I am choosing this particular midwife, and why another type of care provider, who is a participating provider would not be best for me. He let me know that when approved, a special grant can be used to provide my normal insurance coverage for what is normally a non-participating provider. The man gave me a fax number to send the letter to and a phone number to use to follow up after I’d faxed it. Like I said, he was very helpful. This sounded perfect. But it did have to be approved. None of us held our breath.

Blue Cross Approves Special Grant

So I worked on my letter. It became four pages of why this midwife was the best care provider for my baby, and me and I presented the cost of the birth. I even chose to compare the price of having my baby at the birth center versus the cost of having my baby at a hospital. I called the local hospital and endeavored to find out what they bill to insurance companies for a birth that did not entail any medications. This was much harder that I had planned on. Eventually a supervisor in billing was able to decipher what I wanted. As I expected, the prenatal care with an OB, a non medicated birth, and an overnight stay in the hospital would cost the insurance company much more than the combined cost with the midwife for all the prenatal care, birth at the birth center and postpartum care and visits.

Ok, hold on, it’s about to get confusing.

In case you are not familiar, it is common for midwives to lump all their services into one “fee”. And if they offer birth center births (in addition to home births) they commonly have an additional “birth center” fee (this makes sense when you think about the preparation and cleaning that needs to take place after a birth occurs at the birth center, as well as the overhead costs associated with maintaining the center). So included in most midwife’s fees are ALL of the prenatal visits, all care during birth, usually a midwife assistant present at your birth, any immediately needed postpartum care , APGAR exams, weigh and measure). You can get any and all tests that you want with a midwife. She draws blood, or does the “swab”, and the sample goes to a lab. Usually the lab is the same lab used by local OB’s and the lab fees are generally covered by insurance. If you require an ultrasound while seeing a midwife, she will generally refer you to her backup OBGYN, again generally covered by insurance, but you are free to go anywhere.

Can you see the great difference in billing? OB’s and hospital births require that things be billed separately. Each prenatal visit , each procedure and intervention during and after birth, all billed separately. Considering this it's no wonder hospitals and insurance companies require HUGE billing and claims departments, especially when you take into account that more people (women usually) are admitted to hospitals in this country for maternity related issues than for any other reason.

So, back to my story. I wrote my letter, faxed it in. I got a call from a woman indicating to me that my request for a special grant was approved. I would be receiving a letter shortly to that affect, and to make sure that the bills from the midwife were sent to a certain address and fax number. I took it all down, thanked her and blew a sigh of relief. Oh, another note; I kept very detailed phone records. I noted the time, date and name of the person I spoke with and if there was an important statement made, I would ask them to wait a moment while I wrote it down. So I was approved. Blue Cross had agreed to pay my normal coverage of 70/30 for my birth center birth. AND, this was the kicker; they agreed to pay the birth center fee. But, the woman from Blue Cross instructed me that it should all be billed “together”; do not separate out the birth center fee. No problem.

I received the letter. But the language was very confusing, I wasn’t exactly sure that it said what I thought it said, and what I was told it would say. Make sense? So I called customer service. I told them I received a letter that is supposed to be approving my request, but that I did not understand it. The woman, (and here is where my phone notes became vital) informed me that yes, my request had been 

"totally approved, and that any and all services performed by the midwife, so long as they were within the scope of care for a midwife would be covered at my normal “contracted” rate at 70%". 

I actually made her repeat that sentence so I could write it down word for word. Ok, moving on.

So I was blessed with a normal, uneventful pregnancy. I did have an early ultrasound to confirm the estimated due date.  It was covered under my normal maternity coverage, so I paid the full negotiated rate. Wait a minute, what about my insurance coverage? They are supposed to pay 70% of the negotiated rate, and I (the insured) pay 30%. Nope, well at least not yet. I feel for us insurance newbie’s that a little description of how insurance works might be helpful here. I knew nothing about how health insurance works, and I still get confused anytime I have to wrap my brain around it. So using an ultrasound as an example here’s a brief lesson on insurance coverage. So you’ve got your deductible. My deductible at the time was $1500.00. And Blue Cross had a special Maternity deductible of an additional $1,000.00 on top of that. Then after ALL the deductibles are paid, the insurance “kicks” in. That means that only after we are out of pocket $2500.00 will my coverage kick in. This would have been the case if we had our baby in the hospital as well. So generally ultrasounds are covered during maternity care. And mine was. BUT since I had not yet paid my deductible, our insurance did not “kick in” yet, so we had to pay out of pocket, but we got the negotiated rate. Which in most cases is a tiny fraction of the “non negotiated” rate that the OB would charge to an uninsured woman. So we paid for the ultrasound, and it counted toward our deductible. Since the midwife combines all her services into one “bill”, nothing would get billed until after the birth. We did make deposits to the midwife, so that she has some assurance that our bills will be paid, but these didn’t “count” toward our deductible yet. Is this making sense?

So my due date arrives. And goes. I am fine. Baby is fine. We do the non stress tests (NST) with the midwife, and see the backup OB for some ultrasounds. All normal recommended “procedures” for my situation. We paid; it was put toward our deductible. All was normal we waited. My labor began normally, exactly 14 days after my estimated due date. Textbook labor. Baby born. Family goes home.

Several weeks after the birth, my midwife lets me know that Blue Cross had sent in some payments. But after some more time went by it was clear that there was a problem. I called Blue Cross. During my pregnancy the midwife had incorporated her business. So this caused some confusion. It seemed to me that any intelligent person could look at the records, and see that while the special grant was approved for an individual midwife, and that the bills were coming from the name of a birth center (now a corporation) that the address and phone number was the same, but apparently I had to point this out to their billing department. So we got that cleared up. We waited. Again, there was a problem.

I should mention that this midwife used a billing service that deals exclusively with midwives. They are used to dealing with insurance companies and out of hospital births. But my situation was a bit different.  When I looked at the paperwork, I could tell that the billing service was separating things out. They were trying to make similar to a hospital bill, so that the insurance companies could understand it, and fit it into their system better. At least this was my idea of why. I called that billing service and faxed them a note about how Blue Cross had instructed me to bill in one lump sum and to include the birth center fee in with the overall fee for everything else. The billing service was sure that the birth center fee would not be covered, (since it never had been in the past) and I had to reassure them that I had received word from Blue Cross that it was in fact covered and to please bill it. The billing service did as I asked.

But Blue Cross stopped making payments. I made several phone calls. Wrote several letters. I received letters back. Lot’s of letters. Letters from different people in different departments. Letters telling me they were continuing to investigate my claims, and other letters telling me my file was closed and if I had a complaint to submit it to the body that deals with complaints about HMOs. I was told to fax information to a fax number that was not working. I was told to leave phone messages at phone numbers where I could not leave a message. I truly felt that I was literally being given the run around.

I was in a unique situation in that I have some familiarity with the legal process and I had great support. I worked with attorneys, and had an interest in the process of law. I decided I wanted to file against Blue Cross. It was my position that they approved my request, and now they were failing to do what they promised.  Since the amount I would be suing them for was less than $5,000.00 it would be in small claims court. So no attorneys are allowed. The filing fee is small. And the process is fairly clear.

By this time we had paid our midwife in full, so we were out of pocket well over our deductible.  I compiled a packet of evidence. This consisted of my phone records, the confusing approval letter and a clear typed timeline of events. The timeline included all of the correspondence that I had with Blue Cross. When I did the calculations, we ended up suing Blue Cross for about $2,000.00. They had made some partial payments, but they were supposed to pay 70%. I filed in Ventura County. In California all the forms you need are online. You fill them out, print them out, file with the Court, pay a fee and “Serve” them on the other party.

I appeared in Ventura County Court with my packet of evidence. And I had prepared a copy of my evidence for the Blue Cross rep as well. The first appearance was in front of a Commissioner. While considered a Judge in the courtroom, with all the “power of a Judge, they are not truly Judges. A Commissioner is a respected local attorney appointed by the judges to handle small claims matters. But in small claims, we have the option of requesting a Judge be assigned, and that is what I did.  Which meant coming back another day. Remember, Blue Cross cannot send an attorney to speak on it’s behalf in small claims matters. They will send someone from their legal department, maybe a paralegal, or other person hired to show up for these matters. So he had to make the trek back up from Los Angeles as well.

So I appeared in Court for a second time, now in front of a Judge. I had a hint that things were going my way when our case was first called and the Judge asked if we had exchanged documents. Upon entering the courtroom I had handed my documents over to the Blue Cross rep (as is the proper thing to do), but he had not given me anything. So when he answered no to the Judges question, and the Judge instructed him (with an irritated tone) to hand them over to me I felt that was a good sign. I then requested some time to review the documents and the Judge agreed. An attorney friend of mine came to court with me and helped me review the documents. The phone records were there (I had subpoenaed them), and they corroborated my phone notes, but the contents, the words, the actual transcript had been deleted. It showed the date, time and person I spoke with, but the words had been deleted. I thought that was very odd, and very telling.

When the Judge called us again he first asked for a description of events from me. I had been instructed to be very brief and succinct. I focused on the letter and the phone conversations. My special grant had been approved, I was told so by a Blue Cross customer service representative. I don’t think I spoke for more than a minute.  When the Blue Cross rep in court spoke he went into the contract language and how approved fees are based on what is normal and appropriate. Upon questioning from the Judge the Blue Cross rep was forced to say that Blue Cross is the body that determines which fees are normal and appropriate. The Judge frowned on this. Then he got to my documents. For me the most memorable moment came when the judge said, while talking to the Blue Cross representative 

“I consider myself an intelligent person, but when I read this letter from Blue Cross to Mrs. Rivers, and when I read it again, I find that I have no idea what it says.” 

The Judge went on to say that I acted “as any reasonable person would have” (another good sign) he asked both of us questions and listened to our responses. I must admit I was nervous. And was so relieved when he cut off the other guy, and said he had made his decision. And he actually took some time to mention that he used to work for insurance companies, that he knows about the language and tactics used. He found in my favor, and Blue Cross was ordered to pay the full amount I was asking for. The entire hearing lasted about 15 minutes.

As we were walking out, the Blue Cross rep commented to me “be ready for an appeal”. I replied, “I am”. I had expected them to appeal if I won this stage. I admit I was very surprised when I had a check by the end of the week.

After sharing this story with some friends, they indicated to me that similar events happened to them. They were bombarded with paperwork, forms, mountains to deal with after their birth, and they gave up. I do recognize that I was in a good position and had great help and support from attorney friends to take this on. But women can and must do this.

I don’t know how recent health care reforms will ultimately affect the way that insurance companies compensate for out of hospital births. But we must ask for what we want, and demand that we get what we were assured of. In the long run if insurance companies come around to our way of thinking, we know it will bring down costs, and at the same time provide more options for more women. 

*I am happy to provide support and consultation for women who are trying to get their insurance company to pay for an out of hospital birth. Contact me for more information.  

Copyright 2010 Kimberly Rivers. Permission needed to reprint, or use in any way.  Please inquire, as I mostly just want to know where folks are using. Thanks.