Love v. Blue Cross & Blue Shield Ass'n (In re Managed Care Litig.)

Love v. Blue Cross & Blue Shield Ass'n (In re Managed Care Litig.)

Opinion

ORDER AFFIRMING COMPLIANCE DISPUTE OFFICER'S DECISION

THIS CAUSE came before the Court upon North Carolina Medical Society's Appeal (D.E. No. 2087), filed on January 18, 2012. Provider track plaintiff North Carolina Medical Society appeals from the September 17, 2009 decision of a compliance dispute officer relating to Blue Cross Blue Shield North Carolina's  [*25] implementation of a new pricing policy. This is the second time that NCMS has attempted to appeal from this decision. The last appeal resulted in a Report & Recommendation from Magistrate Judge Torres finding that the decision was not ripe for judicial review. Since that time a new compliance dispute officer has finalized the prior written opinion. According to the Parties' Settlement Agreement, Section 12.6(g), review by the court is limited to whether the decision was "arbitrary and capricious, an abuse of discretion or otherwise not in accordance with law" as defined by 5 U.S.C. § 706(2)(A). The main issue in the dispute is whether BCBSNC gave physicians adequate notice of a fee reduction, which would be a material adverse change under the Settlement Agreement, Section 7.6.

I. Background

The following facts are culled from the Compliance Dispute Officer's September 2009 decision. In January of 2005, BCBSNC issued a new Pricing Policy that set payment for a certain class of infused prescription drugs at a percentage of the Average Wholesale Price. Concurrently, a new Specialty Pharmacy Program was introduced that allowed physicians to purchase drugs at a low price. However, the Specialty  [*26] Pharmacy Program had the disadvantage of long delivery times and inflexible application to multiple patients. NCMS points out that "infused drugs represent the largest revenue source as well as the highest cost center for oncologists and rheumatologists." In 2007, BCBSNC updated its policy so that the Specialty Pharmacy Program prices became, in effect, mandatory rather than optional. The CDO's fact section calls this change material and generally adverse for physicians. The variance in wording that signaled the change and thus was the notice of a materially adverse change was subtle and slight,¹ A computer glitch resulted in payments to certain rheumatology and oncology physicians continuing under the old schedule through late 2007. BCBSNC resent the notice to those physician groups in March of 2008 and began to reimburse them under the new plan in July of 2008. NCMS alleges that physicians were confused by the pricing changes or had delays in learning the new scopes of coverage. The Settlement Agreement requires 90 days of notice before reducing any fee schedule. § 7.14(a).

II. Review Standard

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