Deadly Checks from Blue Cross

The new policy took effect in August 2011: Blue Cross/Blue Shield adopted a national policy of sending payments due to out-of-network providers – even when there was an assignment of benefits – to patients.

The impact of this policy on out-of-network mental health and substance-abuse providers and their clients is just beginning to be reported. And it is deadly.

When Blue Cross/Blue Shield sends checks meant to pay for treatment – often for tens of thousands of dollars – to addicts in their first days and weeks of recovery, the addicts are expected to cash and remit the money to the provider of services. It will come as no surprise to people who know about early recovery that many of the treatment centers never receive payment, and that there is a growing list of addicts who cash checks, use the proceeds to buy drugs, and die of overdoses. Or addicts who relapse and kill people while driving, or develop secondary addictions such as shopping and gambling.

The funds are regarded as a windfall by the addicts we spoke to, who admit they had (1) assigned their benefits to the provider, and (2) were not being reimbursed for monies they had prepaid for treatment. They also said that since Blue Cross/Blue Shield never sent them 1099s, they never reported the “income” to the IRS or states such as California, New Jersey, and New York.

We brought this issue to the IRS and Franchise Tax Board. We also met with California State Senator Ted Lieu who was outraged and wrote to Anthem Blue Cross of California demanding it cease and desist. At the request of his staff, we then provided Assemblyman Richard Bloom with case histories received from treatment centers that failed to receive payment for services, and addicts who cashed checks. It is expected that Senator Lieu and Assemblyman Bloom will be looking for legal remedies to end the Blue Cross/Blue Shield’s national policy of sending payment meant for providers to the mentally ill and addicts in early recovery.

Once California acts, we plan to bring this problem to the attention of the appropriate committees in the U.S. House of Representatives and Senate.

Providers interested in recovering the payments they have failed to receive from clients can send us case histories, provided they do not include information that would violate HIPPA. We have set up the following email account to receive We hope to hear from as many of you as possible because each example constitutes a powerful tool in the hands of our legislators in Sacramento and Washington.

Below are links to some of the articles we have published on our blog to draw attention to the disastrous policy of Blue Cross/Blue Shield:

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