Baker County Medical Services operates a rural, not-for-profit hospital, and provides emergency medical services to patients.  Aetna Health Management and Humana Medical Plan are HMOs which provide health benefits to some of BCMS’s emergency room patients.  BCMS does not have a contract with Aetna or Humana.  As a result, when Aetna and Humana’s subscribers receive emergency medical services from BCMS, Aetna and Humana are billed full freight for all emergency charges.  The HMO’s then reduce those charges to what they believe are reasonable, and pay based on that reduced rate.

With regard to emergency services, Florida Statute Section 641.513(5) provides that:

Reimbursement for services pursuant to this section by a provider who does not have a contract with the health maintenance organization shall be the lesser of:

(a) The provider’s charges; (b) The usual and customary provider charges for similar services in the community where the services were provided; or (c) The charge mutually agreed to by the health maintenance organization and the provider within 60 days of the submittal of the claim.

BCMS sued Aetna and Humana claiming that they were violating Section 641.513(5) by improperly reducing the charges.  The 1st DCA addressed two questions on appeal:  1) whether the term "provider" as used in the statute is limited to only hospitals, or should the term "provider" include looking at all providers of similar services; and 2) whether the term "usual and customary charges" includes only the amounts billed by BCMS and similar providers, or should the term also include reference to amounts accepted by BCMS and similar providers.   

As to the first question, the 1st DCA held that the term "provider" includes "all providers of similar services, not just hospitals." 

As to the second question, the Court held that

In the context of the statute, it is clear what is called for is the fair market value of the services provided.  Fair market value is the price that a willing buyer will pay and a willing seller will accept in an arm’s-length transaction….

In determining the fair market value of the services, it is appropriate to consider the amounts billed and the amounts accepted by providers with one exception.  The reimbursement rates for Medicare and Medicaid are set by government agencies and cannot be said to be ‘arm’s-length.’  Moreover, in the emergency medical services context, hospitals do not have the option that private providers have to refuse to provide services to Medicare or Medicaid patients.  Thus, it is not appropriate to consider the amounts accepted by providers for patients covered by Medicare and Medicaid.

Baker County Medical Services, Inc v. Aetna Health Management, LLC, ____ So.3d ____ (Fla. 1st DCA February 24, 2010).