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Tennessee's biggest health insurer claims the new owners of a small hospital in Linden, Tennessee, have submitted bills for lab services for persons who were not patients at the hospital and wants the hospital to refund more than $4.5 million of what it claims were improper medical claims.

BlueCross BlueShield of Tennessee said it filed a demand for arbitration last week against Perry Community Hospital to recover over-payments made to the rural Middle Tennessee hospital due to what the insurer says are improper billing practices.

In a statement today, BlueCross spokesman Alison Sexter said Perry Community Hospital has been in the BlueCross provider network since 1996. But Sexter said several months after the Linden, Tenn., hospital was purchased in 2018, "BlueCross began to identify questionable medical claims for laboratory services" and BlueCross initiated an audit of the hospital's bills for all of 2018.

"The audit showed that in August, the hospital began miscoding claims – and submitting an increased number of claims for lab services for BlueCross members who had not been patients of Perry Hospital," Sexter said.

BlueCross estimates that it overpaid Perry Community Hospital by as much as $4.7 million due to improper billing practices.

BlueCross notified hospital officials of the over-payments, but so far the hospital has neither appealed nor voluntarily repaid the funds. As a result, BlueCross said it took steps to recover the money owed to the company.

"Hospital billing practices is an issue that has garnered recent media attention across the state – especially in rural facilities," said Scott Pierce, executive vice president and chief operating officer for BlueCross. "We continue to actively monitor for such practices and will act accordingly, when necessary, to make sure those we are privileged to serve get the value and benefit that we're paying for on their behalf."

Perry Community Hospital is licensed for 53 beds and, according to the American Hospital Directory, had annual revenues of just over $18.5 million. The BlueCross demand for payments represents nearly 25% of what the Linden hospital generated in total revenues last year.

Perry Community Hospital officials were not immediately available for comment.

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