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  Reimbursement: Health Insurance Companies Held Accountable by Courts

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Dawn Lipthrott, LCSW
Ethical Health Partnerships
1177 Louisiana Ave. #212
Winter Park, FL 32789

 

Insurance Companies Settle Lawsuits Related to Physician Payment

Insurance companies have consistently underpaid physicians over the last decade. After trying to find cooperative ways to resolve the problem, a class-action lawsuits on behalf of physicians has begun to produce some results, but much more is needed. While it is unfortunate that physicians had to resort to lawsuits to be treated fairly, we hope these outcomes will motivate other health plans to be more ethical and fair in their relationships with physicians and patients.

Below are summaries of just a few of the news briefs at MedicoUnlimited, a health consulting firm. Click on their section of healthcare news. You can also find on that site news on the actions taken against physician groups trying to negotiate fairer contracts with health insurance plans. The cases, in my view, illustrate how physician's hands are tied in their attempts to negotiate in a non-adversarial way.

What do these lawsuits mean for patients and physicians?
It means that physicians have a legitimate complaint that is leading to courts finding for their claim or insurance companies settling.

It also means that physicians are restricted in ways to gain fair relationship with insurance companies in non-adversarial ways.

It illustrates that physicians are routinely punished and restricted for attempting to negotiate fair contracts.

While these are steps in the right direction, my guess is that insurance companies will use these and the push to be fair in their relationship with physicians as a justification for premium rate increases for patients. Don't buy it. Premiums have continued to increase, while physician rates have declined. Physician payment is not the cause of rate increase in our insurance. (We will have another article on what some of the causes are and more recommendations for action.)


Lawsuits:
A class action suit was filed in 1999 against 6 of the nation's largest health insurers for violations of the Racketeering Influenced and Corrupt Organizations Act (RCO) for their payment methods to physicians and is just now in 2004 at the point of resolution.

Health plans named in the suit are:
Aetna, Anthem, Humana, Cigna, PacificCare Health Systems, UnitedHealth Group, and WellPoint Health Networks.

Aetna:
May, 2003 (Modern Healthcare) Aetna agreed to pay $470 million dollars in a class action suit filed by physicians in 1999. The suit, representing 700,000 physicians, and filed my medical associations in Texas and California, claimed that Aetna was systematically reducing payments and interfering in patient care. As part of the settlement, Aetna is required to:
* pay $100 million to physicians
* establish a $20 million dollar charitable foundation to find ways to improve medical care
* pay approximately $50 million in attorneys' fees
* establish an advisory panel that includes doctors to work on pyament issues
* change billing methods

Aetna also agreed to pay $4 million dollars to 147,000 dentists, plus another $1 million to the American Dental Association's charitable foundation because of routinely delaying or reducing payments for dental claims. In addition, Aetna promised to:
* clarify the details of its claims process
* reduce paperwork and increase computerization

Aetna paid $75 million in attorney fees during the second quarter of 2003.

Additional note on Aetna:
In October 2004, Aetna and Cigna both are included as defendants in a suit that alleges a scheme to fraudulently market, sell and administer insurance products through employee benefit plans and to steer business to a broker in exchange for kickbacks. They are part of the

Cigna:
Cigna settled their part in the lawsuit after an initial offer the year before was rejected. They agreed to pay $85 million.

In separate cases:
Blue Cross Blue Shield:
The Connecticut Medical Society included Blue Cross and blue Shield Association and its member plans in a class action suit for depriving physicians of millions of dollars due them. The suit alleged that BCBS forced physicians into unfavorable contracts, used computer programs to routinely deny or delay payments and interfered in patient care. Although they and the other defendants who had not settled tried to get the case appealed in regard to its class-action status, the court ruled against them.

Humana:
Humana has agreed to pay 1,900 physicians in 3 states in the Cincinnati area $100 million over 3 years ($20 million, $15 million and $10 million) as a result of a case filed agains four health insurers. It will be a 30% increase in some of their reimbursement rates. The suit claimed that Humana had conspired for years to use illegal and anti-competitive practices to supress reimbursements to physicians. After the 3 years, a committee will oversee Humana's talks with physicians to make sure that there are not anti-competitive activities. Humana also will pay $6 million in attorney fees.


As always, I welcome your constructive comments and suggestions about the material on this website and how we can all be most effective in co-creating the kind of healthcare system we all want. E-mail me at ideas@ethicalhealthpartnerships.org

© Dawn Lipthrott, Ethical Health Partnerships, 2005    www.ethicalhealthpartnerships.org
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May be copied and distributed as long as this identifying information is retained on copies.)

WHAT YOU CAN DO TO HELP C0-CREATE MORE ETHICAL PARTNERSHIPS: Check back because we will be adding action opportunities.


WRITE YOUR INSURANCE COMPANY:

While these cases represent progress, they are specific to the case and not nationwide.

1. Through letters and e-mail, encourage your insurance company (and others, if you are willing) to adopt not only fairer rates, but other areas of reform that have come out of the lawsuits:

  a) create better methods of prompt payment instead of intentional delay;

  b) Reduce paperwork and increased computerization
     
* reduce administrative costs
     *   simplify and speed up the payment process

  c) create advisory boards that include practicing physicians and patients to create fairer relationships and practices that consider the good of all

  d) make reimbursement rates and policies more transparent for both physicians and patients

Based on past actions. insurance companies are likely to attempt to pass on the costs to consumers while using the payments to physicians as an justification of their premium increases.

In your letter or e-mail, make sure you let your insurance company know that you as a patient know they have increased premiums even with inadequate reimbursement to physicians.* A significant cause of the increase is their profits and their administrative costs which have gone from an average of $86 per year patient to $360 per patient. Encourage them to look at ways to reduce administrative costs rather than compromise their relationships with patients and physicians. Another way they can reduce cost is to better educate their members and the public on preventing disease, and offer incentives for members who do.

2. Ask for a response to your letter. If the company does not respond, follow up with another letter or e-mail.

3. Instead of getting discouraged by insurance company responses attempts to brush you off, or failure to respond, use it as an indication of the need to hold all of our healthcare partners and ourselves responsible for more ethical health partnerships.


WRITE YOUR STATE INSURANCE REGULATORY OFFICE:
Tell your insurance regulator or comptroller that you want better regulation of reimbursement rates and practices toward physicians.

Use this as an opportunity to also let them know you want better regulation of your own health insurance premium rates and malpractice insurance rates.

Challenge them to enter into more ethical healthcare partnership with physicians and patients. (we will be doing more in this area later)


WHEN YOU PURCHASE INSURANCE (as a company or individual):

Ask the companies for information on their rates of reimbursement . . .how much their rates to physicians have increased or decreased yearly over the past 5 years. Suggest that they break it down into primary care, general surgery, OB/GYN.

Also ask for the yearly increase in premium rates for a person in your age group over the past 5 years. Be sure to state that you want the information from the point of view if a person of your age, non-smoker, normal weight, no significant medical history, had purchased health insurance 5 years ago.

Otherwise, you may get first year buy-in rates over 5 years, which is not an indicator of what your rate increases will be over time as a member.


Remember that while it is important to hold insurance companies responsible for their partnership in our healthcare, they are not all of the problem. We all contribute and need to address the issues at multiple levels.


* (Medico Unlimited news section has interesting information about increase in premiums compared to the increase in wages of workers.)