Four years ago attorney Archie Lamb filed a federal class action suit against the managed care industry on behalf of 950,000 American physicians. Attorney Edith Kallas filed similar suits in state courts. Ten companies have been named (Humana, Aetna, Prudential, CIGNA, Coventry, HealthNet, PacifiCare, United, Wellpoint, and Anthem) representing 90 percent of the managed care industry. Over 60 Blue Cross companies have since been named in a separate suit. The suit accuses the managed care industry of violating RICO law (Racketeer Influenced Corrupt Organizations Act).
The companies stand accused of engaging in fraud and extortion in a common scheme to wrongfully deny payments to physicians. Their methods include unfair business practices including downcoding, bundling, capitation, de-selection from panels, overzealous utilization review procedures, excessive overhead costs, and predatory contracting strategies.
State and federal cases have been combined and transferred to U. S. District Court in Miami before Judge Frederico Moreno. Eighteen medical societies, the class of physicians, and a few individual physicians are plaintiffs, serving as class representatives. The presence of the medical societies is important to attest to the systemic nature of the charges, dispelling the notion that physicians' complaints are anecdotal. The case has withstood the insurance industry's repeated legal challenges.
The case is scheduled to go to trial in federal court in Florida in September of 2004 with Judge Moreno presiding. The insurance companies will be liable for triple damages should they be found guilty. Aetna and CIGNA have settled; the American Psychoanalytic Association is a signatory on both settlements. The settlements reflect the goals of the suit: to change the way the insurance industry does business, specifically to stop the industry's interference with and control of the doctor-patient relationship. The settlement emphasizes prospective changes in insurance industry business practices over retrospective monetary compensation to physicians.
Aetna awarded $100 million to physicians. CIGNA awarded a minimum of $70 million—$30 million to be divided by physicians on a pro rata basis (no proof of claim needed) and a minimum of $40 million to be awarded to physicians who submit paperwork documenting previous claims that were unfairly edited or rejected outright. Both companies established physician advisory boards and funded foundations to be run by the plaintiff medical societies.
Robert Pyles, M.D., is chair of the Committee on Government Relations and Insurance, and a former president of APsaA.
With respect to prospective change, Aetna and CIGNA have agreed to the following list of changes in business practice for the next four years, estimated to be worth over one billion dollars to physicians. Should they fail to comply with these changes, they will ultimately face punishment for contempt of court.
Medical necessity definition emphasizing standard of care and clinical judgment
Reduced downcoding (Many HMO's utilize software programs that automatically change a legitimate procedure code to one that is a lesser level of service in order to reimburse the health care professional at a lower rate.)
Fairer payment rules (using AMA CPT guidelines)
Disclosure of payment rules (available fee schedules)
No HIPAA mandate, continued acceptance of paper claims (Doctors will not be forced to submit electronic claims. They can continue to remain outside of HIPAA, and protect the privacy of patient records and avoid the inherent conflict between HIPAA and our code of ethics.)
Protection for non-participating physicians
Fewer contract changes
Vaccine payment
Capitation from date of enrollment (This and the item below are meant to correct complicated HMO maneuvers designed to shift financial risk from the HMO to the doctor.)
No enforced participation in pharmacy risk-pools
No requirement to purchase stop-loss insurance from Aetna or CIGNA (This requirement basically amounts to forcing the doctor to pay protection to the HMO.)
Faster credentialing
Arbitration fee cap (This keeps any arbitration fees at a fixed low level, to prevent the HMO from raising expenses for the plaintiff to a prohibitive point.)
Gag clauses prohibited
Applicability to mental health benefits (CIGNA)
Aetna paperwork is complete; unclaimed settlement money will default to the foundation it established. CIGNA will distribute its entire settlement fund to all those physicians who submit the form to claim the monies. CIGNA Proof of Claim forms should be sent to physicians in the near future. Upon receipt, physicians may elect to accept Category A payment ($30 million divided by the number of physicians requesting payment) or to send documentation of itemized unpaid bills.
Physicians may elect to donate their Category A settlement share to the American Psychoanalytic Association or to any other signatory society. If each of us contributes our share, the Association stands to collect over $60,000 to continue this fight.
The terms of the settlement will be enforced by judicial oversight. Individual physicians or signatory medical societies can initiate the dispute process. Disputes fall into three categories: billing, medical necessity, and compliance. The categories differ with respect to deadlines and potential fees.
Judge Moreno expects “changes and commitments in…business practices to eliminate the worst of the improper practices involved in managed care…” The mantle of responsibility has been passed from attorneys to physicians. We must file billing, medical necessity, and compliance disputes whenever they occur. Currently 10 percent of denied claims are appealed. Physicians and medical societies must reverse that trend, returning clinical autonomy to physicians, and restoring the central role of the doctor-patient relationship.
The American Psychoanalytic Association and the American Association of Practicing Psychiatrists are proud to be the two national organizations representing the interests of psychiatry by working closely with the RICO attorneys in this landmark case. At the state level we are joined by the Massachusetts Psychiatric Society and the Psychiatric Society of Delaware.
Members who wish to file a dispute may visit the settlement Web site at . You may also contact me at 781-235-6211 or for help with the process.
View from Dolores Park in San Francisco.