February 2004 - CLIENT ADVISORY LITIGATION INVOLVING PAYMENT PRACTICES OF PAYORS



Class Action Lawsuit against Aetna, Cigna & Other Payors

This lawsuit was brought as a class action against Aetna and 7 other managed plans: CIGNA, United Healthcare, WellPoint Health Networks, Prudential Insurance Company of America, Humana, Pacifica Health Systems and Anthem Blue Cross Blue Shield. The physicians alleged that the managed care plans engaged in improper business practices, violated various prompt pay statutes and implemented certain policies that unlawfully interfered with the physicians delivery of care to their patients.

Aetna
On October 25, 2003, a federal judge in the U.S. District Court for the Southern District of Florida approved a $170 million settlement between Aetna, one of the nation’s largest health insurers, and nearly 1 million physicians. The settlement ended a national class action lawsuit that was pending before the Court for more than three years.

The Final Approval Order and Judgment between Aetna and the physicians stated in pertinent part that the settlement required changes and commitments in Aetna’s business practices “to eliminate the worst of the improper practices involved in managed care.” These changes include:
  1. Eliminating the practices of downloading, improper bundling and computerized denial practices for claims;
  2. Eliminating “gag-clauses” from physician agreements which limit physicians ability to openly discuss treatment options with patients;
  3. Revising the definition of “medically necessary” as a physician exercising prudent clinical judgment which only allows cost considerations when an alternative service is at least as likely to produce equivalent results.
  4. Creating a $100,000,000 fund for physicians to recover damages from Aetna’s practices.

According to Aetna, the settlement will enhance communication and collaboration between physicians and Aetna, incorporate new levels of transparency regarding physician payment, reduce administrative complexity in the claims payment system and improve the quality of care for patients. To accomplish these goals, Aetna agreed to a series of business practice initiatives including:
  1. Establishing a National Advisory Committee of practicing physicians to provide advice to Aetna on issues of common concern;
  2. Disclosing essential factors that determine how much Aetna pays physicians for services;
  3. Establishing an efficient mechanism for doctors to appeal payment decisions with which they disagree;
  4. Committing to specific times for paying "clean" claims; and
  5. Making a pharmacy discount card program available for doctors to offer their patients.
See In Re: Managed Care Litigation, Class Plaintiffs vs. Aetna Inc. and Aetna US Healthcare, MDL 1334.

Cigna
In December 2002, CIGNA attempted to settle the lawsuit with the physicians for $50 million. However, on December 12th, the U.S. District Court for the Southern District of Florida blocked the proposed settlement. Judge Federico A. Moreno stated that CIGNA used “underhanded maneuvers” to obtain the settlement agreement. Cigna eventually settled with the physicians in September 2003 for a reported $540 million.

Other Payors
Six managed care plans still remain in the lawsuit. In December 2003, the defendants asked the Court to dismiss the claims brought against them under the Racketeer Influenced and Corrupt Organizations Act (RICO). The RICO claims alleged the companies systematically reduced or denied payments that the physicians were entitled to for treating plan members. The Court refused to dismiss the RICO claims on the ground that the plaintiffs presented sufficient evidence that the plans engaged in a conspiracy against the physicians to deny claims.

Green Spring and Magellan
In May 1999, the Pennsylvania Psychiatric Society (PPS) filed a lawsuit against Green Spring Health Services and Magellan Health Services, both behavioral healthcare insurance companies. The lawsuit alleged the defendants refused to authorize and restricted medically necessary and appropriate behavioral health care services. On March 11, 2003, Green Spring Health Services and Magellan Health Service filed for bankruptcy. On October 21, 2003, the case was dismissed by the Court. See Pennsylvania Psychiatric Society v. Green Spring Health Services, 280 F3d 278 (3d Cir. 2002)

Blue Cross Blue Shield

Minnesota
In 2000, the Minnesota Attorney General filed a lawsuit against Blue Cross Blue Shield of Minnesota alleging that it violated state law by engaging in a "pattern of misconduct in denying medically necessary health care treatment recommended by physicians for Minnesota children and young adults suffering from mental illness, eating disorders and chemical dependency." According to the complaint, Blue Cross shifted costs to taxpayers and families by telling subscribers' children to seek help through the juvenile justice system rather than receive health care treatment covered under a Blue Cross Blue Shield policy. The complaint further alleged that Blue Cross denied or limited coverage for medically necessary treatment and misrepresented and omitted material facts regarding coverage.

In 2001, the Attorney General’s Office and Blue Cross entered into a settlement agreement. In the agreement, Blue Cross agreed to the following key provisions:
  1. Process urgent claims in less than 24 hours and non-urgent claims in 2 business days.
    • If a denial for chemical dependency or eating disorder is made because of lack of medical necessity, Blue Cross must forward the denial to an independent review board within 6 hours of the denial.
    • If the review board determines that Blue Cross’ denial of a claim was improper, Blue Cross is bound to provide coverage.
  2. Improve access to mental health treatment.

    3. • Blue Cross must ensure that a sufficient number of appropriate health care providers are available to provide treatment to patients within 10 days of referral.
    • Blue Cross must inform patients of what treatment it will pay for if patient claims are denied because of lack of medical necessity.
    • Blue Cross must ensure networks offer reasonable access and coverage including 28-day inpatient treatment for chemical dependency and inpatient and partial inpatient treatment for eating disorders.
  3. Resolve patient complaints made to the Attorney General's Office within 60 days of filing.
  4. Provide “parity” for mental health and chemical dependency treatment.

    5. • When Blue Cross-includes mental health and chemical dependency coverage in a contract, the contact must include both inpatient and outpatient treatment at the same level as for other medical services.
  5. Pay for individual court ordered treatment.
  6. Pay a penalty to the State of Minnesota in the amount of $8.2 million.
North Carolina
On January 5, 2004, the North Carolina Medical Society (NCMS) filed a lawsuit against Blue Cross Blue Shield of North Carolina alleging the managed care company engaged in unfair and deceptive business practices designed to delay, deny and reduce NCMS physician reimbursement. The complaint alleged that Blue Cross forced physicians to enter into unfavorable contracts, denied physicians reimbursement for medically necessary claims and failed to employ a sufficient number of staff to ensure proper handling of claims. No further significant action has been taken by the court since the filing of the case.


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