Managed care companies across the United States continue to await a ruling on a series of class-action lawsuits alleging that the nation's largest managed care companies violated the Racketeer Influenced Corrupt Organ-izations Act (RICO).Filed in the U.S. District Court Southern District of Florida, the litigation claims that managed care companies violated the RICO Act by conspiring to reduce and delay claims payments to network physicians. One allegation lodged by a plaintiff physician, for instance, claims that managed care companies used billing software to automatically "bundle" several CPT (Current Procedural Terminology) codes and, in turn, failed to reimburse the physician for all services rendered.
The lawsuits are part of a group of consolidated class-action suits, transferred to the Florida court from various courts across the country that have been brought against managed care organizations by consumers and physicians on behalf of millions of potential class members.
The lawsuits seek an injunction to compel the health plans to comply with all state and federal laws.
Two agreed to settle
Eight managed care providers had originally been named as defendants, but that changed when Hartford-based Aetna Inc. and Philadelphia-based Cigna agreed last October to settle.
Among several stipulations, the settlement ordered the providers to pay damages to physicians to help recover legal expenses.
Aetna and Cigna opted to settle while the case was being heard before a Florida appeals court, where it still remains.
The managed care companies had filed an appeal in 2003 after a judge for the U.S. District Court Southern District of Florida ruled in favor of the physicians in two separate rulings.
The first ruling stated that physicians could proceed with their class action suit while the second allowed the physicians' RICO claims to go to trial instead of being dismissed as the defendants had sought.
If managed care companies lose the appeal, it would clear the way for a class-action trial to proceed. If so, health providers in the future would be facing major changes in the way they conduct business with physicians.
The plaintiffs allege that health insurers "systematically reduced, denied and delayed payments owed to doctors for medical care rendered to patients who subscribed to the defendant entity."
Representatives for physicians groups hailed Aetna's settlement as a breakthrough that would enable "physicians and their patients to more easily navigate" what has been "a hostile and complex managed care system."
In addition to the monetary part of the settlement, Aetna-which serves 13 million medical members and supports a network of 579,000 health care service providers-agreed to the "prospective elimination of billing and payment practices detrimental to physicians," according to a court document.
Aetna and U.S. Healthcare, a co-defendant in the Aetna agreement, were required to create a $100 million fund for physicians to recover a portion of their damages.
A new era of cooperation
The settlement also ordered the health payers to implement "changes and commitments in its business practices to eliminate the worst of the improper practices involved in managed care." This includes "eliminating downloading and improper bundling and computerized denial practices."
The settlement establishes a standard that would recognize that a "physician exercises prudent clinical judgement for medically necessary services." And, Aetna agreed last December to assemble a nine-member physician advisory committee to provide advise on issues of importance to doctors, and to make recommendations as appropriate with regard to Aetna's business practices.
In a statement released following the settlement, John Rowe, Aetna's chairman and CEO, commented that the court's decision to ratify the agreement "endorses a new era of cooperation between Aetna and physicians. Our ongoing business practice initiatives and heightened levels of transparency will give physicians and their office staffs more time to focus on their central mission: providing health care to patients. This agreement reduces administrative complexity and leads to changes in the health care system that will ultimately benefit patients."
However, executives for managed care providers don't know if a "new era of cooperation" is likely to occur because of the ruling.
Judy Davis, vice president and general counsel for Columbia, S.C.-based Blue Cross Blue Shield of South Carolina, believes that managed care companies have already built a reputation for adhering to best practices when it comes to their business procedures and practices with physicians.
Davis adds that if managed care companies failed in their responsibility to reimburse physicians for the services they provided to consumers, it occurred as isolated incidents-not as part of a grand conspiracy.
The Blues companies have a stake in the appeals ruling: One of the consolidated lawsuits that has been transferred to the Florida court names Chicago-based Blue Cross and Blue Shield Association as a defendant.
"The plaintiffs contend that the business practices of managed care companies are negatively affecting their ability to get paid in a timely fashion-or get paid at all," Davis explains. "The physicians want transparency within a managed care company's claims reimbursement systems, so that when they submit a reimbursement for services rendered, they would be able to see how the company's operating system functions. Speaking for our organization. I believe that we have had system transparency in place for years," comments Davis.
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