Law Feature - December 2007
By Crystal Conde
Texas physicians and one of the nation's biggest health insurance companies are once again clashing over a critical issue: health care for patients vs. profits for the health plan.
The Texas Department of Insurance (TDI) Enforcement Division is investigating UnitedHealthcare's radiology notification program following a Texas Medical Association complaint on behalf of physicians and patients. United has also been tied up in litigation for the past seven years over the integrity of the databases it uses to determine "usual, customary, and reasonable" (UCR) charges.
Favorable outcomes in each matter could potentially result in repayments to affected physicians and reforms that would make United's business processes more transparent and efficient.
TDI's investigation of United's radiology notification program hinges on physicians' complaints about the lengthy notification process United requires of physicians who order certain imaging procedures for their patients. Physicians who don't call United to explain the need for the procedure likely won't be paid for the service.
TMA is urging TDI officials to review any claims denied because the ordering physician did not go through the process. TMA urged the agency to review United's claims information submitted to TDI because improper claim denials may also violate the Texas prompt pay laws. This means that particular physicians may be owed penalties under the law and regulations.
United says its program seeks to "reduce unnecessary radiation exposure" and "ensure that members are not receiving unnecessary services."
TMA believes that despite what United says, its notification program is nothing more than a utilization review system that requires preauthorization for physicians to be paid. Furthermore, TMA believes United's program does not even meet the state requirements for utilization review.
Lyle Thorstenson, MD, is a Nacogdoches ophthalmologist and vice chair of TMA's Board of Trustees. TMA nominated him to serve on UnitedHealthcare's Physician Advisory Committee, established two years ago to consider physician feedback about its operations. Dr. Thorstenson joined the committee last November.
He says United promoted the radiology notification program as an initiative that would save hundreds of millions of dollars and bring efficiencies to delivery of health care. He, along with the 11 other members of the advisory committee, discussed the radiology notification program with UnitedHealth Group CEO Steven Hemsley at the committee's fall meeting.
"The main thing I mentioned is what I learned from TMA: We're overwhelmed with doctors' complaints on the radiology notification program issue," Dr. Thorstenson said. "We have a hassle log, and of all the complaints from all the various carriers, this one was the biggest. I let them know the program is not received well in Texas."
Eliminating administrative burdens for physicians and health plans is a primary goal of TMA's Council on Socioeconomics. The council's immediate past chair, Susan Strate, MD, a Wichita Falls pathologist, says it takes physician office staffs a great deal of time to navigate and adhere to United's program.
"The time spent to adhere to this process could be used more productively in ways that benefit patient care," Dr. Strate said.
Dr. Thorstenson acknowledges that United wants to improve operations.
"When there is something they can do to make the system run better, they're willing to do it, always keeping an eye on the bottom line," he said.
"They don't know what everyone else is doing. They act independently and think there's some advantage one company has over another," Dr. Thorstenson said.
Dr. Thorstenson understands that health care payment plans walk a fine line and must satisfy shareholders, physicians, and patients in the cutthroat insurance industry. He says United is starting to see value in having an advisory committee.
"The advisory committee is kind of a microcosm of the whole country. If it doesn't fly with us, it's not going to fly with everyone else," he said. "We try to emphasize the carrot aspect and not the stick. They're more likely to have a favorable response from physicians if there's reward involved, not punishment. Education is something we emphasize, and UnitedHealthcare seems to take that to heart."
UnitedHealthcare did not comment on the TDI investigation or the lawsuit.
TDI doesn't talk about pending investigations, but John Greeley, public information officer, did say the agency has two years from the time it learns of a violation to issue a notice of hearing.
According to Mr. Greeley, the most severe punishment TDI can levy is revoking a company's certificate of authority, which has never occurred in Texas. Other punishments include suspensions of certificate or a cease-and-desist order for a particular program or practice. TDI can order payment of penalties and restitution of up to $25,000 per day per occurrence. Such penalties have been imposed in Texas.
This is not United's first run-in with TDI. The agency fined the company $4 million in 2005 for violating prompt payment laws.
United was fined $2.5 million in 2005 for not paying claims correctly and another $1.5 million for not filing accurate and complete provider claims data. TDI did not specify how the claims were paid incorrectly. TDI says United failed to report accurate prompt pay information to the agency for almost two years.
At the heart of American Medical Association vs. UnitedHealthcare , filed in 2000, is United's determination of UCR charges. AMA, along with the Medical Society of the State of New York, the Missouri State Medical Association, individual physicians and subscribers/beneficiaries, and a group of New York state unions under the Empire Plan HMO, maintains that United uses invalid databases that have the effect of reducing proper reimbursements for out-of-network physicians.
Leonard Nelson, JD, director of the AMA's Litigation Center, says his organization desires three specific outcomes in the case:
- Money: AMA's attorneys are working on ways of calculating potential reimbursements to physicians. Mr. Nelson says the amount depends on the extent of United's erroneous computations.
- Integrity: "The AMA would like United to reform its method of establishing UCR. If it can't fix the system, then stop determining UCR," Mr. Nelson said. Another system should be used to gauge what to reimburse physicians.
- Openness: When a physician challenges a UCR determination, United should be forthcoming and explain how it made the calculation.
"United is a gigantic company, and they won't tell anyone how they make their calculations," Mr. Nelson said. "There's nobody who can determine the calculations. It's not like government agents examine the calculations. It's totally secret."
United has revealed that it contracts with Ingenix for the use of its Prevailing Healthcare Charges System and Medical Data Research databases to manage costs and develop fee schedules for out-of-network and non-negotiated services.
D. Brian Hufford, JD, an attorney for AMA and some of the other plaintiffs, says the case isn't even close to being over. "We hope to compel UnitedHealthcare to pay back improper amounts it has withheld."
Recently, his law firm proposed adding antitrust and RICO (Racketeer Influenced and Corrupt Organizations Act) claims to the lawsuit. Southern District of New York Judge Lawrence McKenna agreed, and United is seeking to overturn that ruling.
The main concern, Mr. Hufford says, is that insurance companies pressure physicians to sign contracts to join their networks. Once a physician is in network, insurance companies have greater control over compensation, effectively allowing them to continue reducing reimbursement for services.
The option to sign out-of-network contracts gives physicians more freedom and doesn't subject them to as many restrictions. But when insurance companies reduce UCR rates, physicians may be at odds with their patients, who may think their doctors are charging too much.
"It's all part of the overall package because it influences the ability of the insurance companies to put pressure on doctors who are in network, as well. Effectively, doctors realize that if they go out of network they're not going to get paid anything either," Mr. Hufford said.
"This is important to doctors because it examines the question of what insurance companies can do with regard to reimbursements and what they can represent."
In response to the lawsuit, United has amended contracts to give the company more flexibility. Rather than referring to UCR rates, United may refer to allowed charges for out-of-network services or indicate it will examine a number of factors, including the databases, Medicare rates, or in-network fee schedules.
"That makes it more difficult to challenge legally. If they say in the contract, 'You're going to get paid very little money if you go out of network to a subscriber,' there's not much you can do to challenge that contract legally," Mr. Hufford said. "That's what the employer has paid for. The problem is when the insurance companies indicate they'll pay UCR rates and don't."
Crystal Conde can be reached at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email at Crystal Conde.
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