Cover Story - April 2008
By Crystal Conde
It has been five years since Aetna became the first of six HMOs to settle a federal class action lawsuit filed under the Racketeer Influenced and Corrupt Organizations Act (RICO). The lawsuit charged the companies with engaging in racketeering by maintaining claims-processing practices and systems that lowered physician reimbursement.
It all began in 1999, when a physician sued Humana, CIGNA, and several other HMOs, alleging they used fraudulent marketing tactics and financial incentives to restrict patient care, breaching their obligations under federal law to provide necessary medical care. In 2001, the Texas Medical Association entered the RICO suit against CIGNA and Humana. Many of the lawsuits were consolidated, and eventually Aetna, Blue Cross and Blue Shield, Anthem/WellPoint, Prudential, Highmark, and Health Net settled the largest class action health care lawsuit ever filed in the United States, which represented 900,000 physicians.
Because of the RICO lawsuit, the insurance companies agreed to make pivotal changes in their business practices and restructure the way they administer and pay for medical care. U.S. District Judge Federico A. Moreno in Miami dismissed claims against UnitedHealth Group Inc., PacifiCare, and Coventry Health Care Inc. Plaintiffs unsuccessfully appealed the decision.
Texas physicians receive retrospective relief in the form of reimbursement for millions of dollars in claims from the settlements. (See " RICO Settlements at a Glance.") The settlements established a compliance dispute process to hold the health insurance giants accountable for the promises they made. (See " Compliance Dispute Procedure.")
That compliance dispute process is necessary because despite clear provisions in each company's settlement agreement, physicians continue to encounter situations in which the health plans aren't holding up their end of the bargain.
TMA's Hassle Factor Log program and payment advocacy staff can help physicians with the compliance dispute process. TMA members can submit a Hassle Factor Log online, by mail, or via fax. To get started, visit the TMA website. Or, call TMA's Payment Advocacy Department at (800) 880-1300, ext. 1414, or (512) 370-1414 for the appropriate reimbursement specialist.
Lessons in Compliance
Cameron Staples, JD, compliance dispute facilitator for the Anthem/WellPoint, Aetna, and Health Net settlements, says the companies' attempts to recover overpayments is one of the most common pending compliance complaints from physicians.
Each plan's settlement agreement limits how far back the companies can collect overpayments. For Aetna, it's no more than 24 months after the original payment; for Health Net, 12 months; and for Humana and Anthem/WellPoint, 18 months.
Texas law, however, allows insurance companies to recoup only six months back, but sometimes insurers attempt to recover payments beyond the state limit and even beyond the two-year limit provided in the settlements. The settlement language says state law trumps the settlement if the terms are more favorable to physicians.
In Texas, 60 percent of group health benefit plans are employer funded, unregulated by the Texas Department of Insurance (TDI). According to Donald P. Wilcox, JD, TMA vice president and general counsel, some insurers argue the six-month limit organized medicine fought to put in the Insurance Code in 2003 doesn't apply to these employer-funded plans, even though they are administered by an insurance company or HMO. TDI has been reluctant to confront insurers who have taken this position, Mr. Wilcox says.
A Dallas-area family physician - who asked not to be named - was involved in an overpayment recovery dispute in which Aetna sought to go back 10 years. The insurer also alleged fraudulent activity by the physician.
Aetna originally attempted to recoup $70,000, then reduced the sum to $36,000 after reviewing 15 charts. The physician felt confident there was no fraud and contacted TMA. The association's Payment Advocacy Department, along with Deborah Winegard, then the compliance dispute facilitator for the Aetna settlement, assisted the doctor and found the practice was confused, but not fraudulent.
The services in question were evaluation and management (E&M) services for which documentation didn't support the level of service billed. Unfamiliar with the Centers for Medicare & Medicaid Services' E&M Documentation Guidelines, the physician agreed to receive training in proper documentation as part of the settlement with Aetna.
In the end, Aetna agreed to accept payment of only $4,500.
The physician says the compliance dispute process was easy to use, and he is grateful for TMA's guidance and Ms. Winegard's persistence in resolving the matter.
Another ongoing concern involves a requirement in each settlement that insurers pay for vaccines and other injectibles and pay for administering them. The settlement language doesn't specify whether insurance companies have to pay a separate administration fee for each shot when patients receive multiple injections in one visit - a point of confusion, according to Carol Scheele, compliance dispute facilitator for the Humana settlement.
Ms. Scheele says that vaccine payment requires continued vigilance by physicians and that there has been little formal activity in the way of compliance actions, aside from taking one complaint against Humana to mediation.
In some instances, Ms. Scheele says, companies don't pay for the cost of the vaccine. Physicians experiencing this problem should contact TMA for assistance with filing a compliance dispute. The facilitators for each plan can also help. Visit www.texmed.org/rico or www.hmosettlements.com for contact information.
Mary Knauss, MD, a Pearland family physician, did take advantage of the compliance dispute process when she encountered a vaccine reimbursement problem in 2006. A solo practitioner, Dr. Knauss could not afford the chicken pox vaccine because Aetna's fee schedule was set at the bulk purchase price. She wanted to buy single doses.
"When I order a vaccine, if I order just one I get hit with a $30 or $40 surcharge per vaccine. Insurance doesn't cover that expense," she said.
She contacted the Harris County Medical Society for information about filing a compliance dispute. The organization put her in touch with Ms. Winegard.
Because the patient needed the vaccine immediately, Dr. Knauss ended up sending the patient to the local public health department for the shot.
Aetna did eventually cooperate with her, however.
"Aetna agreed that if I'd furnish receipts showing what I paid for it, they'd at least pay the cost of the vaccine," she said. "I just have to buy enough inventory that I am not paying the surcharge, and Aetna will cover the cost of the vaccine. It's still a hassle. You have to watch your reimbursements and compare them with what you paid for the vaccine to make sure you get your costs covered."
Dr. Knauss doubts she would have gotten a response from Aetna without the compliance dispute process. She encourages other physicians to keep the phone numbers for the compliance dispute facilitators readily available.
Fort Worth ophthalmologist Gary Cowan, MD, raised another issue when he filed a compliance dispute against Aetna over its fee schedule notification in early 2007. The dispute arose when Aetna notified physician practices that fee schedules would change as of July 1, 2007, and would not be available until the same day. This violated the 90-day advance notice requirement for material adverse changes.
The Tarrant County Medical Society referred Dr. Cowan to TMA, which informed him of the compliance dispute process and helped him get started.
" The system was easy to use, and the help of TMA was critical," he said. "We're not often able to negotiate with a health insurance entity, but certainly there was success in requiring them to behave reasonably."
As a result, Aetna changed its policy and agreed to give physicians the fee schedules at least 90 days in advance, not only during the term of the settlement, but after it expires.
The Process Pays Off
Dr. Cowan's experience illustrates the value of the RICO settlements' ability to give individual physicians prospective relief. Meanwhile, medical schools and large practice groups have received big payouts in previously unpaid claims because of the volume of patients they see and the number of claims they file.
For instance, The University of Texas Medical Branch (UTMB) at Galveston's Group Practice of Medicine received $210,539.83 in claims payments from Aetna. UTMB Faculty Group Practices in Houston recouped more than $800,000 from CIGNA, and a San Antonio anesthesia practice received $113,309.66 from Aetna, CIGNA, and WellPoint.
Furthermore, as a result of a dispute over Aetna's failure to pay codes involving myocardial perfusion and computer-aided detection mammography, Aetna paid a Houston imaging center $170,564.38 and a Dallas imaging center $120,178.85.
Overall, Texas physicians have received almost $11 million to date in cash payments from the settlements of the lawsuits against Aetna, CIGNA, and WellPoint. WellPoint has paid $5.6 million; CIGNA, $3.3 million; and Aetna, $1.6 million. More payments will follow from settlements with other health plan defendants for physicians who filed claims during the filing period for each settlement.
While individual physicians may not reap financial rewards of such magnitude, they can help hold health plans accountable and insist they operate more transparently by using the compliance dispute process.
Northwest Pediatrics & Adolescents in Austin, for example, joined other Texas medical practices in filing a compliance dispute after recognizing that Aetna hadn't paid about 160 urinalysis claims appended with modifier 25 from Jan. 1, 2006, to March 31, 2006.
Liria Rangel, the practice's billing coordinator, says Aetna reimbursed about $2 per claim at the time - amounting to about $320. The financial impact wasn't the main reason the office pursued the matter. Ms. Rangel says the office's three physicians wanted to be sure they would be paid for claims appended with modifier 25 in the future.
After about two months, Aetna changed its coding policies on pulse oximetry (CPT 94760, 94761, 94762) and urinalysis (CPT 81002, 81003) to allow payment when billed with an E&M code appended with modifier 25 and reprocessed claims with these codes with dates of service back to May 1, 2006. Together, these payment policy changes are worth more than $1.7 million annually to physicians, according to Ms. Winegard. Ms. Rangel advises physicians' billing staff to contact other practices to find out if they're having similar reimbursement problems and to be vigilant in communicating problems with insurance companies.
Aetna isn't the only insurance company that has received complaints about codes appended with modifier 25. CIGNA's Physician Advisory Committee helped resolve a dispute over the company's failure to recognize some codes amended with modifiers 25 and 57. CIGNA subsequently began recognizing the Medicare modifiers and agreed to explain on its Web site when it would not reimburse for claims with modifiers appended to them.
Aetna Mends Its Ways
Many physicians have had positive experiences with the compliance dispute process, but they question whether insurance companies will continue their reformed ways after their settlement agreements end. Physicians are turning their attention to Aetna, with the end of its settlement agreement looming in May.
Tom Young, Aetna's internal compliance officer, says the insurer doesn't plan to change the core policies that make up its business model and reflect its desire to continue working with physicians.
"In anticipation of the end of the settlement agreement this year, Aetna reached out to state medical societies to share our commitment to continuing virtually all of the provisions contained in the settlement," he said.
Mr. Young acknowledges that "a few administrative details have outlived their usefulness." Aetna's annual compliance report, for instance, is obsolete because the company now addresses and resolves problems in person with medical societies. He didn't indicate any other settlement terms or business practices the company may discontinue.
Robert Seligson, MBA, MA, president of the Physicians Advocacy Institute Inc. (PAI) and executive vice president and chief executive officer of the North Carolina Medical Society, hopes Aetna will serve as an example for others in the industry once its agreement expires. TMA and the other plaintiffs in the lawsuit formed PAI to make sure health insurers adhere to the terms of their settlement agreements.
"I think Aetna will lead the way in showing they still want to work with the physician community," Mr. Seligson said. "I think they'll continue to work with PAI to address inequities. We won't always agree on everything, but they'll want to engage in dialogue with us in the future."
Aetna's settlement established the Physicians' Foundation for Health Systems Excellence to improve patient care. The foundation awards grants to improve access to quality care and to integrate health information technology.
So far, Aetna has invested $20 million in the foundation.
Mr. Young says business practice changes that support the exchange of more timely, consistent, and transparent information have had the greatest impact on Aetna's relationships with doctors. He cites the following changes:
- Enhancing the physician Web site, www.aetna.com/provider;
- Implementing Clear Claim Connection technology that makes claim-coding rationale available to physicians;
- Establishing the Physician Advisory Board;
- Adopting a clear medical necessity definition to enhance a common understanding of how determinations are made; and
- Making fee schedules available.
Aetna was the first health plan to settle in May 2003, but its settlement agreement is not the first to expire.
CIGNA's settlement agreement ended in September. The company agreed to uphold some settlement provisions, such as giving physicians 180 days to file, not recouping payments more than 12 months back, providing 30 days notice when asking for recoupment, and abiding by CPT codes and modifiers. The company also agreed to retain the definition of clean claims, not to impose gag clauses, and not to prohibit balance billing for patients outside its network.
CIGNA announced that it will sunset the assignment-of-benefits clause and will no longer recognize assignment of benefits from out-of-network physicians. The company said it does not intend to apply the nonrecognition of assignment of benefits across the board and would only use it in certain products the company sells to employers, likely self-funded plans not regulated by the Texas Department of Insurance.
CIGNA will abolish the prohibition against rental networks. It wants to sell its networks to "affiliated products" or "affiliated companies." In addition, CIGNA will employ tiered networks to remain competitive with other health care payment plans.
Former TMA President Bohn Allen, MD, attended the final CIGNA Physician Advisory Committee meeting in October.
"I encouraged CIGNA, rather than returning to their previous way of doing business, that they shouldn't seek an adversarial role with physicians. They should present physicians with support so they can work in a collaborative way," he said.
Physicians should review their new and existing CIGNA contracts for changes and determine how expiration of the settlement affects their agreements. The termination of the CIGNA settlement does not affect CIGNA's obligation to pay physicians who submitted valid claims for damages from the Claim Distribution Fund and have not yet been paid.
Blue Cross Steps Up
A majority of the plans settled under the RICO lawsuit between 2003 and 2006. But last April, more than 90 percent of Blue Cross and Blue Shield (BCBS) health plans and the Blue Cross and Blue Shield Association agreed to business practices changes and payment restructuring.
Blue Cross agreed to:
- Pay valid clean electronic claims within 15 days and paper claims within 30 days;
- Provide fee schedules to physicians;
- Use a definition of medical necessity that makes sure patients are entitled to receive medically necessary care as determined by a physician exercising clinically prudent judgment in accordance with generally accepted standards of medical practice;
- Give physicians access to an independent medical necessity external review process;
- Use clinical guidelines based on credible scientific evidence published in peer-reviewed medical literature (taking into account physician specialty society recommendations, the views of physicians practicing in the relevant clinical areas, and other relevant factors) when making medical necessity determinations;
- Establish an independent external review board to resolve disputes with physicians over common billing disputes;
- Pay for the cost of recommended vaccines and injectibles and for administering them;
- Not automatically reduce the intensity coding of E&M codes billed for covered services; and,
- Establish a compliance dispute mechanism to address disputes regarding compliance with the agreement.
The settlement includes a guaranteed cash payment of more than $128 million to physicians. All practicing Texas physicians can further benefit from the settlement, taking advantage of the $878 million in prospective relief from changes to Blue Cross practices, and, if a claim is filed, a share in the retrospective relief from payments previously unpaid.
BCBS mailed notices, claim forms, and claim form instructions to physicians on July 27. Claim forms were due Oct. 19.
Judge Moreno hasn't approved the settlement order due to objections from Blue Cross. Once he issues the final order, money can be distributed.
More recently, Highmark Inc., and Highmark West Virginia, Inc., settled in October. Highmark was born out of the consolidation of two Pennsylvania licensees of the Blue Cross and Blue Shield Association: Pennsylvania Blue Shield and the Blue Cross plan in western Pennsylvania.
Highmark's final fairness hearing and oral argument took place Feb. 12. Physicians had until Feb. 27 to file a claim. Physicians who missed the deadline have no other recourse.
Keeping Insurers in Check
Mr. Seligson says the settlement agreements have benefited organized medicine.
"Doctors realize we have to continue to work to get managed care entities to be more fair in their business practices," he said. "That will require continuous verification and maintaining relationships."
Part of PAI's mission is to develop resources that help physicians address abusive insurance company practices and provide quality health care.
PAI has created a video to educate physicians about health insurers' use of episode-of-treatment groupers to rate physician performance. The video contains information that will help health care professionals determine whether they're being rated fairly and accurately.
Physicians will receive continuing medical education credits for viewing the video, which they can purchase from www.hmosettlements.com.
PAI also is developing a tool to help physicians negotiate more fairly with managed care plans when they encounter problems in administration of their policies. The rollout date for this resource hasn't been determined. Texas Medicine was unable to get a preview of the tool.
In addition, the Aetna settlement established the Physicians' Foundation for Health Systems Excellence (PFHSE) and the Physicians' Foundation for Health Systems Innovations (PFHSI). PFHSE is a grant-making foundation with assets of $98 million. PFHSI supports initiatives that improve care for patients and the disadvantaged. Both groups have received more than $100 million from physicians' charitable contributions of their cash recoveries.
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.
Compliance Dispute Procedure
Settlements under the RICO lawsuit share the same compliance dispute process. Here is information needed in challenging a violation of Section 7 of any of the plans' settlement agreements. Section 7 lists the business practice changes to which the health care payment plan has committed.
- Any physician who has not opted out of the settlement may file a dispute with the compliance dispute facilitator. Disputes must be filed within 90 days after the dispute arose or after the physician reasonably became aware of the dispute, whichever is later.
- "Signatory medical societies," which include TMA and the Harris County Medical Society, may also assist in settlement compliance actions at the request of the complaining physician. For a list of these societies, visit www.hmosettlements.com.
- The compliance dispute form and Section 7 of the settlement agreement are available at www.hmosettlements.com and at www.texmed.org/rico.
- The physician (or his or her office staff) must file the form and must include the physician's signature. The form should describe, using specific facts, the health plan's conduct that he or she believes constitutes a material breach of the health plan's obligation under Section 7 of the agreement. The physician should also specify which provision of Section 7 has been breached and describe how he or she has been harmed by the breach. The medical societies may assist in developing the description.
- Attach any supporting documentation to the form, including any correspondence between the physician and the health plan, explanation of benefits, and any relevant records in order for the facilitator to determine the merits of the complaint.
- Mail the completed form and attachments to the compliance dispute facilitator. No fee is required.
- After the facilitator receives the form, the facilitator will contact the physician to advise whether it is properly completed and to obtain any additional documentation or other information.
- The facilitator will review the form to determine that the dispute is not frivolous, cannot easily be resolved, and is not a matter to be resolved by the dispute processes.
- The facilitator will handle the dispute without charge and keep the physician informed as the compliance dispute process takes its course.
Contact information for each plan's compliance dispute facilitator is at www.texmed.org/rico. It also can be found at www.hmosettlements.com. Select Compliance Center from the menu on the left to access the Settlement Enforcement Toolkit.
TMA's Hassle Factor Log program and payment advocacy staff can help physicians with the compliance dispute process. TMA members can submit a Hassle Factor Log online, by mail, or via fax. To get started, visit the TMA website. Or, call TMA's Payment Advocacy Department at (800) 880-1300, ext. 1414, or (512) 370-1414 to be directed to the appropriate reimbursement specialist.
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