Aetna to Pay Up

Company Agrees to Settlement Over Ingenix 

 Texas Medicine Logo 

Law Feature – March 2013 

Tex Med. 2012l;(109):29-32.

By Crystal Conde 
Associate Editor 

Even after the death of the Ingenix database, insurance companies continue to pay for its sins.

In December, Aetna became the latest insurer to agree to a proposed settlement to pay physicians and patients $120 million because it used Ingenix databases that deflated payments for out-of-network physician services.

The decision stems from settlement of a 2009 lawsuit against Aetna by the Texas Medical Association, the American Medical Association, and state medical societies in California, Connecticut, Florida, Georgia, New Jersey, New York, North Carolina, Tennessee, and Washington. They alleged Aetna used databases created by Ingenix, Inc., a subsidiary of UnitedHealthcare, to set usual, customary, and reasonable (UCR) rates for out-of-network services. They said Ingenix was inherently flawed and unable to establish proper UCR rates.

Plano anesthesiologist Frank Tonrey, MD, was the class representative for Texas physicians in the lawsuit against Aetna. He gave a deposition in the case and submitted records dated from 2003 to 2009 that showed Aetna didn't properly pay all claims for out-of-network services he provided.  

"The settlement with Aetna is substantial, and I think Texas doctors should be pleased they're able to recoup some of the money they're owed," Dr. Tonrey said.

He praised TMA's involvement in the lawsuit.

"When TMA gets involved in a legal matter, other state societies take notice and frequently will join in. The association has done a superb job in leading the charge on many of these legal disputes," he said.

Aetna, United, and other insurers agreed to stop using the embattled Ingenix database in settlements with then-New York State Attorney General Andrew Cuomo in 2009. That settlement created FAIR Health to take over and improve the database and establish transparent, current, and reliable health care charge information. FAIR Health collaborates with a group of research universities known as the Upstate Health Research Network to maintain the database. It allows consumers and physicians to calculate in advance, based on a patient's insurance plan, how much they may receive for common out-of-network services in their area.

In February 2008, the New York attorney general began looking into whether Ingenix intentionally skewed UCR charges downward through faulty data collection, poor pooling procedures, and lack of audits. In announcing the settlement, Mr. Cuomo, now the New York governor, said he found that having a health insurer determine the UCR rate created an incentive for the insurer to lower the rates.

Before physicians can file claims in the Aetna settlement, U.S. District Judge Stanley Chesler must approve the settlement. The preliminary approval date was set for late January. Physicians should look for proposed settlement notices, claim forms, and instructions in the mail. Physicians will then have 90 days to file a claim, says Edith Kallas, an attorney for the plaintiffs.

Joe Whatley, another attorney representing plaintiffs, says it's impossible to know exactly how many out-of-network physicians in Texas stand to benefit from the settlement with Aetna.

"We won't know until physicians file claims. Aetna has larger market shares in the metropolitan areas of Texas. We do know a significant number of Texas physicians provided out-of-network procedures to patients insured by Aetna," he said.

TMA and others involved in the Aetna settlement are working with the company to address out-of-network policies to help ensure accurate and fair payment to physicians moving forward.

Donald P. "Rocky" Wilcox, TMA vice president and general counsel, says the association will continue to hold insurance companies accountable for how they do business.

"The private practice of medicine is under siege from all quarters. TMA and the other societies who have joined in these lawsuits have found them to be very useful tools to make sure for-profit insurance companies pay doctors fairly – and legally – for the services they provide. Our members depend on organized medicine to do everything we can to help keep their practices viable," Mr. Wilcox said. 

Filing Claims 

According to Mr. Whatley, physicians can submit claims dating from 2003 to the present to a general fund or a "prove-up fund."

The general fund will cover individual physicians with less than $750 in claims or a group practice with less than $1,000 in claims. They will fill out a simplified claim form and are eligible to receive $40 for each year (back to 2003) they provided covered services or supplies as out-of-network physicians or groups. Higher claims submitted to the prove-up fund require documentation, such as copies of balance bills, receipts, and business records.

Physicians and groups submitting claims to the prove-up fund have the daunting task of combing through past claims. Tim Schmidt is the chief executive officer of Ohio-based Managed Care Advisory Group (MCAG), a litigation claim recovery and health plan auditing service. Since 2003, MCAG has helped more than 300,000 physicians recoup money in class action settlements. Mr. Schmidt says his company accesses records through practice management systems and clearinghouses to identify the appropriate claims to file.

"It would be really hard for physician practices to search records dating back to 2003 and pull out all of the appropriate out-of-network claims, submit them correctly with the required documentation, and get their money. It's a labor-intensive endeavor, and if the information isn't submitted correctly, the claim is declared ineligible," he said.

Historically, about 20 percent of eligible class members file a claim in class action settlements, Mr. Schmidt says.

"The remaining 80 percent of eligible class members throw away the notice of proposed settlement or determine it's not worth their time," he said.

But he says it's worth it for physicians to seek recoupment. In the 2009 class action settlement with United over its use of Ingenix, MCAG collected $114 million out of a total $200 million set aside for physician clients, an average of about 14 cents on the dollar.

"Unfortunately, physicians won't receive a dollar for every dollar they were underpaid in these class action settlements. There's a finite pot of money to pull from, and the amount each physician gets depends on how many people file claims. But the nice thing is the money they recoup goes to the practice's bottom line. Physicians appreciate the money," Mr. Schmidt said.

MCAG receives a flat percentage – typically 20 percent to 30 percent – of what the company actually collects in cash on behalf of the physician.

For guidance and information on submitting claims in the Aetna settlement, visit the Whatley Kallas, LLC, website. Visit the MCAG website for more information about its services.

Physicians Benefit From Settlements 

The way insurance companies conduct business has long been subject to scrutiny by organized medicine. Physicians nationwide have received $2 billion in benefits from settlements with defendants in the Racketeer Influenced and Corrupt Organizations Act (RICO) cases, including the majority of Blue Cross and Blue Shield plans, Aetna, CIGNA, Health Net, Prudential Insurance Company of America, Anthem/WellPoint, and Humana. The class action lawsuits filed in 2001 against large for-profit HMOs include approximately 900,000 physician plaintiffs. TMA was one of the first medical societies to join the suit.

As a result of the settlements, the insurance companies agreed to make key changes to their business practices and restructure the way they administer and pay for medical care.

Bohn Allen, MD, TMA past president, was part of the team that negotiated the settlements in the RICO cases. For five years, he served as a member of CIGNA's Physician Advisory Committee, a group charged with holding the company accountable to the terms of the settlement. He counts among the committee's victories its assistance in resolving 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 website when it would not reimburse for services appended with those modifiers.

"A lot of good came out of the RICO lawsuit settlement," Dr. Allen said. "Insurance companies have ceased automatically downcoding evaluation and management codes, have generally made their fee schedules available to physicians, have ceased enforcing gag clauses in their physician contracts, and have sped up payment of clean claims."

In addition to business practice changes, the RICO settlements provided funding for creation of The Physicians Foundation and the Physicians Advocacy Institute (PAI). The Physicians Foundation works to strengthen the physician-patient relationship, support physicians in sustaining their practices, and help physicians navigate health system reform. PAI develops projects and tools related to medical practice viability and delivery of quality patient care. Louis J. Goodman, PhD, executive vice president and chief executive officer of TMA, is president and chair of The Physicians Foundation and treasurer of the PAI Board of Directors.

Despite agreeing to the terms of the settlement agreements, insurance companies don't always adhere to them. Before the expiration of insurance companies' settlement agreements in the RICO litigation, physicians could file compliance actions if they felt insurers weren't keeping their promises under the settlement terms.

Hundreds of physicians and several signatory medical societies filed compliance disputes to ensure that insurers hold to their agreements. Since the inception of the compliance process in 2004, compliance disputes have benefited physicians by more than $29 million. Texas physicians have received about $1.5 million in relief through the compliance process.

Deborah Winegard, an attorney in the Whatley Kallas Atlanta office, was the CIGNA and Humana compliance dispute facilitator.

"The RICO settlements were definitely worth it because they required the settling insurers to change their business practices to become fairer and more transparent to physicians. In addition, through the compliance process, TMA and other signatory medical societies were able to ensure that the insurers complied with their commitments in the settlement agreements," Ms. Winegard said.

Although the settlement agreements have expired, many health insurers committed to retain many of the business changes originally required under their agreements. To review the specific commitments each plan has made, click here.

 Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email.  

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