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Hot Off The Press

"Enough is Enough": Physician Organization Lawsuits Against HMOS On The Rise

MANASQUAN, NJ -- Physician organizations, weary of years of fighting managed care organizations for prompt and adequate reimbursement, are now taking their battles into courtrooms across the country, according to a copyrighted story in The Executive Report on Physician Organizations.

The 8,000-member Medical Society of New Jersey is the latest in a string of medical organizations suing large HMOS for what MSNJ President Robert S. Rigolosi calls the "stranglehold confines" of managed care.

And the lawsuits will keep coming, until managed care companies change the way they do business with doctors, American Medical Association President Dr. Richard F. Corlin told The Executive Report on Physician Organizations.

MSNJ is the fifth state medical society to file suit against HMOs in state court. State medical societies in Connecticut, New York, South Carolina and Tennessee have already done so.

"The physicians are saying, enough is enough," Corlin said. "We have negotiated in good faith, tried to get things corrected and we have been met with unreasonable responses. We are going to have to do what physicians hate to do, and that is go to court. There is no group that hates to sue more."

MSNJ filed suit in May against five of the state's largest managed care organization, including Aetna U.S. Healthcare Inc., AmeriHealth HMO of New Jersey; CIGNA Healthcare, Inc., HealthNet Inc.; and Oxford Health Plans, Inc.The suits will most likely be transferred to a federal suit pending in U.S. District Court in Miami, Florida. State medical societies in California, Georgia, Texas and Florida have accused nine HMOS of violating the federal civil Racketeer Influenced and Corrupt Organizations (RICO) law.

The list of medical societies whose cases have been transferred to the RICO case in Miami is growing and will continue to grow, Archie Lamb, lead co-counsel for the plaintiffs told The Executive Report on Physician Organizations.

The Connecticut and New York laswuits have already been added to the RICO case, at the request of the defendant HMOs, and Lamb expects the other state court suits to also eventually be consolidated in the RICO suit.

"The plan of the health plan industry is to have all the other cases sent to Miami as well," Lamb said. "I anticipate the defendants in those cases moving to have those casees considered as tagalongs transferred to Miami as well. They'd (health plans) rather fight this in one place instead of 50."

Plantiffs in the cases would prefer to have them heard in state court, where they have more control, than if their case is one of many consolidated in the Miami case, Lamb said.

The RICO lawsuit accuses the HMOs of using economic and market power to "coerce physicians into providing care" and by blacklisting physicians who protest the policies.

The HMOs named in the RICO lawsuit include Aetna Inc.; Aetna U.S. Healthcare; CIGNA; Coventry Healthcare Inc.; Health Net Inc.; PacifiCare Health Systems; Humana Inc., Wellpoint Health Networks, Inc.; and United Healthcare, Inc.

Lawsuits Not Necessary, says AAHP
Not surprisingly, the American Association of Health Plans takes a dim view of the spate of lawsuits against HMOS.

"There is a mistaken notion that seems to suggest that somehow we can sue our way to a better healthcare system," Susan Pisano, a spokeswoman for AAHP, told The Executive Report on Physician Organizations. "This is counterproductive. All it really does is contribute to the rising cost of healthcare."

A key point mentioned in all of the lawsuits is the failure of many HMOs to pay claims promptly. But Pisano says that most do.

"The health plans and the providers need to sit down and figure out how to make things work," she said. "We need to work towards a system that is more automated. The majority of cliams filed are filed manually."

Most claims are rejected because of duplicate bills, or because of ineligibility, Pisano said.

"There seems to be this theory that it's in the interest of health plans not to pay claims on time," she said. "Just the opposite is true. It's in the plans' interest to do this well."

The Medical Group Management Association strongly supports the prompt payment issue, which seems to be a mainstay of many of the lawsuits, said MGMA spokeswoman Bridget O'Connor.

"That's why we work very hard for that issue to be handled on a federal level," she said. "Most of those (lawsuits) aren't proceeding. The jurisdiction actually lies with the insurance commissioner. It does seem they are assessing fines on prompt payment issues. But we can understand doctors and physician groups wanting to pursue this in some way. To get paid promptly is a reasonable expectation."

The MSNJ lawsuit accuses the health plans of engaging in deceptive business practices and violating several state laws, practices which Rigolosi called a "game of cat and mouse."

"If we continue to work within the stranglehold confines of the managed care company's network, we will continue to waste valuable time dealing with HMO bureaucracy," Rigolosi said. "On the other hand, if physicians leave the HMO network, it creates a shortage of providers."

The New Jersey HMOs have failed to pay doctors in a timely fashion and failed to pay interest on claims - both violations of the state's prompt payment law, according to the lawsuit.

New Jersey HMOs are required by state law to pay uncontested paper claims within 40 days, electronic bills (e-claims) within 30 days and to contest claims within 30 days.

The MSNJ lawsuit also accuses the HMOs of the following:

  • Using market power to force physicians into one-sided contracts that infringe upon the doctor-patient relationship.
  • Arbitrarily overuling "medical necessity" determinations by physicians without conducting a proper analysis or review.
  • Failing to provide proper explanation for denied claims.
  • Arbitrarily downcoding, bundling or refusing to pay a modifier on claims for services.
  • Failing to properly staff clinicial and utilization management departments, which delays service and requires physicians to increase staff.
  • More Discussion Needed

    Aetna Inc. said in a statement posted on its website that the company was "surprised and disappointed" at the MSNJ lawsuit.

    "At a time of skyrocketing healthcare costs, they threaten to burden the system with needless additional expense," Aetna said. "We continue to believe that the best interests of millions of patients - in New Jersey and across the nation - is served not by litigation, but by parties engaging in meaningful dialogue."

    The RICO lawsuit, to be heard by Federal District Court Judge Federico A. Moreno in Miami, should be underway within the next 14 to 16 months, Lamb said.

    Lamb agrees that in theory, managed care has merit.

    Managed Care Changes

    But the reality, Lamb says, is far different. Managed care is now a "mutatation" of the original concept of a balance between the best interests of the patient and fiscal concerns, he said.

    "The physician and the patient have been totally excluded from the process," Lamb said. "The only thing guiding managed care today are fiscal issues, the cheaper the better. I don't think anybody would think that is in the best interests of the consumer or health in general."

    Address: The Executive Report on Managed Care; 1913 Atlantic Avenue, Suite F4, Manasquan, N.J. 08735. 1-800-516-4343.

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