American Medical Association, Other Groups File Lawsuit Alleging That WellPoint Underpaid Physicians

Main Category: Litigation / Medical Malpractice
Also Included In: Health Insurance / Medical Insurance;  Primary Care / General Practice
Article Date: 27 Mar 2009 - 7:00 PDT

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The American Medical Association and several state medical groups on Wednesday in federal court in Los Angeles filed a class-action lawsuit against WellPoint, alleging that the insurer took part in an industry-wide effort to set artificially low reimbursement rates for out-of-network care, the Indianapolis Star reports (Lee, Indianapolis Star, 3/26). The suit claims that the insurer failed to disclose flaws in the database known as Ingenix, which many insurers used to calculate "usual and customary" payments for out-of-network medical services. The database is designed to use claims information from participating insurers to establish these rates (Girion, Los Angeles Times, 3/26). However, doctors say that in addition to physician claims the database used claims from other types of health providers, which resulted in lower reimbursement rates.

The class-action suit alleges that the insurer violated federal racketeering, antitrust and employee benefit laws (Levick, Hartford Courant, 3/26). According to the suit, WellPoint's use of the maligned data forced doctors "to expend significant time and resources toward identifying, disputing and then appealing WellPoint's improper reimbursement determinations, oftentimes still resulting in underpayment" (Indianapolis Star, 3/26). It also states that the underpayments could have resulted in higher medical bills for patients, who often were left to fill the gap between what their doctor charged for a service and what Ingenix listed as the "usual and customary" rate.

The plaintiffs are seeking to reform the payment system, operated by UnitedHealth, and to obtain financial reimbursement for doctors harmed by WellPoint's use of the database, but no dollar amount has been specified. A similar suit filed on behalf of patients last week in the Los Angeles federal court names UnitedHealth, Ingenix, WellPoint and BlueCross as defendants, according to the San Francisco Chronicle (Colliver, San Francisco Chronicle, 3/26). The California Medical Association, the Connecticut State Medical Society, the Medical Association of Georgia and the North Carolina Medical Society joined AMA in filing the suit on Wednesday.

AMA President Nancy Nielsen said, "Physicians will not tolerate an apparent conspiracy that allows health insurers to play by their own rules without regard to patients, or the legitimate costs required to care for them" (Hartford Courant, 3/26). WellPoint in a statement said it is "committed to providing appropriate reimbursement for out-of-network services," adding, "We are in the process of reviewing the complaint and are unable to comment further at this time" (San Francisco Chronicle, 3/26). Ken Goulet, CEO of WellPoint's Commercial Business, in a news release said, "WellPoint acknowledges the conflicts of interest in the Ingenix database" (Indianapolis Star, 3/26).

Future Moves
Use of the database has prompted other lawsuits and an investigation by New York State Attorney General Andrew Cuomo (D). UnitedHealth in January agreed to close the database and pay $20 million toward the development of a new database. Aetna also agreed to pay $20 million toward the new database, and Cuomo's office says WellPoint agreed to pay $10 million (AP/Kansas City Star, 3/25). AMA President Nielsen will testify Thursday before a Senate panel that is scheduled to begin examining charges of price-fixing practices by insurers (Indianapolis Star, 3/26).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2009 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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