Unreasonable, not customary?

A class action lawsuit filed recently in New York raises serious issues with the way giant insurer UnitedHealthcare decides how much to pay doctors.

Editorial. April 10, 2000.

The phrase "reasonable and customary charge" has a reassuring ring to it. No wonder an insurance company would want to use it when announcing how much it decided to reimburse a patient or doctor for out-of-network care.

Then again, those on the receiving end deserve reassurance. There is clearly an inherent potential for a conflict of interest in determining the reasonable and customary rate. It's the insurance company that decides, as secretly as it sees fit, what aggregate physician data and methods to use in figuring that amount for a given treatment. When payment falls short of what the doctor or patient expect, it is the insurer that -- rightly or wrongly -- gets to keep the difference.

Those issues are brought into sharp focus by a class action lawsuit filed recently in New York by the AMA, the Medical Society of the State of New York, a doctor and one of his patients against UnitedHealthcare and the Metropolitan Life Insurance Co. The plaintiffs raise serious issues with the way that insurance giant United sets usual and customary fees.

The suit, which charges breach of contract and other allegations, is based on the experience of vascular surgeon Michael J. Attkiss, MD. He has been in a running battle with United over reimbursement for varicose vein treatments. Both United and MetLife are named as defendants because United operated MetLife's health insurance operations.

The belief of Dr. Attkiss and his lawyers is that they have uncovered practices that do not jibe with the insurance company's assurances of using valid data to figure reasonable and customary fees. Included in those allegations are that discounted fees have worked their way into the database used to figure usual and customary charges, downwardly skewing payment amounts. Moreover, the database used by United, the Prevailing HealthCare Charges System, was specifically disowned as a valid source of usual and customary rate information by its creator, the Health Insurance Assn. of America.

It is essential to note that United denies any wrongdoing in this matter, and it says that its data are sound. United also suggests that it is consumers who may suffer a backlash if the controversy causes employers to drop out-of-network provider plans in favor of strict managed care. Interestingly, one of the charges against United is that it apparently retaliated against Dr. Attkiss, who claims that after his fight with United began, a procedure for which United had been reimbursing him for years was suddenly found to be "not medically necessary."

The United case alone has major implications for the patients and physicians who may be directly affected by it. But the far bigger issue is: If, in fact, there are questionable activities going on out there in setting reasonable and customary rates, how widespread is the problem?

The AMA and the MSSNY are part of the lawsuit as representatives of the AMA/State Medical Societies Litigation Center, which joins together nearly every state society to fight significant cases on behalf of physicians. By prominently taking part in the case, the center is not only focusing attention on what may be happening in New York, but they're also inviting physicians everywhere to come forward with their own evidence of possible wrongdoing. In the few days since the suit was filed, some already have.

As for the case against UnitedHealthcare and MetLife, it could take years to work through the courts. When it does come to trial, it's too much to hope that the closing argument will end with: If reasonable and customary is not legit, the insurer must remit. However, to patients and physicians, that is a phrase with a very reassuring ring to it.