Idaho doctors settle with Regence Blues

The settlement of the class action lawsuit means new contracts and higher reimbursement for physicians.

By Julie A. Jacob, AMNews staff. June 4, 2001.

Idaho physicians say they feel vindicated in their position that an insurer can't unilaterally change the way it pays physicians without offering them a new contract, now that Regence Blue Shield of Idaho has agreed to settle a class action lawsuit that physicians filed against the insurer.

Regence, which insures 326,000 people in Idaho, agreed May 15 to offer new contracts to physicians in its network, increase reimbursement to its physicians up to 3% annually over the next two years and pay $1.6 million in a cash settlement, which will be distributed among the 2,000 physicians who joined the lawsuit.

Regence, a mutual insurer, is part of an affiliation of Blues plans in Idaho, Oregon, Utah and Washington. It is owned by Health Care Services Corp. of Chicago, which also owns Blues plans in Illinois and Texas.

The settlement brings to a close a lawsuit that Idaho physicians filed against Regence on Oct. 12, 1999, in a state court in Pocatello.

The lawsuit claimed that Regence breached its contract with physicians in September 1999. That's when it changed its payment method from one based on physicians' "usual and customary charges" to one based on the resource-based relative value scale method that Medicare uses.

When it started the change, a Regence spokeswoman said the change would increase fees to primary care physicians by about 5% while cutting fees to specialists by 2% to 10%. But specialists reported that their fees were cut much more steeply than that, said Robert Seehusen, CEO of the Idaho Medical Assn., which supported the lawsuit although it wasn't a party to the suit. [...]