Aetna settlement seeks to repair rift with physicians

A federal judge has given initial approval to the agreement while other insurers vowed to keep fighting lawsuits brought by physicians.

By Damon Adams, amednews staff. June 16, 2003.

Medical societies and attorneys behind the $170 million Aetna settlement with about 700,000 physicians say the agreement has a much bigger reward than the average $142 payment each doctor will get.

They say the settlement, given preliminary approval by a federal judge last month, will improve how one of the nation's largest managed care firms does business with doctors.

Leveling the playing field
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Physicians should see fewer administrative hassles, simplified claims processing and procedures, a clear "medical necessity" definition and speedier payments from Aetna.

"[Aetna] is the first and only insurer to step up and attempt to make this managed care system fair and equitable for physicians to navigate. This may not be perfect, but it is a tremendous step in the right direction," said Tim Norbeck, executive director of the Connecticut State Medical Society, one of 19 medical societies that made the settlement with Aetna.

The settlement of the class-action lawsuit, which was filed by the medical societies and individual doctors, calls for Aetna to pay $100 million to doctors and use $20 million to create a foundation to improve the quality of health care by reducing medical errors and racial disparities in treatment. About $50 million will go to the doctors' attorneys.

Aetna also said it would make practice changes to improve how it reimburses physicians and approves treatment, changes estimated to be worth $300 million to physicians over several years. A final hearing on the settlement is set for Oct. 14 in Miami.

"The AMA expects this settlement to raise the bar for the entire health insurance industry on fair and open business practices," said AMA President-elect Donald J. Palmisano, MD.

While Aetna is settling with doctors, other insurer defendants in class-action suits filed by physicians vow to fight, saying they have no intention of following Aetna's action.

"We are not settling, and we are not in settlement discussions with the plaintiffs," said Kent Jarrell, a spokesman for eight of the managed care companies, including Humana and WellPoint Health Network.

Those insurers are focusing on their challenge before the 11th U.S. Circuit Court of Appeals on whether a lower court's ruling that the cases can move forward as class-action lawsuits will stand, Jarrell said. Arguments are set for Sept. 11 in Atlanta.

If the class certification is overturned, "the whole case will go away," Jarrell said.

Meanwhile, two physicians and the Connecticut State Medical Society last month filed a new lawsuit in federal court against the Blue Cross and Blue Shield Assn. and more than 50 individual state affiliates. A Blue Cross spokesman would not comment on the suit, which makes similar claims as the other doctor suits.

Suits being heard in federal court

In the past few years, physicians across the nation have filed lawsuits against insurers such as Aetna, claiming that the companies reduced payments and interfered with recommended patient treatments. Those lawsuits have been consolidated in the U.S. District Court in the Southern District of Florida Miami Division.

CIGNA Corp. last year planned to settle with physicians, but the proposed settlement was halted in December by U.S. District Judge Federico A. Moreno, who is overseeing the federal lawsuits.

Aetna will take a $75 million after-tax charge against earnings to pay for the settlement.

Moreno was not happy that CIGNA and two doctors who sued the insurer in Illinois state court moved the suit to federal court in Illinois and filed a settlement there. Some physicians and medical societies said the proposed settlement did not ensure that CIGNA would end the practices doctors view as unfair.

At press time, Moreno had set a June 10 hearing on the proposed settlement, and CIGNA and physicians continued negotiations. "The parties have been meeting and continue to meet in mediation," said CIGNA spokesman Wendell Potter.

Potter would not speculate on the potential impact of Aetna's settlement on CIGNA's proposal. "It's important to point out that each company's different. Each company has different business practices and different contracting practices," he said.

Some medical society leaders said Aetna's settlement is better than CIGNA's proposal, saying Aetna's deal focuses more on making system changes while CIGNA's agreement was aimed at resolving past claims disputes.

"The CIGNA settlement is not nearly as comprehensive or beneficial to physicians as the Aetna settlement," said Bohn D. Allen, MD, president-elect of the Texas Medical Assn. and a general surgeon in Arlington, Texas. "The Aetna settlement is not about money. It's about changing the practices of managed care to more fairly deal with physicians. That is the key difference."

Aetna and medical society leaders announced the settlement May 22. A week later, Judge Moreno gave preliminary approval, then set Oct. 14 for a final approval or rejection.

Aetna officials said the agreement would cut down on administrative complexity in the claims payment system and streamline communications between the insurer and physicians. They said the deal would speed payment of claims and reduce time-consuming and costly administrative burdens.

"Aetna's goal with this agreement and these practice improvements is to make sure that the claims physicians submit get paid quickly and correctly, to make sure that we catch mistakes and we fix them, to make sure that the vast majority of claims are submitted cleanly and that they get paid right away," said John W. Rowe, MD, Aetna's chair and chief executive officer.

To account for the settlement, Aetna said it would take an after-tax $75 million charge against earnings.

Physicians and attorneys are pleased that the settlement calls for an independent appeals process for physician billing disputes and a clear definition to determine the "medical necessity" of treatments based on "generally accepted standards of medical practice."

"It changes [physicians'] lives dramatically in that it tremendously reduces the amount of red tape that doctors have to deal with on a day-to-day basis," said Archie Lamb Jr., co-lead counsel for physicians and an attorney in Birmingham, Ala.

In the end, doctors and patients will benefit, doctors said.

"It's a good deal that should really improve the opportunity for doctors and patients to make their own decisions," said Ronald Bangasser, MD, president of the California Medical Assn. "It gets the extra chair out of the exam room -- the extra chair being the insurance company."

ADDITIONAL INFORMATION:

Leveling the playing field

Under the terms of the proposed settlement, Aetna agrees to:

Pay $100 million to physicians.
Pay $20 million to establish a foundation to improve quality of care.
Adopt a clear "medical necessity" definition.
Commit to timely processing of "clean" claims.
Set up an independent appeals process for physician billing disputes.
Disclose factors that determine how physicians are paid.
Establish a national advisory committee of practicing physicians to advise the insurer on issues important to physicians.