By Peter Waldman
Bloomberg
March 23, 2011
Aetna Inc. (AET) is suing six New Jersey doctors over medical bills it calls “unconscionable,” including $56,980 for a bedside consultation and $59,490 for an ultrasound that typically costs $74.
One defendant billed $30,000 for a Caesarean birth, and another raised his fee for seeing a critically ill patient in a hospital to $9,000 in 2008 from $500 the year before, the insurer alleges in the suits. The Caesarean price was more than 10 times the in-network amount Aetna quotes on its website.
The lawsuits could help determine what pricing limits insurers can impose on “out-of-network” physicians who donāt have contracts with health plans that spell out how much a service or procedure can cost.
The insurer paid some of the large charges because of state regulations mandating timely payments and to prevent doctors from sending patients big bills, (Aetna spokeswoman Cynthia) Michener said.
In April 2010, Aetna said, (cardiologist Benyamin) Hannallah asked for $54,600 for a heart catheterization, up from $5,500 for the same procedure in 2007. When the insurer gave him $2,000 — a sum it deemed āusual and customaryā for the procedure — Hannallah complained, and Aetna paid in full to prevent him from billing the patient for the remainder, Michener said.
Aetna tried in 2007 to impose caps on some out-of-network payments, prompting doctor complaints to the New Jersey Department of Banking and Insurance. The agency sided with the doctors, fined the company $2.5 million, and ordered it to pay out-of-network practitioners enough so that patients wouldnāt be asked to pay balances other than co-pays.
In 2009, Aetna, UnitedHealth Group Inc. (UNH), Cigna Corp. (CI) and WellPoint Inc. (WLP) were accused by the New York attorney general of underpaying out-of-network physicians by manipulating a database used to calculate payments. They paid a total of $90 million in settlements without admitting wrongdoing. UnitedHealthcare agreed that year to pay $350 million to settle a lawsuit by the American Medical Association over the same issues. Similar AMA lawsuits against Aetna, Cigna and Wellpoint are pending.
Comment:
By Don McCanne, MD
The most important innovation in coverage established during the managed care revolution was that private insurers could contract with physicians and hospitals to establish networks of providers with agreed-upon payment rates. Part of the backlash against managed care was that patients wanted the freedom to choose care outside of the networks, and they wanted their plans to pay for that care. So what did the insurers do to control fees and prices for services rendered by providers who had no contractual obligation to the insurers?
Insurers simply included in their plans some version of language to the effect that they would pay usual and customary fees in plans that covered out-of-network providers. Ingenix (founded by UnitedHealth Group) developed a data base of customary fees that led to a standard for payment of out-of-network care that was used by most major insurers. Discovery during the lawsuits that were later filed confirmed that the database was manipulated to produce an artificially low standard for customary fees. Either the providers were underpaid, or the patients had to pay excessive amounts for the balances that were billed.
Between pressure from the regulators and dissatisfaction from their own clients, the insurers were in a bind as to how they would keep the out-of-network providers from billing the patients for more than the deductibles and coinsurance.
Some physicians took advantage of this situation. They revoked their contracts with the insurers, and then charged whatever fees they thought that they could get away with. They knew that the insurers wouldn’t pressure their own clients to pay the balances, so they were basically able to extort the insurers for these outrageous fees. Now Aetna is pushing back by filing a lawsuit against these physicians for violating New Jersey Board of Medical Examiners rules against excessive fees.
Obviously, we have a problem with the way we pay for health care. The Affordable Care Act (ACA) will only perpetuate the abuses of the private insurers and the unscrupulous providers who take advantage of the system.
Fraud and abuse will always be a problem. You hear about it all the time with Medicare. That is because a single public administrator can identify fraud and expose it much more readily than a fragmented, private system that protects its proprietary information by not exposing the abuses. In fact, under ACA, the private insurers have incentives to pay outrageous fees and to pay for fraud because they get to keep 15 to 20 percent of the entire kitty. The more fraud and price gouging there is, the greater their revenues.
A single payer financing system automatically prevents gouging, and also has more effective tools to ferret out fraud. As the pain inflicted by the outrageous costs of our health care system continues to grow, the nation will welcome a single payer system, once the concept is better understood.