The best of the Blues
CMA Appalled by Blue Shield of California’s Failure to Settle RICO Lawsuit
California Medical Association
CMA Alert
July 26, 2007
CMA is outraged that Blue Shield of California has refused to settle a class-action lawsuit filed in 2003 that would have meant tens of millions of dollars to California physicians who were harmed by the insurer’s previous failures to provide and pay for patient care.
Despite the association’s best efforts to work amicably with this nonprofit insurance company — a company CMA founded — Blue Shield is demonstrating a disappointing unwillingness to provide its enrollees with the care for which they’ve paid.
Though not a plaintiff in this case, CMA has been working with the parties involved over the past several months to reach a fair settlement. Unfortunately, the Blue Shield of California board of directors recently decided it was not willing to pay the pro rata shares owed to doctors who provided tens of millions of dollars in uncompensated care to Blue Shield enrollees.
The case, Rick Love, M.D. v. Blue Cross Blue Shield Association, was filed in May 2003 in federal district court in Miami. The suit accused the insurers of a pattern and practice of denying and delaying care, including intentionally programming computer billing databases to automatically down-code physician claims. The suit was filed under the federal civil RICO (Racketeering Influenced and Corrupt Organizations) statutes.
http://www.calphys.org/html/alert072607.asp?anchorID#3
Comment:
By Don McCanne, MD
Those who believe that private insurers should continue to have a prominent role in health care financing often point to the Blue Cross and Blue Shield companies as effective, efficient and ethical insurers. How has that played out in California?
Blue Cross of California has a well deserved reputation for being the heavy in the havoc wreaked in California’s insurance market. They led the way by transforming themselves from a traditional, non-profit insurer serving patients, into a for-profit insurer serving investors. The ugly story will not be repeated here other than to say that their financial success has been due primarily to their business model that has allowed them to offer competitive premiums by limiting their medical losses. The innumerable devious methods used to avoid paying for health care are what offend our sensibilities.
In contrast, Blue Shield of California, founded by the California Medical Association, has remained non-profit, and has had a reputation a representing the noble traditions of the Blues. But is that reputation deserved?
To remain competitive, Blue Shield had to adopt many of the same nefarious measures that Blue Cross uses to limit medical losses. According to this lawsuit, they established “a pattern and practice of denying and delaying care,” and even resorted to the dishonest practice of using computers to automatically change service code numbers. Thus physicians were not being paid the already-discounted fees for which they contracted. Blue Shield is serving neither the patients nor the providers well. The take-home point is that even the best of the private insurers engage in devious practices.
Physicians and hospitals might have their differences with the Medicare program, but at least reimbursements are determined by an open an honest process (a process that requires continual refinement). More importantly, Medicare policies are designed to promote affordable access to care for everyone qualified, whereas private insurer policies are designed to hinder access to care and to exclude those with the greatest needs.
We really do need to eliminate the inefficient, intrusive private insurers from our health care system. Even the Blues have to go.