|Print This Post||Subscribe to RSS Feed||Bookmark this on Delicious|
CALIFORNIA CASE – Aetna Life Insurance Company Vs Bay Area Surgical Management –1-12-CV-217943, Superior Court of California, County of Santa ClaraPosted in News on March 13th, 2012
The world has not changed. Medical insurerstry to maintain healthy profits by, in part, by keeping reimbursements to medical providers as low as possible. On the other hand, medical providers try to get a fair shake based on their education, specialization, financial risk and hard work. Part of the insurer’s strategy is to negotiate rates with medical providers at levels that the often say is patently unfair, and therefore when they are not bound by the network contracts they rightfully seek much higher reimbursement. Obviously the insurer’s bristle at the higher fees charged for out of network medical care.
This “tug-of-war” has resulted in a number of lawsuits throughout the United States that underscore the ying and yang as well as raise questions about the propriety of waiving co-pays and deductibles, as well as the propriety of using patients as leverage against the insurer’s.
THE NITTY GRITTY:
Recently, Aetna sued several California surgery centers for an alleged “fraudulent billing scheme” alleging that the surgery centers induced physicians to refer patients for surgery centers (ostensibly out-of-network centers) with promises that they would not have any financial responsibility for their coinsurance and deductibles.
Aetna claims that the charges that were thereafter submitted were artificially inflated driving up the cost of health insurance coverage.
(Presumably the allegation of inflated billingwas supposed to strike a cord of public outrage which may be tempered by a Feb. 1, 2012 report in the Wall Street Journal that Aetna’s earnings rose 73% as the health insurer continued to benefit from light medical costs amid a sluggish pace of patient visits to hospitals and doctors.)
Aetna alleges that providers are liable for engaging in a fraudulent and illegal kickback scheme when they waive the patient’s coinsurance and deductibles, even if the provider bills the patient but ultimately doesn’t collect.
While I have not had the opportunity to read the California complaint, and the information relayed regarding the case has been distilled from various published sources, it is clear that the defendants have a very different view.
Defendant’s attorney, DaronTooch, a partner Hooper Lundy & Bookman, (defendant’s law firm) says that “this is a calculated move by Aetna to steer patients to contracted facilities.” He continues to say that “the complaint is full of misstatements of fact and law.”
It appears that Aetna and other health insurers do not have standardized fees paid to network providers. Every contract is separately negotiated and it seems that the major driving force in negotiating the contracts is the relative strength of the parties to the negotiation.
For example, if one medical organization controls the majority (or all) of the hospitals in a certain locale, and the health insurer wants to gain a foothold in that market, they do not have a strong negotiating position with the hospitals. The same obviously holds true with any independent physicians Association (IPA) that has a strong negotiating position based on its membership roll, and the specialization and geographic reach of their constituency.
To the extent this is true, the prices for which medical care is contracted are not grounded in allowing medical providers to earn a fair profit, but essentially turn into an unprincipled money grab. Doctors feel that in many (if not the vast majority of) cases they are left holding the short end of the stick. It is easy to understand why. The medical insurers are the Goliath and the doctors are generally the David, except in this case David does not necessarily conquer Goliath.
From the insurer’s perspective, out-of-network surgery centers charging many times more the amount of the contracted rates that in network centers are allowed to charge gives the insurer’s pause.
- Arehigh out-of-network charges a natural consequence of taking unfair advantage of medical providers when insurers have the clout, and therefore when they lose that clout there is a certain understandable payback.
- Are the insurers at least in part responsible for the out-of-network fees, to the extent that their reimbursement relates to the customary charges in a geographic locale.
- Is it improper for medical providers to waive co-pays and deductibles, and even if it is improper, should that render the medical provider liable to disgorge the profits earned on the medical procedures for which they waived the co-pays or deductibles.
- How far must the medical provider go in trying to collect the co-pays or deductibles before it is considered a waiver. Is one invoice enough, two invoices, collection agency intervention, or must the patient be sued and must a judgment be obtained.
There is a somewhat similar in your case that is currently pending, as well as a lawsuit against certain pharmaceutical companies for providing coupons toward the co-pays on branded drugs. However, the details of those cases are best left for another day.
In summary, what do you think?
This blog is intended as an information source for the clients and friends. The content should not be construed as legal advice, and readers should not act upon information in this publication without professional counsel. This material may be considered advertising under certain rules of professional conduct. Copyright © 2012. All rights reserved.