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Legal News
MCO to Pay Physicians In Lawsuit Settlement
Psychiatric News
Volume 40 Number 15 page 1-42

The California Medical Association (CMA) and more than a dozen other state medical associations agreed to a settlement with Wellpoint/Anthem, the largest remaining health plan defendant in a class-action lawsuit brought against several plans under the Racketeer Influenced and Corrupt Organizations Act (RICO).

Among other points in the settlement, Wellpoint agreed to use a patient-friendly definition of medical necessity and agreed to cease using software programs that systematically lowball or deny payment for legitimate patient claims.

The settlement also provides $135 million in direct payments to physicians to resolve allegations of unfair reimbursement for more than a decade. The class-action suit, filed five years ago, accuses several for-profit HMOs of using coercive, unfair, and fraudulent means to control physician-patient relationships. In the ensuing years, physician associations in Connecticut, Georgia, Louisiana, Texas, Florida, and other states have joined with CMA.

Previous settlements have been reached with Aetna, Cigna, Prudential, and Health Net (Psychiatric News, July 16, 2004; October 15, 2004). Remaining defendants yet to settle include United, Pacificare, Coventry, and Humana.

As part of the agreement, Wellpoint agreed to apply the" patient-friendly" definition of medical necessity outlined in the settlement to mental health care, including substance abuse, according to CMA.

Wellpoint will treat participating psychiatrists like other participating physicians with respect to provider directories and referrals, and it will adhere to the "prudent layperson standard" for emergency services. That standard allows for admission to an emergency room and payment for services rendered if the "average layperson" would deem emergency care necessary.

"We have a good settlement in terms of psychiatric services being treated the same as other services," said psychiatrist Catherine Moore, M.D., a member of the CMA Board of Trustees. "This kind of action shows the importance of physicians working together so that we can more effectively fight these huge businesses that are taking us to the cleaners."

Moore told Psychiatric News that Wellpoint's use of" downcoding"—the practice of changing submitted codes for services to a lower, lesser paid code—was a particularly egregious practice that could have affected psychiatrists, particularly if they used evaluation-and-management codes.

Other CMA leaders also lauded the settlement. "CMA began the battle against Wellpoint, California's largest for-profit health plan, five years ago, when it became obvious that insurers promised patients one thing in order to sell a policy and then were doing the opposite when it came time to deliver health care," said CMA President Michael Sexton, M.D. "This is a tremendous victory for physicians and patients."

CMA President-elect Anmol Mahal, M.D., said the agreement recognizes the principle that "the physicians' input is paramount and not to be second-guessed" by corporate executives.

"The Wellpoint/Anthem agreement to implement innovative industry guidelines means that patients will get the quality care they deserve," Mahal said. "It is a shame that other health plans are still delaying doing what is right for patients."

Under the settlement's provisions that deal with abusive business practices, Wellpoint must do the following:

CMA Chief Executive Officer Jack Lewin, M.D., said he hopes the agreement will usher in a constructive working relationship among physicians and Wellpoint.

"While Wellpoint... enjoys a reputation on Wall Street for excellent business management, its relationship with physicians has been on an increasingly sharp downhill slope for more than a decade," Lewin said." This settlement opens the door for a long-overdue and much-improved relationship, including the opportunity to work together to improve patient care and patient safety."

The settlement document is posted online at<www.cmanet.org/upload/wellpoint_settlement_agreement.pdf>. A summary of the settlement is posted at<www.calphys.org/assets/applets/wellpoint_settlement_overview.pdf>.

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