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
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
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
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
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
"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
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
"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."