Courts Have Two Insurers Singing the Blues

In April the Superior Court of Fulton County in Georgia ruled that Blue Cross and Blue Shield of Georgia (BCBSGA) must publish by May 29 its fee schedules and methods for calculating payments to doctors participating in its plans.

The language stipulates that the methodology should include sufficient information so that participating physicians may calculate for themselves whether they have been fully paid for a particular service under the plan. The court order specifically requires publication of the information on BCBSGA’s Web site.

The order also stipulates that “any promise of future compensation must be for an exact amount or based upon a formula or method for determining the exact amount . . . .”

According to the May 27 American Medical News, the Georgia case was the first case the AMA was aware of in which a health plan has been forced to reveal in advance how much it pays physicians for their services.

Patrice Harris, M.D., an APA trustee-at-large and a member of the AMA House of Delegates and Medical Association of Georgia (MAG), told Psychiatric News, “This is a great victory for all physicians and speaks to the value of state medical societies. There are many more battles to be fought, and by sharing the load among state and national medical and specialty societies, we will continue to have victories in the service of quality patient care.”

Saundra Ann Maass-Robinson, M.D., president of the Georgia Psychiatric Physicians Association, told Psychiatric News, “Certainly, the lawsuit addressed very important problems. Until the court ruling, psychiatrists could not determine how much they would be paid for any given treatment session by the insurance company.”

Maass-Robinson also said that physicians could not get information from Blue Cross/Blue Shield about how much to charge a new patient for a copay. Patients often would return for multiple visits before the physician had received any reimbursement from the insurance company or information about copays. Uncollected copays accumulated, and some patients forfeited treatment rather than pay the total once they learned what it was.

She added, “To compound the difficulties, copayments and reimbursement rates for the identical treatment vary among employers, even if Blue Cross administers the plans. This legal decision is an important first step to regaining power from insurance companies and educating the public about the administrative and economic burdens psychiatrists and other physicians have faced with the advent of managed care.”

Lynne Connor, spokesperson for MAG, which brought the case to court, told Psychiatric News that at press time the insurance company had mailed information about reimbursement rates for various CPT codes to participating physicians, but had not posted the required information on its Web site. MAG is requesting that its members let the organization know if the BCBSGA payment information is sufficient.

History of Legal Suit

The origin of the legal suit was a decision by BCBSGA in 1997 to change its payment methodology from a percentage of what doctors usually charge to what the plan usually pays.

MAG and four physicians filed suit claiming that the insurance company breached an implied duty of good faith by unilaterally changing a fundamental element of the contracts and that the company’s refusal to provide participating physicians with a fee schedule and methodology of determining the fees they pay physicians was improper.

On June 19, 2000, the Georgia Court of Appeals rejected the contention that the company did not have a right to change its payment methodology, but agreed that the insurance company’s refusal to disclose payment terms is “improper.”

The case was remanded to the Superior Court of Fulton County for a decision on what the insurance company would be required to do to provide physicians with information about reimbursement.

In July 2000 Mark Rust, an expert on physicians’ contracts at Barnes & Thornburg in Chicago, told American Medical News that antitrust laws prevent doctors from comparing reimbursements and coming up with their own estimate of prevailing charges in their area.

“A company that wants to [hide rates] just does it and waits until someone sues them,” he said.

Georgia is one of four states in which the state medical associations are suing managed care companies for violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act (Psychiatric News, May 3; October 19, 2001).

Physicians Win $6 million

In a related case in June, six pediatricians in Kansas City, Mo., were awarded $3 million in compensatory damages and $3.09 million in punitive damages from Blue Cross and Blue Shield of Kansas City (BCBSKC).

Frank Vaughters, M.D., the lead plaintiff, and other pediatricians had participated in PreventionPlus, a Medicaid pilot project, operated by BCBSKC.

When the doctors signed up for PreventionPlus in 1983, they agreed to provide Medicaid patients with unlimited care for a capitated rate. In return for their willingness to accept that risk, BCBSKC agreed to increase the physicians’ capitation rates in proportion to the profits of PreventionPlus.

By 1991 the doctors had become suspicious that the company was not honoring that contractual obligation and voiced their objections to company officials. Those executives told them funds were not available to increase their rates.

Vaughters came across a publication from the Kansas Medical Society in 1996 that showed financial information from a program similar to PreventionPlus. That program showed profits in the millions.

With the help of a lawyer, he and other pediatricians eventually obtained financial information from PreventionPlus. Ultimately, they charged the company with efforts to disguise the profits.

According to the July 1 American Medical News, the physicians claimed that the health plan had disguised its Medicaid earnings by overstating the administrative costs of running the program. They said the plan had set a 7 percent administrative fee in 1991 but had charged the Medicaid program 22 percent in 1995 and about 45 percent in 1996.

BCBSKC plans to file a motion asking the Circuit Court of Jackson County at Kansas City to set the decision aside.

More information about the Georgia lawsuit is posted on the Web at www.mag.org/content_comm/comm_press_200205_bcbs_final_order.html. ▪

[Medical Association of Georgia v. Blue Cross & Blue Shield of Georgia Inc., No. A00A0398].