Aetna settles class action lawsuit from Doctors re payments and treatment decisions

Home Health Columnist / Guide · May 24, 2003

washingtonpost.com

Aetna Gives Doctors Wider Latitude

Settlement in Lawsuit Called 'Truce'

By Bill Brubaker

Washington Post Staff Writer

Friday, May 23, 2003; Page E02

http://www.washingtonpost.com/wp-dyn/articles/A28313-2003May22.html

Doctors across the country yesterday described a proposed $170 million settlement with Aetna Inc. as a first step in improving their long-contentious relationship with the nation's second-largest health insurer.

"I wouldn't call it a home run, but I would call it a solid double," said Jack C. Lewin, chief executive of the California Medical Association. "This is, in a way, a truce in what has been a multi-decades-long managed-care war," Lewin added.

At a news conference in New York, Aetna said it settled a class-action lawsuit in which 700,000 doctors had alleged that the insurer wrongly cut payments to them and second-guessed their treatment decisions.

The agreement, subject to court approval, calls for Aetna to pay $100 million to these doctors, up to $50 million to the plaintiffs' lawyers and $20 million to create a foundation that would address issues such as childhood obesity and racial disparities in the health care system.

But the most significant part of the settlement, some doctors said, was Aetna's pledge to improve the system whereby it reimburses physicians and approves treatment decisions. Aetna said these improvements could be worth $300 million to doctors over several years.

Under Aetna's new system, "there will be fewer of the administrative hassles that physicians now have with managed-care companies," said Donald J. Palmisano, president-elect of the American Medical Association. "Physicians will spend less time dealing with the managed-care bureaucracy and more time with their patients. This will help restore the patient-physician relationship."

Aetna has agreed, for example, to implement new physician-approved guidelines on how claims should be "coded" and then paid, and to abide by "generally accepted medical standards" to determine whether treatments are medically necessary -- a frequent source of contention.

"In the past, doctors have been inhibited from doing some tests," said Russell C. Libby, a physician leader at Inova Fairfax Hospital for Children. "And getting home care authorized [by Aetna] for patients sometimes can take hours. In this new system, we will be able to get authorization more quickly."

Aetna chief executive John W. Rowe called the proposed settlement a "sea change" in the 150-year-old insurer's recent relations with doctors. "Relations have at times been very contentious," he noted.

The national class-action lawsuit, filed in U.S. District Court in Miami, names other insurers, including industry leader UnitedHealth Group Inc., as defendants. No other settlements have been announced.

"The biggest thrust of this lawsuit was not, you know, pay me back money because you've paid me so poorly for the last five years," said rheumatologist John L. Lawson, president of the Medical Society of the District of Columbia.

"The main gist was to begin an open, clear and honest relationship with Aetna so there will be a framework under which everything operates."

Under the new system, Lawson said, Aetna patients should have a clearer understanding of what's covered under their benefit plans. "The rules will be evident, for example, as to what constitutes an appropriate third [doctor's] opinion, what constitutes the necessity for prior authorization" of a medical service, he said. ". . . So all the players will be able to understand what's going on and work appropriately to get the patient the proper medical care that they need."

Rowe said a large chunk of the settlement has "tax benefits" to Aetna. The Hartford, Conn.-based insurer will take an after-tax $75 million charge against earnings to account for the settlement.

Aetna earned $330 million in the first quarter of this year, compared with a net loss of $2.83 billion a year ago, when it wrote down the value of acquisitions.

Aetna provides health insurance to 13 million people in the United States, including 955,000 in Maryland, Virginia and the District.

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If anything can be done to make my life easier getting homecare authorizations, I'm all for it.

January 1st, 2003 started the era of COPAYMENTS for Aetna Medicare members homecare services. Originally quoted as $20.00 per service co-pay, Aetna has changed it to be a $20.00 per day co-pay. Even the Aetna eligibility staff in MAY are quoting the wrong benefit to me and my verification specialist resulting in contacting an Aetna supervisor for final outcome. I now call all Aetna patients to discuss the copayment, check for secondary insurance that may pick up copay and discuss billing ---an added 30 min of work to my busy day. GRRR...