New Jersey doctors sue insurer over forced payback

In November 2004, a letter arrived at The Heart Group, a seven-physician cardiology practice in Millburn, N.J. In the letter, Horizon Blue Cross Blue Shield of New Jersey said it overpaid the group $189,000 for cardiac catheterizations over the course of 20 months. The doctors were asked to remit that amount by check, using an enclosed envelope, or work out an extended repayment arrangement.

Angered, the physicians felt they owed Horizon nothing, said Fred Aueron, MD, a cardiologist with the group. For several years Horizon had been paying the group $1,700 for the procedure, he said. Now the company said those fees should have been about $350 per catheterization. A computer programming mistake, the insurer said, was to blame.

The physicians told Horizon they wouldn't pay. "We said, 'This has been our fee going back to the mid-'90s or as far back as [we] could track it,' " Dr. Aueron said. "I don't believe for one moment they have that poor a computer system [that] they don't know their payment schedules for various practitioners."

That mistrust was shared by many cardiologists across New Jersey who received similar overpayment notices at about the same time. In all, Horizon notified about 600 cardiologists in 273 practices that they collectively owed $15 million in connection with flawed calculation of fees for catheterizations. If repayment was not made within weeks, Horizon told some groups, it would recoup the contested funds against future reimbursements.

In late November, the New Jersey chapter of the American College of Cardiology, the Medical Society of New Jersey and several cardiology groups filed suit against Horizon, arguing there was no evidence that actual overpayments were made. The groups asked a state judge to issue a temporary restraining order blocking the Blues plan from taking the money from any cardiologist in the state through fee offsets.

Tom Rubino, a Horizon spokesman, said many cardiologists were paid four or five times too much for catheterizations in 2003 and part of 2004, and perhaps longer. Horizon is legally entitled to any money it mistakenly paid, just as employees would have to repay their employer if their paychecks were inflated due to a technical glitch, he said.

"An overpayment is an overpayment," Rubino said.

However, Horizon has voluntarily agreed to suspend its plan to recoup money from the cardiologists through fee setoffs. Both sides will meet with Judge Alexander Lehrer in Monmouth County Chancery Court in Lawrenceville, N.J., on Jan. 27. Lehrer has asked the two sides to work to exchange information and settle the issue before then.

The developments in New Jersey, experts say, are part of a recent trend that's seen more insurers demanding past reimbursements be repaid, a strategy that's sometimes included unilateral decisions to recoup money through take-backs. "It comes to a point where we say enough is enough," said S. Manzoor Abidi, MD, president of the state medical society and a neurologist in Maple Shade, N.J. "All the other 'Horizons' in the other 49 states are watching to see what Horizon can get away with."

Managed care contracts usually give insurers the right to recover overpayments within a specified period of time after an error, though physicians sometimes either are unaware of these provisions or feel they have little choice but to accept them because they're dependent on a network for patients, health lawyers say.

In Illinois, a major national health insurer in 2004 sent letters to a large number of physicians, saying it had reviewed reimbursements for the past three years that were found to be either incorrect or based on claims with inadequate documentation, said Neville Bilimoria, a Chicago health care attorney. The plan said the practices were subject to collections, and possible damage to physicians' credit ratings could result. After some physicians hired lawyers to challenge the insurer's aggressive tactics, the company backed off and dropped attempts to collect, Bilimoria said, without identifying the plan.

The recoupment issue, doctors say, is closely related to what many see as their general inability to view fee schedules from managed care plans. "Why should someone have to ask for a fee schedule?" said Jeff Ruggiero, a health care attorney in New York.

The AMA House of Delegates, at its Interim Meeting in Atlanta in December 2004, passed a resolution calling for insurance regulators to require all private insurers to make medical fee schedules available to those who want them.

"How can the physicians know if the insurer is correct if the insurer says 'We want to recoup payment' if the physician doesn't even know what the payment should be?" said Donald J. Palmisano, MD, immediate past president of the AMA and a general and vascular surgeon in New Orleans. "Let everything be transparent. ... Imagine if you were to buy an automobile and you didn't know what price it was, or you paid for it and later got a note that you owed an additional $2,000."

R. Gregory Sachs, MD, president of the New Jersey chapter of the American College of Cardiology, said his group's members feel they've been underpaid countless times by Horizon before but lack the time, money and information needed to object. If fee schedules are known, he said, it would be clear to what extent other errors have benefited the payer.

Steve Kern, attorney for the Medical Society of New Jersey, said he wants the court to direct Horizon to supply his side with various data, including fee schedules for about 25 CPT codes most frequently used by the cardiologists; what actually was paid out for those codes; and the company's payment policies.