Kansas City doctors allege that insurers fixed prices

Physicians have filed class-action lawsuits in Kansas and Missouri accusing managed care firms of lowering reimbursement rates.

By Mike Norbut — Posted May 23, 2005

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Hundreds of Kansas City-area physicians filed proposed class-action lawsuits against numerous insurers doing business in the region, accusing the companies of colluding to set and fix reimbursement rates and not paying doctors according to contractual obligations by doing things such as delaying, downcoding or bundling payments.

Doctors allege that the insurers' actions resulted in unfairly low reimbursement rates. They are asking the court for financial damages and an order requiring the managed care companies to stop the alleged practices.

In their lawsuit, the physicians say that more than a dozen insurance companies, which control about 90% of the Kansas City market, "acted in concert to control" medical care reimbursement rates in the area.

"The region is particularly susceptible to price-fixing because it is controlled by a few dominant companies who have conspired to cultivate and use their market power to force unconscionable reimbursement rates from doctors with the intent to manipulate prices," according to the physicians' anticompetitive lawsuit filed in Jackson County, Mo.

The physicians are basing their claims partially on a survey financed by Mid America Medical Affiliates, a Kansas City lobbying and education network of about 1,500 physicians.

The survey, which was completed by an independent company, compared reimbursement rates in Kansas City with those in Des Moines, Iowa; St. Louis; Springfield, Mo.; Topeka, Kan.; and Wichita, Kan. It found that Kansas City physicians were paid as much as 30% less for the same procedure than physicians in the other cities, said William D. Soper, MD, a family physician and Mid America's president.

St. Louis was the closest comparison, with physicians earning an average of 7% more, while physicians in other cities were earning at least 15% more than doctors in Kansas City, Dr. Soper said.

"We were surprised," he said. "We thought we were 5% or 10% below. We had no idea doctors in Springfield were being paid a third more than we were for the same procedure."

The lawsuit also references an American Medical Association study, "Competition in Health Insurance: A Comprehensive Study of U.S. Markets," showing that Kansas City has one of the most highly concentrated HMO markets in the nation.

The lawsuits, filed in February, name more than a dozen insurance companies, including: BlueCross BlueShield of Kansas; BlueCross BlueShield of Kansas City; BlueCross BlueShield of Missouri; Coventry Health Care; Humana Inc.; and United Healthcare Services.

Most insurers declined to comment on the lawsuits or did not return phone calls. Humana issued a statement calling the lawsuits "baseless and frivolous."

The Kansas City Blues said in a statement that company executives were "surprised and disappointed" that physicians filed the lawsuits. The Blues noted that it had raised its payments to physicians by 29% over the past five years.

Because of Kansas City's geographic location, two lawsuits were each filed in Kansas and Missouri. The two sets of complaints have similar charges, though the plaintiffs and defendants vary. The cases mirror lawsuits physicians filed in Cincinnati in 2002 and elsewhere over the past few years.

The Metropolitan Medical Society of Greater Kansas City is not a party to the lawsuits, though the organization supports the physicians in their case against the insurers, said Executive Director Ronald Cosens.

"We're supportive of whatever it takes to get fair reimbursement for doctors in Kansas City," Cosens said. "If it takes a lawsuit, then it takes a lawsuit."

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Cases at a glance

New Century Health Quality Alliance Inc., Kansas City Urology Care PA, Midwest Neurosurgery Associates PA, et al v. BlueCross BlueShield of Kansas City Inc., RightCHOICE Managed Care Inc. d/b/a BlueCross BlueShield of Missouri, et al
Steven Buie, MD, and Hickman Mills Clinic Inc. v. BlueCross BlueShield of Kansas City Inc., RightCHOICE Managed Care Inc. d/b/a BlueCross BlueShield of Missouri, et al

Venue: Circuit Court of Jackson County, Mo.

Prime Care of Northeast Kansas LLC; New Century Health Quality Alliance Inc.; James Mirabile, MD, PA, et al v. BlueCross BlueShield of Kansas City Inc., BlueCross BlueShield of Kansas Inc., Good Health HMO Inc., et al
James Mirabile, MD and James Mirabile, MD, PA v. BlueCross BlueShield of Kansas City Inc., BlueCross BlueShield of Kansas Inc., et al

Venue: District Court of Wyandotte County, Kan.

At issue: Whether managed care companies conspired to set lower-than-average reimbursement rates for physicians in the Kansas City area and whether companies, by doing things such as delaying and downcoding payments, failed to pay doctors as the contracts with physicians required.
Potential impact: Physicians say the alleged practices by managed care companies are endangering their ability to practice medicine in the area and that low reimbursement rates are forcing some physicians to leave the region. The managed care companies that responded denied the allegations.

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