California radiologist group sues UnitedHealthcare over payment rates

A radiology group in California has taken UnitedHealthcare to court after nearly a year of unsuccessfully wrangling with the insurance giant to honor PacifiCare Health Systems' contract rates it took over when the companies merged two years ago.

Radiological Associates of Sacramento Medical Group Inc. sued United in June for allegedly shortchanging the practice on payments for services it agreed to cover fully under a 2003 PacifiCare contract.

"If we didn't do something and acquiesced to a unilateral reduction in our payments, what would be next?" Radiological Associates Executive Vice President Fred Gaschen said. "If one company does it, pretty soon it's two, then it's 10."

California insurance regulators, meanwhile, also are putting the heat on United in light of a host of complaints that the California Medical Assn. began reporting to the state in February. Aileen E. Wetzel, associate director of the CMA's Center for Economic Services, said that following the United-PacifiCare merger, doctors "encountered a poorly equipped, disorganized corporation."

Among the complaints against United and its PacifiCare subsidiary, she said, are delays in processing new contracts and terminations, as well as failures to correctly input doctors' contract rates into their system -- all of which have resulted in reduced and delayed payments. In addition, she said there has been misinformation to patients about their doctors' participation status in either plan.

Though the CMA has worked with United to help resolve doctors' individual issues, "it does not appear that [United] has made a commitment to eliminating these problems on a systemic level," Wetzel said.

Jason Kimbrough, a spokesman for the state Dept. of Insurance said that the agency with the Dept. of Managed Health Care launched a market conduct investigation of United. "We will use the full scope of our authority," he said, but declined to comment further.

United spokeswoman Cheryl Randolph acknowledged that the merger created challenges that may have affected physician contracts and claims, but said many of the issues have been corrected. United is cooperating with the state inquiry, she said, but declined to comment on the lawsuit.

"Our goal is to always pay claims on time and accurately, and we will continue to diligently work to resolve any outstanding issues [relating] to our provider network," Randolph said.

Radiological Associates physicians, however, said they saw no such relief after a year of trying to meet with United to settle their payment dispute. The group contracted with PacifiCare in 2003, and in 2006, a year after the companies merged, United told Radiological Associates that its members would be able to access their services at the same PacifiCare rates, court documents show.

Since then, however, the doctors allege that United has refused to fully compensate them when a patient receives, in a single visit, two or more diagnostic procedures that the insurer considers to be in the same category. In those instances, United "unilaterally recalculated and paid [Radiological Associates] less than the full amount due" under the PacifiCare contract, the lawsuit states. The doctors are suing United for breaching that agreement.

United's policy has not affected patients' access to care in any way, according to Gaschen. But the group of 76 physicians and 900 staff in 23 centers in the Northern California region, is concerned about what the future holds.

Already, administrators met with two other national payers that proposed the same policy. Both companies agreed not to cut reimbursements, Gaschen said. He declined to name the insurers.

California doctors are not alone in their fight. United has come under fire in at least seven other states where some insurance regulators levied hefty fines and penalties against the plan for repeated misconduct, such as prompt-pay violations, according to the American Medical Association. A proposed merger in Nevada between United and Sierra Health Services Inc. has raised physician concerns there.

"United's conduct reflects a philosophy that it is more cost-effective to violate state law and possibly pay a fine than to assure compliance with laws designed to protect both patients and physicians," AMA Executive Vice President and CEO Michael D. Maves, MD, MBA, wrote in a June letter to the Nevada insurance commissioner.