AMA takes on Aetna, Cigna over use of flawed database

Organized medicine says it's not enough for plans to pledge they will stop using controversial Ingenix data. Doctors demand back pay, but plans aren't budging.

By Emily Berry — Posted Feb. 23, 2009

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Lawsuits against Aetna and Cigna are attempts by the AMA and medical societies to ensure that the health plans get punished for using what has been called a flawed database to pay physicians artificially low rates for out-of-network care.

The action is the latest fight in a long battle between physicians and insurers over what doctors should get paid for treating an insured patient when they don't take that patient's insurance.

In February, the Litigation Center of the American Medical Association and State Medical Societies filed class-action lawsuits against Aetna and Cigna, two plans that used a database created by Ingenix, a UnitedHealth Group subsidiary, to set so-called usual, customary and reasonable rates. Several state societies, as well as individual physicians, also are plaintiffs in the lawsuits.

The lawsuits allege that Aetna and Cigna violated federal racketeering and antitrust laws in addition to federal health insurance laws by intentionally shortchanging out-of-network physicians. The litigation came only a few weeks after UnitedHealth Group agreed to settle with New York Attorney General Andrew Cuomo's office after he came to a similar conclusion about Ingenix.

Aetna and Cigna, like United, have agreed to contribute money toward a new, independent database. But, the two plans, unlike United, have not agreed to pay doctors for underpayments related to the old database. United made that promise to settle a 9-year-old lawsuit first filed by the AMA and several state societies.

AMA President Nancy H. Nielsen, MD, PhD, an internist from Buffalo, N.Y., said insurers' promises to abandon the old system are not enough -- the plans must pay physicians and patients what they should have in the first place. "We are willing to turn the page, but they need to make whole the physicians and patients who should have been paid fairly."

Cigna said the AMA's lawsuit was "without merit" and defended its payments for out-of-network care as "robust and fair." Aetna spokeswoman Cynthia Michener said the company would have preferred a "collaborative dialogue" rather than litigation.

Gil Weber, a practice management and managed care consultant based in Viera, Fla., said getting paid fairly for out-of-network care has been a "point of contention" for the 30 years he's worked in health care. Patients pay more for out-of-network care on the theory that the plans must pay more because doctors have not agreed to a negotiated network discount. Yet often, doctors say, plans find ways to depress their pay.

But if doctors know they can be paid fairly outside a managed care contract and find out their out-of-network pay rate in advance, it gives them leverage to decline joining a network unless it's truly to their benefit, Weber said.

"If we can get a reasonably level playing field, I think that will cause more physicians to be less fearful and more willing to be more selective in contracts they accept, and give them the ability to negotiate better contracts," he said. "If things shift a little bit, it might be the health plans will be living a little more in fear, instead of the physicians."

An unsettled case

United agreed to eliminate the database at the center of the Cuomo investigation and to spend $50 million to develop a new independent database. Days later, United agreed to pay $350 million to doctors around the country who were underpaid based on Ingenix data, settling the AMA lawsuit. United admitted no wrongdoing.

Aetna was the first insurer to follow United in pledging to stop using the Ingenix database. It promised to contribute $20 million to develop the new independent database. Cigna followed with an agreement announced Feb. 17 to pay $10 million toward the new system and to stop using the Ingenix database within two months of the launch of the independent one. Neither company admitted any wrongdoing.

Cuomo's settlement over out-of-network pay is his second major announcement affecting the health care industry. In October 2007, after an investigation aided by the AMA, his office reached agreements with New York's major health plans to base their ranking and tiering programs on more than cost and to disclose the methods of ranking. Plans pledged to honor the agreements nationally.

Dr. Nielsen said the AMA did not file lawsuits seeking damages on behalf of members in those cases because doctors hadn't been deprived of fair payment, as they were by the use of the Ingenix database.

The new lawsuits against Aetna and Cigna seek damages for physicians from each company commensurate with what doctors would have been paid if the out-of-network pay rates had been calculated accurately. Damages are also being sought for patients who overpaid. Both cases were filed in the U.S. District Court of New Jersey.

The AMA suit contends Aetna not only used the Ingenix data to set what it paid physicians but also was the single most active contributor of charge data that Ingenix used to feed into its database.

According to Cuomo's investigation and the AMA's lawsuit, Aetna eliminated some higher charges before submitting its information to Ingenix, skewing the charges lower in the first of several steps to artificially drive down usual, customary and reasonable rates.

Cigna is accused of not only using the Ingenix database, knowing it was flawed, but also using an in-house formula that was similarly faulty.

Both companies deny the charges.

"We're disappointed the medical community has chosen to litigate on top of already pending consumer litigation on the topic," Aetna's Michener wrote in a statement.

In response to the lawsuit, health insurance trade group America's Health Insurance Plans released a statement in part criticizing physicians for asking for payments above Medicare rates.

"With the nation facing the crushing burden of rising medical costs, all stakeholders should be focusing on constructive ways to bring costs under control. This lawsuit moves in the opposite direction by advocating to give providers who refuse to participate in networks a 'blank check' to charge patients rates that exponentially exceed Medicare payments."

Larry Downs, general counsel for the Medical Society of New Jersey, said Aetna and Cigna were sued first because of their size, their relative contribution to the skewed database and the evidence available from the New York attorney general's office. More lawsuits against other plans could come, he said.

New York-based plans MVP Health Care, Independent Health and HealthNow New York, which operates two New York Blues plans, also have promised to stop using the Ingenix data and collectively promised to pay more than $1 million toward the new database. They have not been sued.

Neither has WellPoint. On Feb. 18, after the lawsuits were filed, Cuomo announced that health plan had agreed to pay $10 million toward the new database. The company, which owns Empire BlueCross BlueShield in New York, did not admit any wrongdoing.

Dr. Nielsen said she hoped health plans would agree to a deal on back pay sooner rather than later -- including those plans that haven't been sued yet by physicians. "The right thing for them to do is to settle, to put up a reparations fund and work through the lawyers. They're not going to win in court. The facts are clear."

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Case at a glance

Should plans pay back physicians for out-of-network care that may have been underpaid?

The AMA and state societies have sued Aetna and Cigna for their use of a database maintained by UnitedHealth Group subsidiary Ingenix. Investigators have found the data were skewed to keep "usual, reasonable and customary" rates low.

Impact: If resolved in physicians' favor, doctors who were paid for out-of-network care from 2005 through the present could receive payments to compensate them for alleged underpayments. Cigna and Aetna maintain that their payments were fair and have vowed to fight the lawsuits.

American Medical Association et al. vs. Aetna Health Inc. , U.S. District Court, District of New Jersey; American Medical Association et al. vs. Connecticut Life Insurance Co., U.S. District Court, District of New Jersey

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Aetna settles on underpayments for student health care

Aetna in February reached a deal with New York Attorney General Andrew Cuomo to pay $5 million plus interest and penalties to some 73,000 former members and their physicians on behalf of its student health subsidiary.

Cuomo claimed Aetna Student Health used outdated and inaccurate systems to knowingly underpay physicians who cared for the students. The attorney general alleged that the company -- known as the Chickering Group until Aetna purchased it in 2003 -- between 1998 and 2008 relied on databases operated by Ingenix, a UnitedHealth Group subsidiary, to set out-of-network pay rates. In separate settlements, United and multiple plans have agreed to fund a new, independent database.

Aetna did not deny or admit the situation as laid out in the agreement.

Medical students were among policyholders affected, and the American Medical Association is trying to get word out to them online and through medical student publications.

According to Aetna, physicians will be paid automatically unless a student patient sends back a form indicating he or she already paid his or her physician for the underreimbursed claim. The company expects to send out payments within six months.

The student health settlement is one "ripple effect" from the AMA's work to draw attention to the problem and ultimately push for legal action and reparation for physicians, said AMA President Nancy H. Nielsen, MD, PhD. "We fought many years to expose the flawed data insurers were using to underreimburse patients and physicians for out-of-network care, and those efforts are paying off."

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