Aetna sues more physicians over out-of-network pay

A California surgery center will be in court July 20 to defend allegations that its doctors drastically inflated their compensation for medical services. It’s one of four lawsuits filed by Aetna during the last 1½ years claiming that out-of-network physicians overcharged the insurer.

Though disagreements have commonly come up as part of the discussion on out-of-network charges, the Aetna lawsuits appear to be on the extreme end of the spectrum, said Jeff Rice, MD, a radiologist and CEO of Healthcare Blue Book. The company provides free resources for patients on prices for medical services.

Aetna claims that Bay Area Surgical Management, one of the largest ambulatory surgical centers in the San Francisco area, submitted false claims to the insurer, grossly overcharged Aetna and paid its physicians excessive amounts to refer patients to out-of-network facilities.

Similar legal challenges are pending in New Jersey, New York and Texas.

In the California suit, filed in late February in the Superior Court of California for the County of Santa Clara, Aetna alleges that in-network physicians at Bay Area Surgical intentionally referred patients to out-of-network doctors at facilities where they had financial interests.

To entice patients to use out-of-network services, the surgery centers waived patients’ insurance co-payments without informing Aetna, the suit said. Doctors allegedly explained to patients that they would not be responsible for deductibles or other financial responsibilities associated with their treatments. The referrals have led to out-of-network charges of $23 million for services that should have cost only $3 million, the suit said.

The case represents a recent pattern of overcharging among health facilities, Aetna said.

“We believe there is a growing trend of [health professionals] overbilling insurers,” said Anjanette Coplin, an Aetna spokeswoman. “The message we hope to convey is that Aetna is being vigilant about such abuse and is taking steps to rectify such abuses.”

Bay Area Surgical called the lawsuit unfounded. It has asked that the case be dismissed.

“The accusations are completely baseless and completely inaccurate,” said Bobby Sarnevesht, a spokesman for Bay Area Surgical. “We’re confident that a court will throw out the case.”

Bay Area Surgical argues that it’s not illegal to refer patients to a surgery center in which a physician has an ownership interest. In addition, neither waiving co-pays nor billing Aetna without informing it of a co-pay waiver is illegal, the company said in court documents.

Latest in a series of lawsuits

In April, Aetna sued Humble (Texas) Surgical Hospital LLC. The insurer said doctors charged “outrageous” amounts for out-of-network services, including a $99,750 bill for an ear wax removal, $82,653 for a nose surgery and $11,000 for hemorrhoids removal, according to the lawsuit. Just as in the California case, physicians allegedly referred patients to out-of-network facilities in which they held a financial interest.

The suit claims that doctors told patients they would not be subject to higher costs for going to an out-of-network facility. The charges billed by the out-of-network doctors were up to 10 times higher than the usual, customary and reasonable fees of hospitals in the same market, the suit said.

At this article’s deadline, messages left for Humble Surgical Hospital were not returned.

Similar suits were filed last year against nine New Jersey and two New York doctors, along with a Long Island-based surgery center. Discovery in the cases is ongoing, Aetna said. In the New Jersey case, four of the physicians have countersued, saying Aetna is paying inadequate rates.The suits are the latest in an ongoing battle among insurers, physicians and patients about out-of-network costs and what constitutes fair health care bills.Insurers frequently have said doctors charge too much for out-of-network services and that some physicians intentionally abuse the system. Doctors have argued that insurers do not pay adequate out-of-network rates and reduce reasonable fees. The debate has lead to lawsuits on both sides of the dispute.

For example, in 2000, physician organizations and advocates, including the Litigation Center of the American Medical Association and the State Medical Societies, sued UnitedHealth Group for paying unfair rates as part of the insurer’s former fee system. Neither United nor any of the health plans that used the system admitted to any wrongdoing, but in 2009, they reached a settlement agreeing to pay physicians and patients $350 million.

Around the same time, New York state reached a settlement with United and other insurers that had used United’s Ingenix subsidiary as the basis for setting usual, customary and reasonable charges that were the basis of what physicians called underpayments for out-of-network care. FAIR Health, an independent, nonprofit corporation, was established as part of the settlement to improve the rate payment system and offer data to consumers and the health care community.

“The Aetna cases and the ongoing discussions about in- and out-of-network costs bleed into the larger narrative on general cost transparency,” said Robin Gelburd, president of FAIR Health.

After the establishment of FAIR Health to set UCR rates, some large health plans, including Aetna, announced that they would set some or all out-of-network rates based on Medicare charges. Physicians said this was an attempt to pay doctors less money for out-of-network care, but plans said using Medicare rates made charges more transparent to patients.