Aetna's decision to provide increased flexibility in its managed care contracts in Texas could be a prelude toward removing physician-hated restrictions around the country. The move also could pressure other insurers to take similar steps.
Aetna's agreement to eliminate its all-products clauses and end payment incentives to reduce care came as part of a settlement of a lawsuit filed by the Texas attorney general in 1998. The deal, announced last month, quickly caught the attention of physicians, physician organizations and others in the healthcare industry. The move gave the nation's largest insurer some desperately needed good press.
"The strategy was to better relationships with physicians and consumers," says Jodi Laurence, a partner with the Broad and Cassel law firm in Fort Lauderdale, Fla., who represents providers. The strategy worked, she says.
"They're coming off as the good guy. They're going to do all these things as part of a settlement to improve quality of care and give the physicians the ability to practice medicine."
But the doctors most immediately affected aren't unconditionally singing Aetna's praises just yet.
"It requires further clarification," says Kim Ross, vice president for public policy with the Texas Medical Association. About 15,000 Texas physicians contract with Aetna. The TMA is reviewing the conditions of the settlement but wasn't involved in negotiations. "It's not all bad or all good. It's going to require further vetting and careful structure of how it's enforced . . . and (to ensure) Aetna did not have its fingers crossed on some of the key provisions."
The timing of the move could hardly be better.
Less than two months after taking over as CEO of Blue Bell, Penn.-based Aetna and promising to improve relations with physicians, William Donaldson's company took a major step toward making good on that pledge.
The settlement essentially eliminated the all-products clause in Texas. In the settlement, Aetna agreed not to financially penalize or reward physicians for providing or withholding care. Officials say they're considering making those policy changes nationwide.
"One of our major commitments is strengthening relationships with physicians within our healthcare networks," says John Kelly, M.D., head of Aetna's physician relations unit. "This particular agreement allows us to accomplish this."
Texas' attorney general sued Aetna and five other health plans for providing financial incentives to reduce care for patients and save money. The settlement, in which Aetna admitted no wrongdoing, doesn't affect the lawsuits against the five other plans.
"We believe the measures we're introducing are good for members, good for physicians and good for our health plans," Kelly says. "I think they go a long way to helping resolve some of the issues and restore the trust in our health plans. I'm pleased by the agreement and the benefits it will provide."
While the past two years have been tough for Aetna, the past several months have been extremely rocky.
It has been the target of at least six class action lawsuits--the first of which was filed in October--accusing it of everything from mail fraud to withholding information from patients about how physicians are paid. In February, Aetna's board of trustees ousted Richard Huber as CEO, replacing him with Donaldson. After plummeting to a 52-week low of 32 1/2, Aetna's stock began to edge upward, closing at 56 3/8 on April 24. The 52-week high was 99 7/8.
Aetna is the often-cited example of managed care gone awry. Physicians and other providers frequently lambaste the company for its reimbursement rates, all-products clauses and poor patient treatment.
The Texas agreement appears directed at those criticisms.
Under the agreement, Aetna eliminated capitation for physicians caring for fewer than 100 Aetna enrollees. "We've agreed to pay them on a fee-for-service basis rather than on a capitated basis," Kelly says. "Our goal is to provide financial protection for those primary care physicians who have a small number of our members."
All physicians in Texas will be able to choose to accept just HMO plans or just PPO plans, Kelly says. Company officials expect more Texas physicians will become Aetna providers now that the all-products clause has been eliminated, Kelly says. More than half of physicians in the country participate in Aetna networks. In Texas, more than 13,000 physicians participate in the networks.
The agreement makes it clear to physicians and patients that important medical decisions are made at Aetna by medically qualified people, Kelly says. "It provides them with information about what the financial incentives are," he says. "It makes it very clear that we are focused on improving . . . the quality of care our members receive."
The Texas physicians' organization has some reservations. The TMA's attorneys have reviewed the document and developed a list of questions for the attorney general, Ross says.
The TMA wants clarification on several aspects of the settlement, particularly the external review and ombudsman aspects. The concern, Ross says, is that Aetna will be given too much discretion in interpreting how the company will comply with the settlement.
While the settlement strictly addresses only the Texas lawsuit, the stipulations caught the attention of physicians and physician organizations around the country.
"It's a predictable but significant first step for them to gain back physicians' trust," says Tim Norbeck, executive director of the Connecticut State Medical Society. The CSMS in October asked Connecticut's attorney general to determine whether Aetna's all-products clause violates the state's fair trade and practices law. It isn't known when a decision will be released. "The handwriting is clearly on the wall . . . It's incomprehensible that they'd lift the (all-products clause) in Texas and not anywhere else," he says.
Whether Aetna executives make policy changes nationwide, its change in its top brass plus the terms announced in the Texas settlement are "a concentrated effort to mend some of the fences with providers," says George Moore, senior vice president of ACS Healthcare Consulting in Dallas. The effect of the settlement, however, will take some time, Moore says.
The settlement sets a precedent for other insurance companies, Laurence says. Included in the terms are agreements for Aetna to provide consumers with more information about how physicians are paid and how the company decides what is medically necessary. It also expands consumers' rights for appealing denials of care.
The settlement also expands the definition of medically necessary care. "That's a constant dispute over letting doctors practice the way they like," Laurence says. "It's what everyone fights about."
The biggest item under the settlement, Laurence says, was waiving the ERISA exemption, which insurers claim protects them from lawsuits since they're not practicing medicine. While that likely won't mean much in Texas--where a law already allows patients to sue their health plans--it could open the door for Aetna to remove that exemption in other states. But Laurence says that's not likely. Regardless, she says, it was "very smart on their side to do this."
Big winPhysicians and consumers come out on top
The Texas settlement includes requirements that Aetna will:
- Give physicians the option to decide what Aetna contracts to accept (eliminates all-products clause)
- Eliminate contract provisions that financially reward or punish physicians for how much and what type of care they provide patients
- Detect and prevent discrimination and underutilization of medical resources for certain enrollees, including women, minorities and people with disabilities
- Provide doctors a financial incentive for providing preventive care
- Provide consumers access to experimental or other new therapies for life-threatening diseases
- Proide in writing a specific list of medical services not covered
- Provide consumers at least 90 days written notice if a prescription drug is being dropped from coverage
- Ensure that only licensed medical professionals will determine what is medically necessary for a patient
- Improve access to specialists, both in and out of network
- Use a state-of-the-art definition of how medical necessity decisions and covered benefits will be made
- Create an ombudsman position
- Waive federal ERISA pre-emption challenges to the attorney general's authority to enforce the settlement