Both sides are claiming victory after a Georgia Supreme Court action that means an insurer must disclose payment rates and methodology to physicians.
The Georgia Supreme Court on Jan. 10 declined to review a case in which the Medical Association of Georgia sued Blue Cross and Blue Shield of Georgia. By doing so, the court upheld an appeals court ruling that stated the Blues can select the methodology for how physicians will be paid but must reveal the reimbursement rates and methodology to physicians.
MAG officials call the victory "significant" and say it will force the Blues, and perhaps all insurers, to be fairer.
"I think it's a significant victory for our membership," says David Cook, general counsel for the association. "It's basically saying that the reimbursement methodology Blue Cross implemented was illegal because it didn't allow physicians to know what they were going to be paid for services rendered."
Blues officials say the ruling is a victory for them and for the insurance industry.
"This is a clear victory saying that we can contract with physicians the way we want to," says Charlie Harman, spokesperson for the Georgia Blues. "We are in the midst of reviewing the lower court's rulings to understand what is required in terms of disclosing our reimbursement rates.
"Like Mark Twain's death, the rumors of the demise of managed care in Georgia are greatly exaggerated."
The case began in 1997 when the association alleged the Blues wouldn't tell physicians what it reimbursed and how it arrived at the amounts. MAG sued on behalf of its 8,000 members.
"The actual participating physician would not know what the fee schedule was and couldn't go out and ascertain it," Cook says. "They would say, 'You will find out what we pay you when we send you the check.' We tried to sit down and negotiate with them."
The Blues had paid based on usual, reasonable and customary charges, Cook says. That changed without notice, he says.
The insurer began reimbursing based on the resource based relative value system, Harman says. "They sued us and said we couldn't do that," he says. "We basically won at the trial court. The trial court said that Blue Cross can develop its methodology and amend its contract the way it wanted to."
During the appeals phase, MAG asked that the Blues be forced to disclose reimbursement rates to physicians. The appeals court overturned the trial court on that point, ruling the Blues must disclose its reimbursement rates and methodology. But the appeals court upheld the lower court's ruling allowing the Blues to pay physicians based on any method it chose.
"We expect physicians will be told what they will be paid," Cook says.
"I think it's a real significant case . . . It's a precedent setting case," Cook says. "Other insurers have followed Blue Cross' lead as far as reimbursement."
The AMA joined the Georgia association in suing the Blues.
"It's an example of the AMA and the state medical societies working together," says Donald Palmisano, M.D., a surgeon in New Orleans and member of the AMA's board of trustees. "We think it's a great win. They can't unilaterally change the contract without notice to physicians. It's not a contract you can change at will."
The Georgia suit was among dozens filed during the past year against many of the nation's insurers by physicians and enrollees. The suits, many of which have been consolidated in the courtroom of one Florida judge, accuse the insurers of everything from mail fraud to racketeering to lying to enrollees about coverage.
In June, the U.S. Supreme Court ruled enrollees can't sue insurers for breach of fiduciary duty by financially rewarding physicians for keeping costs down.
Aetna, the nation's largest insurer and the target of many of the lawsuits, is in talks to settle some of those cases out of court, sources say. Among the possible settlement terms are an agreement to stop financially rewarding physicians to keep costs down and the elimination of capitation.