Aetna has agreed to settle class action lawsuits brought against it by individual physicians and 17 state medical societies, the health plan announced today.
Medical society representatives are heralding the agreement as a model for potential settlements with 10 other health plans that are defendants in class action lawsuits in U.S. District Court in Miami.
The medical societies also say they filed similar lawsuits today against an undisclosed number of Blue Cross Blue Shield plans, in hopes that they, too, would agree to terms similar to the Aetna settlement and create nationwide standards for all plans to follow.
While the Aetna settlement calls for $100 million in payments to physicians, medical society representatives say the key feature is a set of agreements on determining coverage, processing claims and handling physicians' appeals of Aetna's decisions.
Rather than focus on settlement payments, "we've said all along that we wanted to change the nature of the industry going forward," says David Cook, executive director of the Medical Association of Georgia, one of the plaintiffs.
But Cook added that Aetna's proposed future changes in payments are expected to save physicians $300 million a year.
Medical society representatives say they have been negotiating a settlement with Aetna for almost a year and a half.
Realizing that the first settlement would be a model for others, the societies successfully defeated a settlement negotiated independent of them between Cigna and attorneys for Timothy Kaiser, M.D., of Illinois and filed in an Illinois federal court late last year.
Under the 82-page Aetna settlement, Cook says the company would basically agree to AMA-CPT guidelines for processing claims and to a definition of "medical necessity" for coverage decisions, which closely mirrors the AMA definition.
Medical society officials add that Aetna would agree to follow AMA-CPT policy determining when CPT codes can be bundled or replaced, and Aetna would probably continue to use existing coding software, such as McKesson's Claim Check, rather than reinvent new software, which could take years.
Aetna's new definition of medical necessity would be based on what a "prudent physician" would do, ruling out experimental treatments and choosing treatments that have been verified by peer-reviewed medical literature, Cook says.
Under the agreement, Cook says Aetna could still insist on a less costly treatment or procedure, but only if it is at least as effective as the alternatives.
Under the agreement, Aetna also would give physicians access to its entire fee schedule and coding logic, according to Archie Lamb, co-lead counsel for the medical societies.
The settlement also sets out two kinds of independent external appeals processes that have timeframes built in--one for billing disputes and one for medical necessity decisions--attorneys for the medical societies say.
Under the agreement, Aetna also pledges to provide greater Internet connectivity so that physicians can verify reimbursement information and track claims with Aetna, the company says.
The company says it would also offer a pharmacy discount card for doctors to offer their patients and set up an advisory committee of practicing physicians to advise Aetna on policy.
In addition, the company would spend $20 million to create a foundation to improve the quality of healthcare.
Lamb says the agreement would not be finalized until the fall. First it must go to U.S. District Court in South Florida for preliminary approval. If approved, he says notices would be sent to 600,000 physicians in the class who would have a chance to opt out of the settlement and pursue their own lawsuits. Then the Florida court would hold a "fairness hearing," at which time physicians in the class could bring objections forward, Lamb says.
Payments would be sent to doctors after the settlement is finalized, Cook says. Physicians would be paid at different rates, depending on whether or not they are in an Aetna network, how much they received in reimbursements from Aetna and whether they are retired, he says.
Cook says the payment process would be easier than that of the proposed Cigna settlement, in which "physicians would have had to dig out their old claims and prove that they submitted them." He adds that Aetna is also offering more money than the $67 million that Cigna estimated it would pay.
Speaking at a news conference today, Aetna Chairman and CEO John Rowe, M.D., said the payments have already been included in company financial guidances and will be covered as an after-tax charge of $75 million that he company will make for the second quarter of 2003.
"The cost to Aetna is modest," Rowe says.
Rowe adds that he is glad he can address doctors' objections to the payment process. "No other part of the interaction has been as contentious and combustible," he says.
The settlement is "about getting that old era behind us," Rowe adds.