Although hospitals will neither pay nor be paid from last week's settlement of a civil lawsuit filed against WellPoint on behalf of 700,000 physicians, they had a stake in the fight nonetheless, according to the plaintiff attorney who filed many of the lawsuits against WellPoint and other health plans.
Birmingham, Ala., lawyer Archie Lamb said that as more insurers settle the class-action lawsuit, it would help all providers because it "reduces the black-box mentality that plans have in setting prices and conditions and keeping information from providers."
Lamb said one of the conditions of the settlement's injunctive relief was changing the definition of medical necessity, which WellPoint and other plans allegedly used to justify claim denials. "Many decisions made by physicians, such as medical necessity, directly impact hospitals," he said.
From now on, he said, WellPoint must have legitimate reasons for overruling physician prescriptions of care. Lamb said the company previously could overrule physician orders based on the cost of the planned treatment. "This agreement advances a very basic principle: that the physicians' input is a critical part of the healthcare system," he said.
Indianapolis-based WellPoint, the country's largest publicly traded health insurer, said it would pay $198 million to settle a class-action lawsuit alleging that WellPoint and Anthem, with which it merged last year in a $16.4 billion deal, systematically shortchanged physicians by wrongly denying or delaying claims payments.
"We see this agreement as a very important step in further collaborating with physicians," WellPoint Chief Executive Officer Larry Glasscock said in a statement. "We look forward to forging a closer partnership with the physician community in order to truly transform healthcare for the better."
WellPoint became the fifth insurer to settle in the national litigation, although others paid far more. Aetna ponied up $470 million in 2003, and last year Cigna Corp. settled for $540 million. That leaves Coventry Health Care, Humana, PacifiCare Health Systems and UnitedHealth Group still to settle or go to trial in January 2006. All have shown signs they will go to trial.
The WellPoint deal, approved July 13 by U.S. District Judge Federico Moreno in Miami, involves $135 million in payments to physicians, up to $58 million for legal fees and $5 million to set up a foundation for healthcare quality.