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BRUCE ROSEMAN, M.D.
NICOLE LIVESCU, R.N.
Three crisis states show improvement since tort reform
The steady progress toward stabilizing or reducing liability insurance rates has been, in one supporter's words, like "taking an aspirin for bringing a fever down."
By Mike Norbut, AMNews staff. March 28, 2005.
From lower liability insurance premiums -- or less dramatic premium increases -- to more insurers entering the market, doctors are starting to see at least some of the results they hoped for when they pushed for change in their respective states.
entering the market, doctors are starting to see at least some of the results they hoped for when they pushed for change in their respective states.
In Texas, for example, every insurer but one has lowered liability premiums in 2005, and the last one soon could follow suit, said Texas Medical Assn. President Bohn D. Allen, MD. Meanwhile, West Virginia has seen an increase in new physicians and a decline in defense costs for liability insurance companies, and Ohio has seen a moderation of premium increases and two new insurers enter the market.
The states are three of 20 the AMA has declared to be in crisis because of rising medical liability insurance premiums. In those states, some physicians were retiring early, others were forced to discontinue high-risk procedures or move to states not in crisis.
Waiting for the effects of the various state measures, all enacted in 2003, has been an exercise in patience for doctors. Progress has been gradual, but the signs of what's to come are encouraging.
"I liken this with taking an aspirin for bringing a fever down," said Evan Jenkins, executive director of the West Virginia State Medical Assn. and a state senator. "Trial lawyers want you to think when you take the medicine, you'll see the effects immediately, but it takes a little time."
Trial lawyers also would argue that caps on noneconomic damages do not affect liability insurance premiums, "but they're disproved by actual facts," said AMA Immediate Past President Donald J. Palmisano, MD.
"What we want to do is try to pass common-sense legislation," Dr. Palmisano said. "We realize it may take time for the full benefit of legislation to take effect. We're encouraged that the American public understands the issue is a loss of access to care."
Constitutional amendment in Texas
In Texas, for example, voters approved a constitutional amendment that caps awards for noneconomic damages at $250,000. Access to care there seems to be building as a result.
"[Obstetrics] groups around the state that had stopped delivering babies have gone back to doing that," Dr. Allen said. "One group in Fredericksburg [near Austin] put a big ad in the newspaper saying, 'We're back.' I think we've turned the corner."
Medical liability insurers apparently feel the same way. Texas Medical Liability Trust, which insures more than one-third of Texas physicians, followed up its 12% cut in rates last year with another 5% drop this year. Maury Magids, president of the American Physicians Insurance Exchange, said premiums for Texas physicians insured by the company would decrease by a total of $3.5 million this year. Effective May 1, he said, 2,200 of the 3,500 total physicians insured by the company will see an average 5% drop.
The Doctors Company, a Napa, Calif.-based firm that insures more than 1,100 physicians in Texas, announced plans to reduce premiums for 90% of its doctors in the state this year. Some reductions will be as much as 30%, though physicians at the most common coverage level will see a 14% decline on average, said Richard E. Anderson, MD, chair and CEO of the company.
Dr. Allen said these reductions are examples of the overall effect of the constitutional amendment, which, unlike legislative action, can't be struck down by a court or changed by subsequent laws. "It's rock solid."
Positive signs in West Virginia
West Virginia physicians, on the other hand, have seen their fight shift from the Legislature to the courts, although tort reform measures in place, including a $250,000 cap on noneconomic damages, have stood up to challenges so far, Jenkins said.
Physicians have responded to the reshaping of the liability climate, Jenkins said. The West Virginia Board of Medicine reported 377 new physicians were licensed to the state in 2004, the most since 391 were licensed in 1999. The state hit a low point with 305 new licenses in 2000.
The West Virginia Insurance Commission, meanwhile, issued a report late last year that said while medical liability rates continued to rise, the increases were less dramatic than in previous years. Loss results for insurance companies have leveled off, and defense costs declined in 2002 and 2003, according to the report.
"We still have an affordability crisis in West Virginia, but every indicator at this point is very promising suggesting rate relief," Jenkins said.
Signs of future stability in Ohio
Ohio physicians are equally optimistic that rate relief is coming because they're seeing signs of stability in the liability insurance market, said Tim Maglione, senior director of government relations for the Ohio State Medical Assn.
Two new companies have begun selling liability insurance in the state since a $350,000 cap on noneconomic damages took effect in 2003, Maglione said. Meanwhile, premiums, which had been increasing at a rate in the 30% range before tort reform measures passed, were increasing between 10% and 20% this year, he said.
Still, the picture in Ohio is far from bright. The Ohio Dept. of Insurance last month reported on a "Physician Medical Malpractice Insurance Survey," which concluded that rising insurance costs are still having an adverse effect on doctors and patients.
But when assessing the state of the medical liability insurance market last month, Ohio Dept. of Insurance Director Ann Womer Benjamin said premiums had increased at a lower rate in 2004 than they did in the two previous years. Some companies had even lowered rates for general practice physicians in certain regions of the state, she said.
The medical association has used this momentum to build its case against frivolous lawsuits as well. The association has advocated sanctioning attorneys who file frivolous lawsuits that clog the state's justice system. Earlier this year, it saw a judge rule in favor of a physician who had been the target of such a case. The attorney who brought the lawsuit was ordered to pay defense costs.
"The judge found that the attorney didn't do her homework," Maglione said. "Maybe it sends a signal to other lawyers that if they continue to file cases with no merit, there's the possibility of being sanctioned."
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rigged database for reimbursement
A.M.A. Joins Several States in Suing Aetna and Cigna
By THE ASSOCIATED PRESS
Published: February 10, 2009
The American Medical Association is joining several state associations in suing two health insurers over a database they say was rigged to underpay doctors on out-of-network claims for more than a decade.
The lawsuit, filed Monday in United States District Court in New Jersey, accuses the two companies, Aetna and the Cigna Corporation, of rigging a database of customary medical fees maintained by Ingenix, a subsidiary of the UnitedHealth Group.
Ingenix also has drawn the ire of the New York attorney general, Andrew M. Cuomo, who said last month that poor reimbursement by insurers resulting from Ingenix data, has led to higher medical bills for consumers.
The latest complaints accuse Aetna of deleting valid high charges from figures contributed to an Ingenix database. They also accuse Cigna of hiding serious systemic flaws in the data.
Insurers use the data to determine usual and customary rates for care received outside their networks.
But Aetna and Ingenix corrupted the database, according to the lawsuit.
An Aetna spokeswoman, Cynthia Michener, said the lawsuits are similar to claims already filed by consumers in state courts in New Jersey and Connecticut.
“We intend to continue to defend the company,” she said. “We’re disappointed the medical community has chosen to litigate on top of already pending consumer litigation on the same topic.”
She said the insurer has developed “much improved” relationships with doctors over the last several years and wants to continue “collaborative dialogue with them on this topic.”
Cigna said in a statement that its payments to out-of-network doctors are robust and fair.
The insurer said prices charged by doctors are part of the problem. It said, for instance, that doctors in the New York City market charge on average $214 for a 15-minute out-of-network office visit.
Health plans, in turn, reimburse as much as $160 using the Ingenix database while Medicare pays doctors $77 for the same visit.
“Cigna believes that increased transparency around physician pricing will further support efforts to drive lower cost, high quality care,” the statement said.
The medical associations of several states, including Connecticut, New Jersey and New York, as well as individual doctors, are named as plaintiffs in the lawsuits.
Aetna has already agreed to pay $20 million to help set up a new database that will replace the one run by Ingenix.
UnitedHealth also pledged last month to give $50 million toward the new database’s creation.
Last month, UnitedHealth agreed to close the databases and help finance the creation of a new one after Mr. Cuomo said an investigation found that insurers using them underpaid from 10 percent to 28 percent for certain claims in New York State.
This article has been revised to reflect the following correction:
Feb. 17 (Bloomberg) -- Cigna Corp. agreed to pay $10 million to settle a probe by New York Attorney General Andrew Cuomo into how the health insurer reimburses clients for out-of-network physician services.
Cigna is the latest U.S. insurer to agree to help fund a new nonprofit database to help determine “reasonable and customary charges” for reimbursement. UnitedHealth Group Inc., the biggest U.S. insurer, settled for $50 million and Aetna Inc., the third- largest, paid $20 million. Cigna, which specializes in employer- sponsored health plans, is the fifth-largest by revenue.
“We are pleased to partner in the creation of an independent not-for-profit organization to administer the new database,” Dan Nicolls, Northeast region medical director for Philadelphia-based Cigna, said today in a statement.
Cuomo also said he intends to sue Excellus Blue Cross Blue Shield for manipulating reimbursements for out-of-network services. The Rochester, New York-based insurer, with 1.8 million subscribers, used a nine-year-old rate schedule, Cuomo said at a press conference in Rochester.
Linda Lacewell, head of Cuomo’s health-care task force, said that the chief executive of Excellus BCBS had been subpoenaed. Excellus’s chief operating officer, chief financial officer, and in-house counsel also were sent subpoenas, according to Cuomo spokesman John Milgrim.
Cuomo has been investigating the industry’s handling of out- of-network claims for about a year. In an accord announced Jan. 13, Minnetonka, Minnesota-based UnitedHealth agreed to shut the database operated by its Ingenix unit. Cuomo said insurers had used Ingenix’s “defective and manipulated” database to set artificially low reimbursement rates.
The American Medical Association, the largest doctors’ group, earlier this month sued Aetna Health Inc. and Cigna Corp. in New Jersey federal court, alleging the insurers used “a corrupt system,” the Ingenix database, to underpay physicians and patients.
Excellus BCBS said that it had been cooperating with Cuomo and would continue to do so. “In the process of working with the Attorney General, questions have arisen about our own application of Ingenix data,” Excellus BCBS said in an e-mailed statement. “If mistakes occurred in the payment of out-of-network claims, we will address them.”
UnitedHealth said Jan. 15 it agreed to pay $350 million to settle a class-action lawsuit targeting the insurer’s out-of- network reimbursements. UnitedHealth had been battling the AMA over such costs since 2000.
To contact the reporter on this story: Karen Freifeld in New York at email@example.com.