AMA joins suit against managed care

May 1, 2000

Pharmaceutical Representative

The American Medical Association, Chicago, and the Medical Society of New York have joined with a New York physician and his patient in filing a class-action lawsuit against Metropolitan Life Insurance Co. and United HealthCare Corp., claiming the two companies used flawed and invalid data to reduce payments for medical services.

The suit, filed in state court in Manhattan, contends that the two insurance companies underpay physicians, leaving patients to pay a much higher balance than terms of the contract provide.

"Insurance companies need to honor the terms of their contracts, so patients not only get the care they deserve, but the care they believe they are paying for in the first place," said Donald J. Palmisano, a member of the AMA board of trustees. "Unfortunately, there is no reason to think this is an isolated situation. In fact, the circumstances suggest that this practice is widespread."

Most insurance contracts allow companies to reimburse physicians using the lowest amount from three factors: the physician's actual charge, the physician's usual charge, or the "reasonable and customary charge" for the service. The "reasonable and customary" charge is typically determined using the rates charged by similarly trained physicians, for comparable services within a specific geographic area.

According to the lawsuit, Metropolitan Life and United HealthCare relied on data provided by the Health Insurance Association of America, to establish the "usual" charge for services and to lower physician reimbursements. According to the AMA, HIAA itself admits that itdoesn't stand behind the data.

John A. Ostuni, president of the Medical Society of the State of New York, said: "When a patient or a physician files a claim with their medical insurance carrier and gets back significantly less than what they think they should get, it raises the question as to how the insurance carrier made that decision on payment. That's what this litigation is all about." The Health Insurance Association of America, however, dismissed the suit as an attempt to get more money for doctors. "In point of fact, this lawsuit has little to do with patients' well-being," said Chip Kahn, president of the Health Insurance Association of America. "Lets be direct: the AMA lawsuit seeks more money for doctors … If the AMA truly is interested in lowering costs, then it should drop its push for higher reimbursements, antitrust wavers and 'patient protections' that benefit physicians at the expense of patients and consumers." PR

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