Citing deception, NY physicians sue HMOs

A New York physicians’ group is suing six health maintenance organizations (HMOs) and alleging a regular pattern of deception and breach of contract by the health plans serving half of the state’s insured population. The suit asks for relief from what it calls illegal business practices.

Six class-action lawsuits were filed on behalf of the 27,000 members of the Medical Society of the State of New York (MSSNY) seeking monetary damages for the abusive practices alleged by MSSNY against the same six carriers. The suits name Aetna Inc., Cigna Corp., Empire Blue Cross & Blue Shield, Oxford Health Plans Inc., and United HealthGroup Inc.— all in New York City. A suit also was filed against Excellus Inc., a nonprofit group, in Rochester, NY. All of the managed care firms issued statements stating the claims were without merit and denied charges made in the lawsuits.

MSSNY general counsel Donald Moy says the group filed the suit because the health plans systematically engaged in practices to deny medically necessary care, to bundle and reduce claims based on CPT codes, and to revise payments of claims retrospectively. The health plans "apply their own edits to CPT codes, and don’t inform physicians of the edits, changes to the edits, or a decision to downcode a claim," he says.

For instance, Moy says a physician might order two separate treatments for a patient on the same day, and even though the two claims were filed under two separate codes on the same day, health plans would routinely bundle the claim under one code. That would allow them to approve a lower payment to the physician, Moy says.

Another questionable practice involves denying payment to specialists because the insurer asserted it never received an approved referral from the primary care physician. Moy says that excuse is often cited enough to suggest that it is a systemic strategy.

MSSNY also charges that the insurers use software that automatically downcodes health care services provided by plaintiff physicians. Moy says they also practice routine downcoding of reimbursement to physicians identified as high utilizers of specific codes without performing chart reviews to determine if the downcoding is appropriate.

The suit also contends that health plans use guidelines from actuarial firms to determine the medical necessity of care and the length of time a patient needs to be hospitalized, but those guidelines are based on the most optimistic scenarios.

Other physicians’ groups have filed similar litigation against insurers in other states in the past few years; many of those suits now are before the U.S. District Court in Miami.