Blues plan settles 4-year-old suit with New York physicians

The state's medical society had sued Excellus BlueCross Blue Shield over its claims reimbursement process.

By Tyler Chin — Posted June 13, 2005

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Excellus BlueCross BlueShield agreed May 23 to spend $63 million and alter its business practices to settle a 4-year-old class-action lawsuit filed by the Medical Society of the State of New York. The lawsuit challenged the timeliness and the way in which the insurer reimbursed doctors.

Although only $5.5 million would go directly to physicians, both the Rochester, N.Y.-based health plan and the medical society said the settlement would significantly improve the way the insurer does business with physicians, speeding up claims payments and reducing administrative hassles for doctors.

"We think that, especially with the prospective and business practices relief that is contained in the settlement, this is going to usher in a new era and a new environment of what we hope will be a very, very positive working relationship with Excellus not only for the benefit of our physicians but more importantly for the benefit of the patients," said Rick Abrams, executive vice president and CEO of the medical society.

"This is more about operational improvements and not a cash settlement," said Jim Redmond, a spokesman for Excellus. "What it's designed to do is enhance the current relationship between the physician and the health plan while improving the day-to-day operations [of both], and it resolves other outstanding disputes regarding fee schedules, timetable for claims payment and inadequate guidelines for payment denials."

Under the settlement, which covers approximately 15,000 physicians who have provided care to health plan members since Aug. 15, 1996, Excellus would spend $53 million on operational improvements to standardize and speed up claims processing and payment.

"Of the $53 million of operational improvements, quite a bit of that is already in place because the health plan has been making improvements," Redmond said, since the medical society sued Excellus and five other insurers in 2001 over their payment practices. Among other things, the plan has upgraded and is "making investments in technology over the next couple of years that will speed the time for automating claims payment review, and that should result in faster payments for services rendered," Redmond said.

To improve the consistency and accuracy of claims payment, the plan also is implementing several new business practices that are supposed to make the day-to-day lives of doctors and their staff easier. These include:

  • Paying claims submitted electronically within 15 days and paper claims within 30 days.
  • Making payment rules consistent with AMA CPT codes and guidelines, which "is absolutely critical ... because that certainly brings consistency and continuity to the way business is done," Abrams said.
  • Agreeing on medical necessity provisions that take into account generally accepted standards of medical practice and the treating physicians' judgment.
  • Posting, on a secure Web site for physicians, fee schedules and a list of procedures requiring prior authorization, medical necessity denial rates, medical record requirements and other reimbursement guidelines.
  • Giving physicians 90-days notice of significant changes that could adversely impact their businesses, such as fee changes or increased utilization review.
  • Hiring an external review board to resolve billing disputes.

The settlement also sets aside $5 million for active, practicing physicians who can use that money to buy medical equipment, electronic connectivity or use of technology in their office, and medical education involving coding and quality of care. Another $500,000 would be paid to retired physicians and the estates of deceased physicians who had contracted with Excellus at any point since Aug. 15, 1996.

The amount of payment individual doctors receive will depend on how many submit claims, Redmond said.

Excellus also would pay the medical society $1.25 million for community health initiatives mutually agreed upon by the two parties; $250,000 for medical liability advocacy and up to $3 million to the plaintiffs' attorneys.

The proposed settlement must be approved by the State of New York Supreme Court. That is expected to occur in the fall, Redmond said.

Excellus was one of six health plans the Medical Society of the State of New York sued in state court in 2001. The others were Aetna, Cigna Corp., Empire BlueCross BlueShield, Oxford Health Plans LLC and United HealthCare.

The lawsuit against Aetna, Cigna and UnitedHealthcare, along with others that physicians and medical societies filed against several health plans around the country, were consolidated in the U.S. District Court in the Southern District of Florida. Aetna and Cigna have settled with the societies, but UnitedHealthcare has not.

The State of New York Supreme Court dismissed the society's lawsuit against Oxford because the physicians' contract included a binding arbitration clause that barred doctors from suing the plan, said Donald Moy, the medical society's general counsel. But New York physicians recently filed a class-action arbitration case, alleging many of the same complaints the society originally leveled against Oxford, Moy said.

The society's lawsuit against Empire BlueCross was transferred to a federal court in New York. That case is pending.

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External links

Excellus BlueCross BlueShield settlement agreement, May 23, in pdf (link)

Exhibits related to the settlement agreement, in pdf (link)

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