HMO Accused of Underpaying Doctors
By Phil Galewitz, AP Business Writer
March 16, 2000
NEW YORK (AP) - The American Medical Association has filed a class-action
lawsuit against HMO giant United Healthcare Corp. for reducing payments
to thousands of New York doctors by using invalid data to determine reimbursement
rates.
As a result, patients have been forced to pay higher doctors bills to
make up the difference, the AMA says.
The civil suit, filed Wednesday in state court in Manhattan, seeks unspecified
compensation, including punitive damages.
AMA Trustee Dr. Donald Palmisano said the physician's group believes
the problem of HMOs underpaying doctors is happening nationwide with
several major health maintenance organizations. 'Insurance companies
play by their own rules without regard to patients or the legitimate
cost it takes to care for them,' he said.
Many insurance company contracts let them pay doctors using the lowest
amount based on three factors: the doctor's actual charge; what the doctor
usually charges; and the 'reasonable and customary charge,' which is
determined by what other doctors in the same specialty in the same city
charge for the service.
In the lawsuit, the AMA says United relied on data provided by the insurance
trade group the Health Insurance Association of America to establish
the ``usual'' charge for services. The AMA says the data is invalid.
The suit against United is the second time the AMA has sued a large HMO
in as many months. In February, the AMA sued Aetna Inc. (NYSE:AET - news)
in Georgia for failing to pay doctors promptly.
Palmisano, a New Orleans surgeon, said the recent suits are part of the
AMA's new strategy of getting more aggressive in pursuing physicians'
rights against HMOs.
United Healthcare officials did not return calls seeking a comment.
Last year, United won praise from the medical community after it said
it would no longer overrule doctors seeking approval for certain tests,
treatments or hospitalizations.