AMA backs N.Y. surgeon in questioning plans' fee formula

An out-of-network specialist sues two health plans, contending there is nothing usual, customary or reasonable in the way it calculates his payments.

By Sarah A. Klein, AMNews staff. April 3, 2000.

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For more than two years, Michael J. Attkiss, MD, has been trying to figure out how United Healthcare and MetLife have been calculating his paycheck.

The vascular surgeon from Great Neck, N.Y., and his lawyers have volleyed letters back and forth with the companies, trying to determine exactly how they arrive at the so-called usual and customary rate they pay him as an out-of-network physician.

Getting an answer became all but a crusade for Dr. Attkiss, especially after United began inexplicably cutting his reimbursement by as much as 40% and forcing patients to pay the difference. For a typical operation on varicose veins, for instance, his patients were required to pay an extra $2,000. For injection treatments, more than $700.

But getting to the bottom of how the company calculated what was considered usual and customary in his region was like trying to break into a black box. United referred Dr. Attkiss and his lawyers to its plan book and the Health Insurance Assn. of America, which they said collected the data the company used to determine prevailing rates.

They didn't mention that United bought the database HIAA had created, but it didn't matter. Because when Dr. Attkiss' lawyers found the United subsidiary that operated it, they were told they couldn't have access, much less information on how it was compiled. Perhaps more important, the plans didn't mention that before HIAA sold its database to United, it disclaimed its use for setting rates.

Out of frustration and concern that doctors and patients were being shortchanged, Dr. Attkiss joined with the AMA/State Medical Societies Litigation Center and the Medical Society of the State of New York and filed suit against United and MetLife. The class action suit, filed in the New York County division of New York Supreme Court last month, alleges the plans breached their contracts with physicians and patients by using unreliable data to calculate reimbursement.

Attorneys for Dr. Attkiss and the medical societies suspect the companies have understated physician fees by including discounted rates paid to in-network physicians and by counting charges from physicians in noncomparable localities. The insurers also may have gotten a false picture of actual charges by underreporting procedures and eliminating the highest charges for each type of procedure in an area, the lawyers said.

Moreover, they think it is a problem that extends beyond MetLife and United. "This is the tip of the iceberg," said Barry M. Epstein, a Newark, N.J., lawyer working on the case.

United is less convinced, while MetLife has refused comment. "This is the largest database [for determining physician fees] in the United States, and they are complaining it is inadequate," said Lee Newcomer, MD, United's senior vice president of health care policy and strategy.

Dr. Newcomer insisted that the database, known as the Prevailing HealthCare Charges System, does not include discounted in-network rates, except when the physicians submit such rates themselves, and does not knock out outlier rates unless they appear to be data entry errors.

And to threaten its use with a lawsuit will ultimately harm patients, Dr. Newcomer said.

"If the AMA has its way with this suit, employers will drop [the out-of-network] option immediately. There just won't be an out-of-network option. It's a nice argument to make that the patients get billed a little more, but the doctors could charge a reasonable fee and then the patients wouldn't have to pay so much," he said.

"You might expect them to say such things," said AMA Trustee Donald J. Palmisano, MD. "But what we need to do is go and get the facts -- and the facts are that insurance companies should honor their contracts." The AMA contends that United and MetLife are not following their own contracts' guidelines for calculating out-of-network pay.

Dr. Palmisano said the discovery process will show the data are flawed. One of the most compelling pieces of evidence derives from the fact that Dr. Attkiss conducted a disproportionate number of the procedures performed under CPT codes 36471 and 37735, his lawyers said. Thus, he was the statistical equivalent of the usual and customary charge and should have been paid in full.

Potential for industrywide impact

Whether they can show that in court remains to be seen. "What we most hope to accomplish is to remove the veil of secrecy from how UCR is computed and make sure it is done appropriately and fairly for the benefit of doctors and patients," Epstein said.

And what effect the case will have on the industry is also unclear. Epstein said the lawsuit was written broadly enough to include other companies and will extend across the country to the extent the court allows.

But challenging such common business practices is likely to meet stiff resistance from a cost-driven insurance industry. "Let's be honest about it. The way most insurers operate is to find the database that has the fee schedule with the lowest fees," said Charles A. Peck, MD, director of physician and managed care services for Arthur Andersen in Atlanta.

And United Healthcare doesn't appear ready to roll over.

"The assumption in this lawsuit is if this guy has been in town for more than 20 years and has been doing lots of surgery and has good gray hair, he should be paid more because he is experienced. Well, when we looked at hard data on performance in our clinical profiles a few years ago, it had nothing to do with training or age. It had to do with who collects the data," Dr. Newcomer said.

On that last point, all sides agree.

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 ADDITIONAL INFORMATION: 

Fun with numbers

According to the AMA, the database used by MetLife and United Healthcare may understate physicians' usual and customary charges by:

• Underreporting actual procedures in an area
• Eliminating highest charges for each type of procedure in an area
• Including discounted rates of physicians in the network rather than fee-for-service charges
• Using charges from noncomparable geographic areas
• Using charges for noncomparable services or supplies
• Failing to distinguish physicians by skill and experience

 

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