Health Net Settles RICO Case with CMA and 900, 000 Physicians Nationwide

CAL/AAEM News Service calaaem_news at yahoo.com
Sun May 8 20:54:54 PDT 2005


Health Net Settles RICO Case with CMA and 900,000 Physicians Nationwide

Source: CMA Alert (http://www.calphys.org/html/news.asp) 
Date: May 5, 2005


CMA and more than a dozen other state medical associations agreed this week to a
settlement with Health Net, one of 6 remaining health plan defendants in the RICO class
action lawsuit pending before U.S. District Judge Federico Moreno in federal District
Court in Miami. The suit alleges that the for-profit plan defendants violated federal law
by using coercive, unfair, and fraudulent means to control physician-patient
relationships. Health Net is the third defendant to settle.

The settlement provides improvements to physician-related business practices as well as
cash payments to physicians in accordance with specific terms set out in the agreement.
The settlement will also enhance communication between physicians and Health Net, reduce
administrative complexity in claims payment and improve the quality of the health care
delivery system. These changes are expected to result in increased predictability and
speed of claims payment, creating significant value for physicians by reducing
time-consuming and costly administrative burdens and giving physicians more time to focus
on their central mission–providing health care to patients.

Health Net has agreed, among other things, to:

Redefine medical necessity so physicians can expeditiously get their patients the care
they need, 
Abide by fair and transparent payment and contracting rules. 
Use AMA’s CPT codes for patient care and billing, which will end most claim “bundling and
downcoding,” a practice used by 
many insurance companies to cut medical costs and underpay 
physicians, 
Pay capitation from day of patient enrollment and provide physicians with periodic
reports on projected cost and utilization information, 
Speed up payments to physicians, with electronically submitted claims paid in 15 days and
paper claims in 30 days. 
The settlement provides major protections both for fee-for-service PPO physician
practitioners and for medical group and IPA physicians who contract with Health Net. 

“This settlement provides significant gains for physicians and patients,” says CMA CEO
Jack Lewin, M.D. “We hope it puts leverage on the other health plan defendants to move
ahead and resolve this suit without the need for a protracted trial. Most important,
settling the suits means we can spend our time and resources working together on quality
of care, patient safety, and expanding access together—and that’s where we need to be.”

The settlement agreement, which will be presented to Judge Moreno Friday, May 6, for his
approval, also requires Health Net to pay $40 million to physicians as redress for past
grievances and another $20 million for legal fees. Officials estimated the prospective
relief through improved claims and payment procedures to be worth $300 million in the
next several years.

“CMA began the battle against California’s largest for-profit health plans—Blue
Cross/Wellpoint, Health Net, and PacifiCare—five years ago, when it became obvious that
insurance companies were promising patients one thing to sell a policy and then doing the
opposite when it came time to deliver health care,” says CMA President Michael Sexton,
M.D. “This is a victory for physicians and patients. It is a shame that other health
plans are still delaying doing what is right for patients.”

For more information, go to http://www.calphys.org/html/bb871.asp 

Contact: CMA’s legal information line, 415/882-5144 or legalinfo at cmanet.org.



Cyrus Shahpar & Brian Potts 
Managing Editors, CAL/AAEM News Service 
UC-Irvine


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