Feature

Since the inception of managed health-care plans in the 1980s, controversy over issues such as accountability and patient access to care have been brewing--occasionally bubbling over into legal or regulatory battles.

The battles continue. "Managed care is under tremendous pressure, and [certain practices] still warrant necessary actions when problems arise," says Russ Newman, PhD, JD, APA's executive director for professional practice. "There are [actions] happening in the legal system right now--no one has let go of this fight."

In fact, the APA Practice Directorate is fighting some of these battles and closely monitoring others that address everything from fraud to patients' rights. Here are some highlights:

Battling fraud

The Virginia Academy of Clinical Psychologists (VACP) along with individual psychologists and consumers--with support from APA--filed suit against CareFirst (formerly Blue Cross Blue Shield of the National Capital Area) and Value Options in 1998 for various alleged wrongful acts, including a 30-percent cut of psychologists' payment rates and broken promises to consumers.

After reaching a favorable settlement on breach-of-contract claims just before trial last April, VACP is now appealing previously dismissed fraud and punitive damages claims. The academy's briefs argue that those claims should have remained in the case and that:

  • CareFirst defrauded consumers by marketing a large provider panel, knowing that the impending rate cut would create a "phantom panel."

  • The company imposed hidden restrictions to keep consumers from receiving the promised number of treatment sessions.

  • CareFirst's treatment of mental health patients was egregious enough to justify punitive damages.

Both plaintiffs and defendants have filed initial and final briefs. According to Alan Nessman, special counsel in the legal and regulatory affairs department of APA's Practice Directorate, oral arguments may not take place before 2005.

Alleged mismanagement

The VACP case hasn't gone unnoticed by those outside of psychology. In fact, Maryland Insurance Commissioner Steve Larsen pointed to VACP's "phantom panel" allegations against CareFirst--which covers approximately 3 million people in Maryland, Virginia and Delaware--as an example of how mistreatment of providers can affect patient care.

The commissioner included the information in a scathing report last spring on CareFirst's proposal to shed its nonprofit status and be acquired by WellPoint in a $1.37 billion deal. The deal would have provided the top CareFirst executives with an estimated $119 million in bonuses. The commissioner rejected the proposed deal, claiming it wasn't in the public's interest. The Maryland legislature and governor subsequently enacted legislation last spring to reform CareFirst and return it to its original nonprofit mission of serving consumers' needs.

Protecting practitioners

Oxford Health Plans--which operates in New York, New Jersey and Connecticut--recently yielded to demands from APA and the New York State Psychological Association that the company immediately stop coercing psychologists into refunding money for supposed deficiencies in their record-keeping.

In 2002, Oxford began retrospective audits of some of its contracted mental health providers, covering files going back seven years. Often, the company did not show that it had obtained valid patient consent to release the records. After performing these audits, Oxford then demanded large refunds, claiming that notes of particular sessions were not sufficiently detailed. This violated the company's agreements with psychologists, and New York health maintenance organization law, in part because the company had never given psychologists notice that it would require a certain level of record-keeping.

Under pressure from APA and other professional associations, Oxford said publicly in December that it would not only stop the repayments but also return money providers had already paid back.

As a result of the controversy, Oxford also proposed working with APA and other professional associations to look specifically at the record-keeping issue.

Emerging from bankruptcy

Last March, Magellan--the nation's largest managed behavioral health company--filed for bankruptcy after accumulating more than $1 billion in debt. Magellan serves 67 million people and contracts with more than 48,000 providers.

Thankfully, providers' worries that they might not be paid for services did not become reality. In fact, the company said in January that it had emerged from bankruptcy by cutting its debt by $600 million and putting $150 million back into its balances. How the financial reorganization will affect operations and service delivery in the future is not yet clear.

Considering class action

An ongoing class-action lawsuit in Florida involving managed care and more than 600,000 physicians has sparked the interest of nonphysicians. The original suit alleges that eight of the nation's largest managed-care companies violated the federal statute known as RICO--the Racketeer Influenced Corrupt Organizations Act, which was originally designed for prosecuting organized crime--by conspiring to reduce and delay payments to physicians. For example, the companies are alleged to have used billing software to automatically "bundle" several Current Procedural Terminology (CPT) codes billed on the same day and reimburse the physician for only one of those codes.

The trial court has handed the physicians two victories. First, it allowed the physicians to proceed with their class action. Second, the court has allowed the physicians' RICO claims to go to trial instead of being dismissed as the defendants had sought.

Following the class action ruling, Aetna and Cigna agreed to pay approximately $200 million in damages.

Now the suit has been expanded. Nonphysician providers have filed a companion suit making similar allegations, and that suit recently has been expanded to include psychologists. APA is currently evaluating the appropriate role for organized psychology in this ongoing litigation.

Patients' rights

In November 2003, the U.S. Supreme Court said it will reenter the debate over patients' legal rights when their health plans refuse to pay for recommended medical treatment.

Patients and health providers argue that health plans should be held accountable for medical decisions in state courts. But health plans claim that the 1974 federal Employee Retirement Income Security Act (ERISA) protects them from state lawsuits--which tend to award greater monetary damages to plaintiffs. ERISA allows for patients to sue health plans to get them to pay for a particular denied service, but does not allow for monetary damages.

Two cases are at the center of the issue. Both involve patients who sued their managed health plans in Texas under a 1997 state law that gives citizens the right to sue health plans in state court. Both patients claim they had health complications as a result of their health plans' decisions not to cover recommended treatments.

The health plans--Aetna and Cigna--appealed their cases to the Supreme Court, claiming that ERISA pre-empts the 1997 Texas statute, therefore protecting them from state legal action.

Twelve states have laws similar to the Texas one that could be affected by the Supreme Court's decision, which is expected next summer.