WellPoint Agrees to Pay $198 M to Settle Dispute With Physicians

WellPoint Inc. has agreed to pay $198 million to settle a dispute with physicians and medical societies which will give doctors more leeway in determining the types of treatment required and whether or not a given procedure will be covered by medical insurance. A hearing on the agreement will be heard Wednesday in federal court in Miami.

The proposed payment calls for WellPoint, which has about 29 million customers, to pay $198 million in cash and invest $250 million in information technology and procedural changes to resolve disputes with doctors and pay claims more promptly, The Washington Post reported.

If accepted by the court, the proposal will result in payments to some 700,000 doctors and significant changes in the way the managed-care company pays medical claims in the future.
As part of the agreement, WellPoint would adopt a patient-friendly definition of “medical necessity” that mirrors the American and California medical associations’, and would allow cheaper treatment only when it was at least as effective as what a doctor recommended, physicians said.

If approved by a federal judge, the deal calls for WellPoint to spend about $198 million to settle two class-action lawsuits by more than 700,000 physicians who charged the company with systematically underpaying them and putting its financial interests ahead of patient care.

WellPoint also would make notable changes in the way it reimburses physicians and considers their treatment recommendations at a minimum cost over several years of $250 million, according to the agreement. It includes a ban on WellPoint’s alleged use of computer programs to systemically deny and underpay purportedly legitimate patient claims.

WellPoint operates mainly under the Blue Cross banner and has 28.5 million members, including 7 million in California.

The settlement would be paid out of cash on hand and would not increase premiums paid by WellPoint members, the company said. Last year, WellPoint posted a net profit of $960.1 million on revenue of $20.8 billion.

The landmark litigation began as a series of suits filed by the California Medical Assn. and its sister groups in 1999 and 2000 against 10 of the biggest managed-care companies. The doctors alleged that the HMOs’ heavy-handed business practices amounted to extortion and fraud-violations of the federal Racketeer Influenced and Corrupt Organizations Act (RICO).

The suits were eventually consolidated in U.S. District Court in Miami, where a showdown of mammoth proportions was shaping up between the nation’s physicians and every major health plan.

Topics California