Aetna hit by $9.5M fine for M.D. bills
Thursday, July 26, 2007

By LINDY WASHBURN
STAFF WRITER

New Jersey regulators fined Aetna Health Inc. $9.5 million Wednesday -- the largest fine ever levied on a health insurer in New Jersey -- for shortchanging out-of-network physicians and leaving patients to pay the balance.

More than 3,000 insurance claims must be reprocessed by the insurer, under the order from state Insurance Commissioner Steven M. Goldman. Aetna must pay "whatever the provider demands [so] that the member is held harmless," said the order.

The insurer, which has 521,000 members in New Jersey, said it would ask for a full hearing to dispute the order.

Aetna does not feel it violated any laws, said Cynthia B. Michener, an Aetna spokeswoman. "Our policy protects our members and customers ... from excessive billed charges by a small group of physicians who do not participate in insurer networks," she said.

The Medical Society of New Jersey, representing the state's doctors, cheered the ruling against Aetna.

"They're not reining in health costs," said Michael T. Kornett, the society's chief executive officer, "they're padding their bottom line. ... They're doing it out of the doctors' pockets and out of the patients' pockets."

The problems addressed by the state arise when Aetna members go to an in-network hospital for emergency care, surgery, or an in-patient stay. While they are in the care of an in-network physician for most aspects of their treatment, they also receive services -- such as anesthesiology, pathology or radiology -- from doctors who are not in Aetna's network.

The patients are powerless to choose who provides those services. The out-of-network doctors bill the insurer "sometimes 300 to 400 percent higher than what Medicare pays for the same services," said Michener, of Aetna.

In June, Aetna informed out-of-network doctors that it would determine what constituted a "fair payment" -- not the doctors. It set the rate at 125 percent of the standard Medicare reimbursement.

Doctors who felt they didn't receive enough payment billed their patients for the balance.

The department of insurance looked into Aetna's new payment policy when physicians complained. Goldman, the insurance commissioner, found that Aetna's actions violated state law.

The state fined Aetna $2,500 for each of the 3,099 claims it says were not properly paid, plus an additional $1.7 million for other violations.

Aetna must pay the doctors the amount its initial reimbursement fell short, with 12 percent interest.

Aetna members who have been balance-billed by non-network doctors should complain to the state Department of Insurance, said a department spokesman.

Goldman's order says nothing about refunds to patients.

Aetna's spokeswoman said the order "should be a concern to all insurers, employers and consumers in the state of New Jersey." It would encourage more doctors to leave Aetna's network, she said, and to charge higher and higher rates, leading to ever-higher health insurance premiums.

I agree with Aetna on this issue.

The "retail" price for services that are not negotiated prior to the event is simply outrageous and nobody pays that price.

Most doctors accept Medicare..........which pays at the lowest possible point in the spectrum..........so, a reimbursement at 125% of the Medicare figure appears perfectly reasonable to me.

A payment of 400% of the Medicare reimbursement fee is absolutely ridiculous.

I hope Aetna will prevail on appeal.


I've got my own personal problem in a very similar vein.

My POS plan allows me to go out of network and the plan will reimburse 80% of the fees. However, the reimbursement will be 80% of what the plan considers "fair and reasonable".

Naturally, if I go out of network, I'll be billed at "retail"........a figure that's about 300% of what the plan would consider "fair and reasonable". So, guess who would have to pay the balance (about 2/3 of the "retail" bill)??

We agree twice today, Brian.
IMO, Aetna's the whipping boy. The doctors who contract with the hospitals should in their contract with the hospital agree to take the health insurance reimbursement as payment IN FULL for all insurers the hospital accepts. After all, anesthesiologists have no job without hospitals.
Who else gets that deal...a place to work, no overhead, state of the art equipment provided FREE OF CHARGE.. and charge whatever you want!
A lot of them accept NO insurance and thus are out of every insured's network!
Anesthesiologists are a bunch of ho's in my book. Take it all and give little back.

State law for hospital bills for uninsured should apply to physician services in hospitals.

Anesthesiologists and endodontists. What a racket. They only do one procedure...........a root canal. Most of them have done thousands of them. They have the task perfected. The time to do a root canal is always less than 45 minutes and the follow up visit is less than 30 minutes.

They can easily do six of them per day (including the follow ups).

They get $800. for each procedure.

Figure out the income.

I'm pondering this case a bit more after I posted.

It's generally agreed that the anesthesiologists are charging significantly more than they would otherwise charge if they were accepting an insurance plan.

Therefore, it's not a requirement of Aetna to pay their demanded fee because they never did have an agreement with Aetna.

But, lacking an agreement in advance, the anesthesiologist can charge what he wishes and is rightfully due payment of the retail fee.

So, where does the responsibility lie?

Is it the obligation of the insured to do the research prior to the hospital procedure and confirm that all individuals who perform services will accept the Aetna reimbursement rate? This sounds a bit ridiculous.

Is it the obligation of the hospital to do the same research? Also ridiculous.

And, if nobody does the research, is the patient ultimately responsible for the remainder of the bill to the anesthesiologist? This also sounds a bit ridiculous........but it's probably closest to the rightful outcome and one that the conservatives would fully support.

The entire affair is a classic example of the flaws in the system and the inability of the consumer to have any attempt whatsoever to get ahead of them. Without proper regulation, this disaster can continue indefinitely.

If the income is so good and the risk so minimal, you go do it and tell us from your luxury boat and/or penthouse. I never begrudge someone for what they charge. After all, if it is that easy and lucrative, I would go do it myself. If I don't have the abilities, I take what I get and don't grumble.

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Sounds like a bulk discount to me. We give our regular customers that if they order in significant enough quantities.

Perhaps the anesthesiologist should not have done the work BEFORE the negotiated fee is settled.

Agreed. However he should have confirmed payment BEFORE the procedure. I don't ship you 300 tons of grain and then figure out the price after you get it because you said you wanted it. I ship it AFTER we agree on the price.

I'd go with the anesthesiologist. I charge $500 for this procedure. If you meet my price, call me. If not, don't call. If in spite of that the hospital calls them then blame the hospital.

With proper regulation, life would be smooth as silk. That will never happen. All that govts have done is screw it up even more. If you think this situation is screwed up, involve the govt and it will be FUBAR.

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The barriers to entry are steep, otherwise there would be a greater number of people in the profession and the price would drop.

You can certainly be OK with this fellow earning $1M per year.

I think it's excessive when compared to others in the profession who work a lot harder, take on significantly more risk, and earn less money.

You're blabbing away without addressing the problem.

Who is responsible for understanding and negotiating the fee with the anesthesiologist prior to the procedure?

The patient?

The doctor?

The hospital?

The insurance company?

Who should do this?

It is probably the current responsibility of the patient. However, the patient does not have the slightest clue that it's necessary for him to do that task. And, he's not qualified to negotiate with a medical professional on fees. Finally, the medical professional would likely refuse to speak with him on fees. That approach won't cut the mustard........sorry.

Not to mention the amount of work required, going thru certification, constant worrying about litigation, etc, etc. Lets face it, not everybody is cut of for that job, just like any job.

Or $10M or whatever the market will pay.

I have no issues with what people get paid. Like I said, if I could be an anesthesiologist and I thought the money was good enough, I'd be there. If not, I don't gripe about how easy they have it. I could also gripe about movie stars who get paid "excessive" amounts for a low risk job. They can make it and we are willing to pay, more power to them. I am not envious.

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The problems addressed by the state arise when Aetna members go to an in-network hospital for emergency care, surgery, or an in-patient stay. While they are in the care of an in-network physician for most aspects of their treatment, they also receive services -- such as anesthesiology, pathology or radiology -- from doctors who are not in Aetna's network.

The patients are powerless to choose who provides those services. The out-of-network doctors bill the insurer "sometimes 300 to 400 percent higher than what Medicare pays for the same services," said Michener, of Aetna.

In June, Aetna informed out-of-network doctors that it would determine what constituted a "fair payment" -- not the doctors. It set the rate at 125 percent of the standard Medicare reimbursement.

Doctors who felt they didn't receive enough payment billed their patients for the balance.

Is it Atena's fault that other doctors were contracted? I think not. Atena does not have control of that. So, for that issue, if the hospital contracts an outsider without prior authorization and rate negotiation, it is their fault.

Not true. The patient has ultimate control. When I went for my surgery, the wife felt that she didn't want Dr X and wanted Dr Y instead. She was POA when I was down. However, we still hold control.

Atena can do that. It says it is willing to pay $X and that is that.

They didn't agree on the rate. They should not have done the procedure and then bill the patient. They knew the rate and if they worked, they accepted the rate. Don't come crying later on. If you don't like the terms of service, don't work. It is that simple.

Solution? MDs should have agreed on the rates or not perform the services. Atena tells you what they are willing to pay. You take the job, you take the rate. Either that or don't do the job till somebody comes to a settlement. So yes, I blame the MDs. My wife took a job. She doesn't feel she should make only say $50K. She feels she should make $100K. So does she get to bill her patients to make up the difference? I think not. She took the job knowing that Company X is willing to pay $50000. Live with it or get another job.

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I am also not envious. They can earn what the market will bear.

However, I make the comment simply because it pains me to pay the fee........nothing more.

In fact, I've got to pay that exact fee again, as soon as I get my ass over there for another one of the damn things.

Responsibility is with the doctor. So what if I was on your boat and you felt that your company wasn't paying you enough? You stop in the middle of the lake have me pay the difference or walk the plank?

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I'm not with it.

With the anesthesiologist? It's his responsibility to negotiate with a patient who he does not know...........prior to the surgery?

Or with the surgeon? Currently, the surgeon has no responsibility to negotiate fees of other providers..........??

I don't think any professional would stop the procedure in the middle..........there is recourse via billing after the fact...........and the legal system.........if necessary.

Good luck on your procedure. Not to frighten you but John Lingenfelter of Lingenfelter Performance Engineering had a car crash. They had to perform surgery. He was ok. 2nd time he had to go under, he never got up. Anesthetic is pretty much an unknown. We KINDA know how it works but I don't think we are really sure of it 100%.

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