American College of Cardiology

In 2000, several medical societies brought class action lawsuits against the nation’s top insurers, including Aetna, Anthem, CIGNA, Coventry, HealthNet, Humana, PacifiCare, Prudential, United Healthcare and Wellpoint on the grounds that the health plans engaged in fraud and extortion in a common scheme to wrongfully deny payment to physicians. These cases were consolidated in U.S. District Court in Florida and are known as the MultiDistrict Litigation (MDL). Aetna and CIGNA have already settled with physicians for more than $1 billion. See related summaries.

Based on the terms of the proposed settlement, Health Net will pay physicians $40 million and will pay up to $20 million in legal fees. The company will also amend its current business practices to:

• Disclose fee schedules and claims-editing methodologies to providers
• Conform its claims-editing software to certain editing and payment standards, such as adhering to CPT rules and accepting specific modifiers
• Pay electronic claims within 15 days and paper claims within 30 days
• Use a “uniform definition” of medical necessity that references “credible scientific evidence published in peer-reviewed medical literature”
• Establish a billing dispute external review board to resolve provider complaints
• Give providers a 90-day notice of changes to contracts, as well as changes to the payer’s practices and policies
• Tell providers what kind of costs and patient utilization they can expect before entering into capitation arrangements

Prudential will pay $22.2 million to physicians. Since the company’s health care business was acquired by Aetna in 1999, Prudential no longer processes medical claims.

A hearing to receive preliminary approval of the settlement was scheduled for May 6 and a final hearing date will be set at a later time.