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On April 27, when involved parties announced a preliminary settlement to the class action lawsuit filed four years ago, a major step was taken in ending the long-running battle that pitted nearly 900,000 physicians and their representative medical societies against the BlueCross BlueShield (BCBS) Association and individual BCBS plans nationwide.

The federal suit, Love et al. v. Blue Cross Blue Shield Association, et al., which was filed in the Southern District of Florida, alleged violation of the federal Racketeer Influenced and Corrupt Organization Act (RICO).

With an agreement reached, nearly 90 percent of the nation's BCBS health plans have consented to terms that will change the way they do business with doctors … from coding reform and redefining medical necessity to improved payment and credentialing timelines to implementation of a stronger mechanism for dispute resolution.

As part of the settlement the Blues are expected to pay $128 million to physician-class members. Locally, BlueCross BlueShield of Tennessee's (BCBST) portion of the national figure is $8 million.

Mary Thompson, spokesperson for BCBST, said that of the $8 million, approximately $5.8 million would be paid to numerous physicians with the remaining $2.2 million "for a handful of national class action attorneys."

Thompson continued, "By settling, we don't admit any wrongdoing. It was a business decision made to protect our members' money as the legal expenses would have easily exceeded the settlement amount and tied our resources up in court for many years."

At the settlement announcement, Tennessee Medical Association president Dr. Charles Handorf said, "The lawsuit, and ultimately the settlement, was never about putting money in doctors' pockets. It is about correcting business practices that interfere with physicians' abilities to provide the best care for patients."

For TMA and BCBST, the battle lines were actually drawn back in 2002 with suits filed in Davidson County Chancery Court alleging breach of contract and unfair business practices.

"The cases in Davidson County are still active," explained Yarnell Beatty, director of the division of government and legal affairs for TMA. "Once the federal judge gives final approval to the settlement, that will effectively moot the need for our case, and we'll promptly dismiss it … in fact, that was part of the settlement."

While a good deal of progress has been made, Beatty cautioned that it will take several more months before the case can really be considered closed.

Currently, the motion for preliminary approval is under consideration by the federal judge. Once he approves the settlement, he will then set a date for a final approval hearing within 60 days. At that point, if anyone objects to the terms, the judge will hear those concerns and take them under advisement before issuing a final ruling. While Beatty said he expected there would be some objections, he feels like the settlement agreement will ultimately be accepted … particularly because the terms are very similar to what has already received approval in cases against other major carriers.

The settlement secures a commitment from BCBST to change several business policies and to outline in writing other practices. Major provisions include agreement to:

• Apply a definition of medical necessity that ensures patients receive care as determined by their physician using prudent clinical judgment backed by generally accepted standards of medical practice (based on credible scientific evidence published in peer-reviewed medical literature).

• Utilize less costly means of treatment only when they are "at least as likely to produce equivalent therapeutic or diagnostic results."

• Promptly pay clean, valid claims — 30 days for paper claims and 15 days for claims filed electronically.

• Reduce automatic downcoding of evaluation and management codes and institute fairer payment rules.

• Pay for both a vaccine product and its administration.

• Agree to credential new physician group members within 90 days of application.

• Improve consistency and communication.

• Create effective, fair mechanisms to mediate disputes over billing and the determination of medical necessity.

To make sure that the provisions above plus others in the document are enforced, BCBS has agreed to create a physician advisory committee and will be required to file an annual compliance report.

Beatty noted that not all of the provisions in the settlement were necessarily problems in Tennessee. BCBST has, for example, typically received favorable reviews from physicians when it comes to paying for vaccines and credentialing.

"BlueCross credentials faster than most of the national companies so what they agreed to do was to put their policy in writing," he noted.

In Tennessee, two of the biggest concerns were related to reimbursements and the ability of physicians to stand up for their patients when a treatment option was declined.

"If denied, then the physician had very few options to pursue care for that patient," Beatty said, adding that he thought the provision for an independent review of denials … both for treatment and claims … was one of the aspects of the settlement that would have the most impact.

"It (the settlement) gives physicians peace of mind that BlueCross is going to make some business practice changes. As a result, physicians will be able to focus more on patient care and less on the administrative hassles of getting claims paid," Beatty said. "The second thing is it's going to give physicians more of a level playing field to stand up for their patient's care."

On the administrative end, Thompson was quick to point out that BCBST has been working to improve their claims processing system since before the lawsuits were filed.

"Since 2000, we've invested nearly $90 million in our claims processing operations, and we are currently meeting or exceeding 75 percent of the settlement provisions," she said. "We're constantly building on best practices within our claims processing systems, and we will continue to make investments into the system and to enhance communications with physicians."

Now, the hope is that involved parties can put the litigation behind them and work together to improve the delivery of care.

Thompson concluded, "We can now direct our full efforts toward providing affordable and quality healthcare solutions for all Tennesseans — a common goal shared with our network providers."



June 2007

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