More Healthcare Fraud: Insurers vs. Doctors

There was an article in Businessweek recently that told of charges and counter charges between doctors and insurers over fees charged for out-of-network services. I thought of titling this post: “No honor among thieves,” but that might be deemed insulting by some hardworking thief out there.



If one sees a doctor who is a participant in a medical plan, the doctor has agreed to charge a certain amount for each of the procedures covered by the contract with the insurer. But if a patient, for whatever reason, sees a doctor outside of the coverage plan, the doctor can charge whatever he thinks is appropriate. Apparently there are rules and regulations that vary from state to state which impact this interaction. Insurers have been sued by doctors for not paying enough to reimburse them for their services. Insurers are now going to court to sue doctors for excessive charges.


From the insurers’ point of view:

“In 2007 cardiologist Benyamin Hannallah charged $220 to evaluate patients admitted to the hospital where he worked, Jersey City Medical Center, across the river from New York. Then he opened his own practice and raised his fee for the 25-minute bedside consultation to $56,980, according to a lawsuit filed by Aetna. The health insurer is suing Hannallah and five other New Jersey doctors for charging what Aetna calls ‘unconscionable’ fees to treat patients admitted at four New Jersey hospitals.”

“The lawsuits could help determine what pricing limits insurers can impose on out-of-network physicians who don't have contracts with health plans that set how much a service or procedure can cost. ‘It's the uninvited guest who comes into your hospital room and then bills you and your health plan for outrageous, undisclosed amounts,’ says J. Edward Neugebauer, Aetna's chief of litigation.”

“The complaints provide a glimpse of the sums physicians earn from an insurer and the huge variations in how much different doctors charge and receive for the same services. Hannallah billed $59,490 for a cardiac ultrasound, which typically earns Aetna's in-network doctors in Jersey City $74, says Aetna spokeswoman Cynthia Michener. Another defendant, obstetrician Waleed Abdelghani, charged $30,000 for a Caesarean birth, or more than 10 times the in-network fee Aetna quotes, Aetna claims. ‘If these charges are accurate, consumers and purchasers should be outraged,’ says David Lansky, president of the Pacific Business Group on Health in San Francisco, a coalition of health insurance buyers that includes Chevron, Walt Disney, and General Electric. Lawyers for the doctors declined to comment on specific charges in the suits and said their clients did nothing wrong.”

From the doctors’ point of view:

“Aetna tried in 2007 to impose caps on some out-of-network payments, prompting doctors' complaints to the New Jersey Banking and Insurance Dept. The agency fined the insurer $2.5 million for violating consumer-protection laws by failing to reimburse enough for HMO patients, and ordered it to pay out-of-network practitioners enough so that patients would be asked for no more than their co-pays.”

“In 2009, Aetna, UnitedHealth Group, Cigna, and WellPoint were accused by the New York attorney general of underpaying out-of-network physicians by manipulating a database used to calculate payments. They paid a total of $90 million in settlements without admitting wrongdoing. UnitedHealth, again without admitting wrongdoing, agreed that year to pay $350 million to settle a lawsuit by the American Medical Assn. over the same issues. Similar AMA lawsuits against Aetna, Cigna, and WellPoint are pending.”

The author of the article does not actually take sides, but the weight of the data presented would indicate malfeasance on the part of the doctors.

“In its suit against Deepak Srinivasan, a cardiologist at Hackensack University Medical Center, Aetna claims the doctor raised his fee for heart catheterizations to $18,720 in 2007 from $3,000 in 2006. His income from Aetna rose to $2.5 million in 2008, from $155,310 in 2006, the suit says. George Frino, Srinivasan's attorney, says Aetna agreed to his fee schedule as an out-of-network practitioner in 2007. Srinivasan filed a countersuit alleging that Aetna, by not paying him what it owes, violated laws governing group health plans and committed mail and wire fraud in its reimbursement practices. Aetna's Michener calls Srinivasan's counterclaim ‘unfounded’."

“Abdelghani, who also practices at the Hackensack (N.J.) hospital, increased his Caesarean charge to $30,000 in 2009, from $3,000 in 2008, the suit alleges. Aetna paid the full $30,000 fee "numerous" times in 2009, says Michener. In-network doctors in the area receive $2,655 for the operation, according to Aetna. Abdelghani's income from Aetna rose from $76,173 in 2007 to $5.1 million in 2010, the company says.”

“Abdelghani's attorney, Charles Gormally, disputes Aetna's figures and says the insurer paid Abdelghani's practice a total of $5.8 million over a three-year period. The practice billed Aetna nearly $13 million over the three years, with some procedures not reimbursed at all, he says.”

If this much money is flowing to these doctors there is something terribly wrong. Paying doctors an order of magnitude or more beyond reasonable charges—multiplied by how many doctors?—we’re talking big bucks here.


No wonder our healthcare costs so much.