AETNA TO STOP CAPITATION, INCENTIVES, AND DOWNCODING TO SETTLE RACKETEERING CASE

Targeted in a "huge fraud and racketeering" lawsuit, Aetna, Inc. may enact a "sweeping list" of policy changes in order to settle the case, the Wall Street Journal reports (1/17). According to the Journal, any agreement could result in a "fundamental change" in Aetna's dealings with physicians and patients under managed care. Aetna and plaintiffs' lawyers this week will likely discuss damage figures for Aetna plan members. According to settlement terms under discussion, Aetna would agree to stop using financial incentives to "reward physicians who restrict plan members' access to health care" and agree to limit the practice of capitation, which HMOs can adjust to "punish" physicians with high utilization or referral rates. Aetna would also discontinue using medical guidelines that some insurers use to deny full reimbursement for care and provide "full disclosure" about the limits of its services to plan members, according to the terms under discussion. In addition, Aetna would disclose all financial arrangements with pharmaceutical companies for price reductions and impose "strict limits" on "downcoding," a practice physicians rightfully complain about since it reduces payment for treatment and services that they provide. Lawyers drafted the "broad outlines" of a deal and presented them last week. While an Aetna spokesperson declined to comment on the talks Tuesday, one source said that the company views the discussions as "preliminary." Aetna initiated the talks in October after a federal judicial panel in New York "raised the stakes" by combining about two dozen lawsuits seeking class-action status against HMOs in Miami federal court. Among the cases, plaintiffs charge that HMOs have "engaged in fraud" and even "racketeering" by using undisclosed financial "incentives and controls" to limit patient care. While the lawsuits also named Humana, Inc., Prudential Insurance Co. of America, Cigna Corp., United HealthGroup Inc., Pacificare Health Systems, Inc., and Health Net Inc., as defendants, Aetna remains the only insurer involved in settlement discussions. According to the Journal, the talks "come as a surprise" because none of the suits have reached class-action status, and Miami US District Judge Federico Moreno may "dismiss the claims altogether." Experts expect a decision later this month.

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FROM MEDICAL SOCIETY OF THE STATE OF NY !