BALTIMORE, MD, December 6, 2001. Maryland's largest physician organization and two individual doctors have filed a class action lawsuit against Aetna U.S. Healthcare, alleging that the nation's biggest HMO improperly pays Maryland doctors who are not on its panel of participating physicians.

MedChi, The Maryland State Medical Society, and two individual physicians, filed the suit on behalf of all so-called non-contracting physicians, claiming that the HMO has failed to reimburse them in accordance with Maryland law. The action, filed in Circuit Court for Baltimore City, requests an accounting and damages.

David Hexter, M.D., an emergency physician in Cecil County is one of the named plaintiff physicians. He says that the failure to pay non-contracting doctors properly is a big problem for emergency physicians and specialists who offer their services to emergency rooms because they have to treat anyone who comes in, regardless of their insurance.
"Emergency providers are the safety net for the entire system," Hexter said. "The ER doctors who are there 24-7 and the specialists on-call often have not agreed to accept big HMOs' reimbursement rates that may not even cover our costs." Meanwhile, he added, "the law prohibits us from billing HMO patients themselves, so an HMO's failure to pay a reasonable fee squeezes ER doctors and can make ER service a money-losing proposition for some specialists. This weakens the whole system at a time when the ER is the nation's front line against terrorism."

Because of low reimbursement rates for non-contracting doctors, hospitals have encountered difficulty getting specialist physicians to make themselves available, or "take call", for emergency rooms without either paying the doctors themselves or requiring them to take call in order to use the hospital's facilities.

Aetna and other HMOs expect their enrollees to obtain physician services from doctors who are under contract with the health plan. These contracting physicians are supposed to be paid pursuant to the terms of the contract, and Maryland law prohibits them from billing HMO patients any amount other than co-pays and deductibles specified in the plan.

But HMO enrollees also obtain services from doctors who do not contract with the health plan, especially in connection with emergency room visits or where there is no doctor available who is part of the HMO network. Maryland law also prohibits non-contracting doctors from billing HMO patients and specifies the method by which HMOs are supposed to reimburse them. Known as the "balance-billing" prohibition, the law is hugely unpopular with doctors, both in the way it is applied by HMOs, and on its own terms. Few other states have a similar law.
From its inception in 1989 until last year, the law required HMOs to pay non-contracting physicians at either the doctor's billed rate or the "usual, customary and reasonable", or UCR, rate, whichever is lower. In 2000, the law was changed so that HMOs are supposed to pay non-contracting doctors the higher of rate paid by the HMO on January 1, 2000 or 125 percent of the prevailing rate paid to contracting physicians of the same specialty in the same geographic area.

The lawsuit alleges that Aetna has applied the law improperly under both payment methods that have appeared in the law, resulting in underpayment to doctors. The complaint asserts that "Aetna HMO has either paid...Maryland Physicians the same rate that it pays to its contracting providers or less than it pays contracting providers."

MedChi, The Maryland State Medical Society, is a private non-profit association of physicians, representing more than 6,500 Maryland doctors of all medical and surgical specialties.