Physicians from all corners of the country will be receiving refund checks by mid-April totaling nearly $200 million. The checks are not a tax season windfall courtesy of the IRS. The payments resulted from a record-breaking settlement that concluded a historic court challenge led by the American Medical Association against UnitedHealth Group.
Under the terms of this landmark settlement, UnitedHealth agreed to compensate patients and physicians for 15 years of shortchanging payments on medical bills for out-of-network services. A decade-long fight led by the Litigation Center of the AMA and the State Medical Societies forced UnitedHealth to finally pay its fair share for out-of-network care.
The lasting legacy of this court victory will continue long after the last patient and physician have received a share of the landmark settlement. The AMA-led litigation exposed a fundamental conflict of interest among health insurers, which called into question the accuracy of the entire insurer controlled system for paying for out-of-network services.
Insurers’ methods for calculating out-of-network reimbursements were hidden in what has been called “the great black box of the health care industry.” This lack of transparency allowed some insurers to place profits ahead of their obligations to patients. The AMA has long fought to increase the transparency of the health insurance industry’s payment system, and the UnitedHealth settlement is a giant step toward achieving that goal.
UnitedHealth and several major insurers agreed to meaningful reforms and provided funds for a new, independent system called FAIR Health that would cut out the corporate abuse that plagued the old system for determining payments for out-of-network services.
FAIR Health’s free online comparison tools publicly report rates for any given out-of-network services and help patients estimate out-of-pocket medical costs. The new tools bring transparency to the two common methods insurance companies use to determine what they are willing to pay: one based on accepted market rates and the other based on the Medicare fee schedule.
Shining light on the insurer payment process is needed as more companies are quietly switching to Medicare-based rates to pay out-of-network medical bills. The switch allows insurers to lower their share of the medical bill and shift more of the cost to patients. The trend has created confusion among patients who have been surprised by larger than expected medical bills.
Insurers need to help patients understand the financial implications of the switch to Medicare-based rates for out-of-network care. Informing patients that Medicare rates are substantially lower than accepted market rates will help patients make informed decisions. Until insurers meet their obligation, FAIR Health will be a powerful transparency tool to help prevent insurers from hiding behind contractual fine print.
The AMA’s stand for health insurer transparency shows that when doctors join together and enlist the help of organized medicine, the best outcome for patients and doctors can be achieved. In just the last week, the results of AMA advocacy have made it possible for physician-led ACOs to thrive, and opened the door for relief from the massive and expensive regulatory burden of ICD-10.
For more information on the effectiveness of organized medicine’s advocacy in the courts, including continued efforts to reform the improper business practices of insurers, please visit the AMA Litigation Center.
Peter W. Carmel is President of the American Medical Association.
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