The Hawaii Medical Service Association, the state's largest health insurer, is intentionally engaging in unfair and deceptive business practices by lowering reimbursement rates and denying services by doctors, according to separate lawsuits filed yesterday by the Hawaii Medical Association and two member doctors. Doctors accuse HMSA
of deceptive practicesHMA alleges that the health
Isles following national trend
insurer raises rates arbitrarily
and denies doctor servicesBy Debra Barayuga
dbarayuga@starbulletin.comThe Hawaii Medical Association, which represents more than 1,600 doctors, is seeking injunctive relief from the courts to stop what it says is a problem that has gone on for years.
In the second suit, Dr. Maxwell Cooper and Dr. Michon Morita make similar allegations and are seeking class-action status on behalf of other doctors for unspecified damages.
Cliff Cisco, HMSA senior vice president, said the association is reserving comment until its attorneys review the lawsuits.
According to the HMA suit, HMSA unilaterally sets the terms and conditions on how it will reimburse physicians. But if doctors object or try to negotiate, they are basically rejected, said Rick Eichor, one of the attorneys representing HMA. "They have no bargaining power; it's a take-it-or-leave-it contract."
About 90 percent of Hawaii's doctors participate in HMSA's networks, the suit said. "It is through such market dominance that HMSA is able to dictate the terms and amount of reimbursement HMA physicians will receive," the suit says.
According to the HMA suit, HMSA uses different methods to continually lower the reimbursement level for particular services and impinge on the doctors' ability to provide medical care they feel is necessary and appropriate.
Among them, HMA alleges, is that HMSA engages in "downcoding" -- systematically and arbitrarily replacing codes submitted by doctors for particular procedures and services with lower reimbursement rates.
HMSA also uses software programs that identify doctors who provide "excessive procedures" or perform certain procedures or services more frequently, and denies claims or reduces payments based on these profiles, according to HMA.
Doctors are hurt financially, and patients suffer because they are unable to get the medical care that doctors feel they need, Eichor said.
HMA has tried unsuccessfully to negotiate with HMSA for the last couple of years. The situation has reached a crisis point where doctors feel there is no choice but to sue, he said.
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The lawsuits filed yesterday against the Hawaii Medical Service Association by the Hawaii Medical Association and two doctors follow a number of similar suits against insurers on the mainland. Dissatisfied isle doctors
follow U.S. trend
of anti-insurer lawsuitsPlaintiffs maintain that physicians
have not been treated wellBy Lyn Danninger
ldanninger@starbulletin.comIn fact, Milberg Weiss Bershad Hynes & Lerach, one of the law firms representing the doctors and HMA, has filed suits against insurers on behalf of doctors in Connecticut, New York, South Carolina and New Jersey.
Last year, the Florida Medical Association joined with California, Georgia and Texas medical associations in a federal lawsuit against several major health insurers, alleging they violated federal laws under the Racketeer Influenced and Corrupt Organizations Act, or RICO, through deceptive practices related to reimbursements.
In Georgia the state insurance commissioner ordered HMOs to disclose their formulas for paying doctors. The move followed a Georgia court ruling in April this year that Blue Cross & Blue Shield of Georgia, the state's largest insurer, must reveal its payment schedule and its method for calculating those payments to doctors who participate in those plans.
Similarly, Texas wants insurers to reveal physician payments. The Texas Department of Insurance will soon issue final regulations that will require insurers to disclose to physicians information on how they set fees -- including information on "bundling," where the insurer makes a single payment for a group of related medical services, and "downcoding," where the insurer changes billing codes to indicate that a doctor should be paid less for a service.
Bill Donahue, executive director of the Hawaii Independent Physicians Association, said he was not surprised to hear about the lawsuits against HMSA, or the proliferation of such suits against insurers nationwide.
"The lawsuits demonstrate the level of dissatisfaction within the physician community over the way they have been treated," he said.
Donahue said he hopes the lawsuits will prompt HMSA to reconsider its relationship with doctors.
Hawaii state Insurance Commissioner Wayne Metcalf, who gained greater oversight of health insurance activities in the last legislative session, had no comment about the lawsuits. But Metcalf said he will be meeting next week with representatives from HMA.