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Physicians fight back as insurers try to terminate contracts

From international law firm Arnold & Porter LLP comes timely views on current regulatory and legislative topics that weigh on the minds of today’s physicians and health care executives.

Over the past several months physicians nationwide have been receiving notices from insurers, terminating their participation as panel members. Generally, this means that patients who wish to continue to see these physicians must pay a higher out-of-network co-pay. In some cases, it may mean that the insurers will cover no amount whatsoever when a patient sees the physician. Often these letters state simply that the insurer no longer requires the number of physicians on its panel, and in order to be more efficient, it has decided to reduce the number of panel physicians. In one case of which we are aware, the insurer claimed that it had 93 physicians in a particular specialty but required only seven.

 

Alan E. Reider

Generally, contracts between physicians and insurers enable the insurer to terminate for no cause, and there is little that a physician can do. The wholesale termination of physicians across the country, however, has resulted in an unusual, coordinated response. This is particularly acute in the case of Medicare Advantage plans, which must comply with federal regulations to assure appropriate levels of participation.

Termination notices from the Medicare Advantage plans sponsored by United Healthcare have been of particular concern for physicians. Objections have been raised with CMS, and while, at this time, CMS has not acknowledged that these programs have exceeded their authority in excluding providers from their networks, the American Medical Association is coordinating with state medical societies to provide CMS with documentation to support their position that these terminations will reduce these networks to the point where they cannot adequately provide care for their subscribers.

 

More dramatically, a group of physicians in Connecticut decided to take matters into its own hands by going to court and seeking an injunction against United Healthcare from terminating physician contracts. In a decision issued on Dec. 5, a federal court judge issued a temporary restraining order and preliminary injunction against United Healthcare, precluding it from terminating approximately 2,200 physicians in the state from its Medicare Advantage plans. It is anticipated that this successful litigation will encourage other physician groups to bring similar challenges to the wholesale termination of physicians from provider panels.

It is important to realize that the successful result in Connecticut is only temporary, and does not assure that these physicians will regain their participation going forward. It simply requires United Healthcare to provide the physicians with an opportunity to challenge their termination through the formal appeals process. Nevertheless, the success of this action likely will serve to embolden others to challenge terminations in the future.

Clearly, this is an issue that will continue for some time.

Alan E. Reider, JD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-6496; email: Alan.Reider@aporter.com