Battle Over Fee Definitions Far From ‘Usual’ and ‘Customary’

AMA policy advocated by California physicians is strengthening doctors’ chances at recovering benefits from health care insurers for under-reimbursements of medical services.

The policy, brought forth by the California Medical Association delegation at the 2006 Interim Meeting of the AMA House of Delegates, reaffirms a strict definition of “usual, customary and reasonable” (UCR) fees, to help doctors combat attempts by insurers to sell or convey artificially low definitions of rates physicians should charge patients. The lower these insurers classify these fees, the higher their profits rise.

Insurers use their definitions of UCR fees to justify inadequate reimbursement for services that patients pay for in advance, through their health insurance premiums. And they often pit patients against their physicians over the cost of care they’ve been provided.

These questionable definitions of UCR fees are at the center of a nationwide class-action lawsuit against United HealthCare, with the AMA Litigation Center, a coalition of the AMA and state medical societies; the Medical Society of the State of New York; and the Missouri State Medical Association as plaintiffs. Recently, a federal court in New York ruled that an amended complaint could be filed against United HealthCare for violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act and federal and state antitrust laws.

At issue in the case is United Healthcare’s practice of relying upon certain databases to limit reimbursements for out-of-network services to a percentage of UCR fees. The plaintiffs allege such databases are inherently flawed and have been manipulated by United Healthcare so that reported fees do not reflect actual UCR rates. The AMA considers UCR fees to be:

· “Usual” when the fee is usually charged, for a given service, by an individual physician to his private patient (i.e., his or her own usual fee)

· “Customary” when the fee is within the range of usual fees currently charged by physicians of similar training and experience, for the same service within the same specific and limited geographical area

· “Reasonable” when the fee meets the above two criteria and is justifiable, considering the special circumstances of the particular case in question without regard to payments that have been discounted under governmental or private plans

For more information about UCR fees, AMA members can visit www.ama-assn.org/go/psa and click “PSA tools and publications,” then access the AMA Private Sector Advocacy unit document, “Out-of-network payment challenges for the physician practice.”

Coverage Plan Makes Splash
As health coverage reform proposals continue to emerge at the federal level and in several states, including California, the AMA and 15 other diverse, national health care stakeholders announced their consensus on a two-phased policy approach to expand coverage to more of America’s almost 47 million uninsured patients.

These organizations--united as the Health Coverage Coalition for the Uninsured (HCCU)--unveiled a set of proposals that combine public and private sector initiatives. The agreement is the result of a nearly two-year effort to forge policies that can be accomplished in the 110th Congress and have an immediate impact for patients.

The HCCU proposal starts with a “Kids First” initiative that would allow parents to more easily enroll their children in such public programs as the State Children’s Health Insurance Program and Medicaid. It also would provide states with additional money to enroll more than 6 million children who are already eligible. A new tax credit would help families provide private health insurance for their children.

The second phase would expand health coverage to more adults by giving states more flexibility to expand Medicaid eligibility and by creating tax credits to help some adults cover the cost of private coverage.

These proposals are largely consistent with the AMA’s long-term plan to expand coverage. Visit www.ama-assn.org/go/insurance-reform to learn more about the AMA plan.