Aetna made headlines in California last week when it sued seven California surgery centers for treating patients at out-of-network rates, charging $66,100 for a bunion repair. But in New York, Aetna quietly filed a lawsuit last October against New York doctors whose patients were socked with massive bills—in one case for more than $425,000.
The two lawsuits, along with earlier ones filed in New Jersey and Texas, form a strategy by Aetna to combat what it sees as abusive out-of-network charges by providers, according to Crain's Pulse.
Aetna's lawsuit comes at a time when New York state also is taking aim at price-gouging by surgeons and other providers. State regulators recently asked health insurers to provide examples of consumer complaints about price-gouging and unexpected bills after procedures and treatments performed by in-network providers.
The state's goal is to draft legislation that guarantees greater transparency and disclosure for consumers about how out-of-network charges are calculated, and gives patients a better idea of what they will be responsible to pay.
A spokesman for the state Department of Financial Services confirmed the agency sent two letters to insurers requesting information on billing complaints and that it is conducting an investigation. He declined to comment on the possibility of legislation.
Aetna's New York case is against two doctors and their affiliated businesses. Dr. Ramin Rak is a neurosurgeon who specializes in brain and spine surgery and is an owner of Neurological Surgery PC on Long Island, which is also a defendant. Dr. Shuriz Hishmeh is a spine surgeon at LI Spine Center. Aetna raised no issues about the quality of care provided by both doctors, only their billing procedures.
The lawsuit addresses balance billing, when doctors bill their patients for charges that exceed the amount payable under the insurance plan. Aetna alleges that Rak asked Hishmeh, an out-of-network physician, to provide services and act as co-surgeon on procedures performed on Aetna members.
Starting in March 2008, Aetna received claims for out-of-network services. Rak submitted more than $11.1 million in bills, when his contracted rate for the services was $183,294. Hishmeh gave Aetna claims for nearly $3 million, and was paid out-of-network rates of more than $1.1 million for patients referred by Rak.
The doctors did not clearly communicate the charges to Aetna patients, Aetna alleged.
The lawsuit says that Rak signed a Specialist Physician Agreement in February 2008, in which he agreed he would not balance-bill patients unless he "exhausted all reasonable efforts to obtain payment" from Aetna.
Aetna alleged that Rak brought on Hishmeh and other out-of-network specialists, including plastic surgeons and physiatrists, to provide "incidental services for procedures" he performed on Aetna patients. Through a billing company, Business Dynamics, Hishmeh threatened to bill patients for the portions of the bills unpaid by Aetna, according to the lawsuit.
Aetna cites the case of one patient who was treated by Rak between April and June of last year. He performed a laminectomy and spinal fusion and related services. Rak and Hishmeh did not disclose that providers in Neurological Surgery and the LI Spine Center would be out-of-network, and they did not obtain any agreement from the patient to pay for the higher out-of-network rates.
Neurological Surgery billed Aetna for $2.3 million, while Hishmeh submitted a $716,264 claim. Aetna paid the doctors according to the terms of the specialist agreement. But the doctors shocked the patient with a bill for another $425,555.
The attorney for Neurological Surgery, John Jankoff of Jankoff & Gabe, said the company did not balance-bill on Rak's behalf. "He only collected what Aetna paid him as an in-network provider," Jankoff said. "He billed at Aetna's rate and that was what he was paid. Aetna is not asking Dr. Rak to return any money."
The insurer, though, is arguing that its customer was balance-billed as a result of Rak calling in an out-of-network doctor to help treat his patient, which Aetna's contract with the doctor is supposed to prevent from happening. "Non-participating providers may not recover unreasonable or excessive fees or fees not agreed to pursuant to any contract with the patient," the lawsuit said.
"We're not a plaintiff very often," said Edward Neugebauer, Aetna's head of litigation, citing the extensive background work in data analysis that the cases require. By spreading the cases out across the country, Aetna is using litigation "as a stepping-stone to open policy doors" at the state level, he added.
"This is a nationwide problem," said Neugebauer. Many providers, he claims, "scheme to get around insurers' practices, and you have patients getting bills crammed down their throats."
Dr. Hishmeh's counsel declined to comment.