Class Action Settlements

Aetna Class Action Settlement Information


MSSNY Position on This Settlement:

As a plaintiff in an action against Aetna the Medical Society of the State of New York supports the settlement. As such the Medical Society of the State of New York urges all physicians to review the material and participate in the settlement.

Major benefits of the settlement include:

  • Application of generally accepted medical standards determining medical necessity.
  • Agreement on a nationally recognized and physician-approved set of rules governing claims coding and grouping procedures (i.e., no more automatic downcoding of E&M codes, and agreement to use coding rules based on AMA CPT guidelines concerning bundling, modifiers and global periods).
  • A joint effort to develop a claims-editing software package that incorporates physician- and industry-accepted claims coding and grouping procedures.
  • Increased electronic connectivity and direct, web-enabled access to Aetna systems to verify reimbursement information and track claims.
  • Allowing physicians to access a Medical Necessity External Review Process administered by a Medical Necessity Independent Review Organization, to review and challenge Aetna’s medical necessity denials;
  • Creation of an independent external review board for resolving disputes with physicians concerning many common billing disputes.
  • Payment of $100 million to physicians.
  • Payment of $20 million to fund a foundation, to be controlled by the state societies participating in the case, to support initiative to enhance physicians’ ability to focus on the health care of their patients.

Because the Medical Society of the State of New York is part of the settlement, we can represent physician members who have future disagreements with Aetna through a compliance dispute process for violations of the terms of the settlement as well as violations of state law relating to such terms. Those physicians who choose to opt out of the class will not find this compliance dispute process available to them.

Although the payment to physicians is nominal and will be made in accordance with the formula set forth in the agreement, the precedent set by the settlement is extremely valuable in terms of future Aetna behavior and as other class action cases proceed – either to trial or negotiated settlements – and the rules of the claims submission/ processing game are revised.

For more information about the settlement or for another copy of the claim form (some packets apparently were missing this simple form) go to

We hope to have a list of frequently asked questions and answers about the settlement on the Medical Society of the State of New York Website this week.

Other state and county associations that have participated in the action, and support the agreement include, in addition to the Medical Society of the State of New York, Alaska, California, Connecticut, Denton County (TX), El Paso County (CO), Florida, Hawaii, Louisiana, Georgia, New Jersey, Nebraska, New Hampshire, North Carolina, Northern Virginia (VA), South Carolina, Tennessee, Texas and Washington.


New Aetna Contract Protects Patients and Physicians
Millions of Americans covered by Aetna Healthcare — and the physicians who care for them — now have new protections against the everyday abuses of managed care health plans, thanks to the nation’s leading state medical societies, including MSSNY. These protections are now backed by the power of a federal judge. The changes incorporate all of the patient- and physician-friendly protections that Aetna agreed to two years ago when it settled a national class-action lawsuit filed by the state medical societies under the Racketeer Influenced and Corrupt Organizations Act (RICO). At the time of the settlement, Aetna valued those protections at more than $300 million. Currently, Aetna provides benefits to 14.4 million Americans.

“This is good news for patients and their physicians,” said MSSNY President Robert A. Scher, MD. “We have battled health plans for years to get them to pay for necessary medical care for our patients. Now we have the contract changes that will require them to do that. And we have a federal court watching it all to make sure they do the right thing.”

The new contracts spell out that patients are entitled to medically necessary care as determined by a physician exercising clinically prudent judgment in accordance with generally accepted standards of medical practice. Health plans may require less-costly alternatives only if they are “at least as likely to produce equivalent therapeutic or diagnostic results.”

The contract changes are another physician and patient benefit stemming from the settlement between Aetna and physicians, which was approved by US District Judge Federico Moreno Nov. 6, 2003. In addition, Aetna has agreed to extend most of the settlement provisions one additional year because of its failure to fully implement the changes before this. Physicians who believe Aetna is not living up to the settlement agreement should contact Julia Stewart, the compliance dispute facilitator, at (877) 760-0157 or [email protected].

Aetna was the first of 11 for-profit health insurance companies to settle the lawsuits that were consolidated under Judge Moreno in 2001. Since then, CIGNA, Health Net, Prudential, and Wellpoint have also agreed to settle with the state medical societies, who represent the nation’s 700,000 physicians in the case.

To date, the settlements have provided more than $1.3 billion in enhanced protections for patients and returned nearly $350 million to physicians. The RICO case is the largest health care lawsuit in US history.

“For physicians, the new contract means that Aetna will pay them, on time, for the services they provide,” said Dr. Scher. “Now physicians can spend less time worrying about their businesses and more time caring for their patients.”

UPDATE: The Excellus Settlement Agreement has officially sunset. However, Excellus has agreed to continue to comply with most of the Section 7 Settlement provisions. See letter of Martin Lustick, M.D., Senior Vice President Corporate Medical Director to David Hannon, M.D., President of the Medical Society of the State of New York, January 2010.


MSSNY and Excellus Reach Agreement
In a statement released May 23, 2005 MSSNY and Excellus BlueCross Blue Shield announced that the two parties had reached an agreement in the class action suit filed by MSSNY on behalf of member physicians three years ago.

Operational Improvements
The settlement includes a number of “operational improvements” agreed to by Excellus that focus on prompt payment and adherence to the AMA CPT codes, guidelines and conventions. It also includes medical necessity provisions that take into account “generally accepted standards of medical practice and the treating physician’s judgment.” Excellus also agreed to establish a website that will allow physicians to see fee schedules, clinical editing rules, lists of procedures requiring prior authorization and medical necessity denial rates.

The company estimates that the value of the improvement is in excess of $50 million and will enable administrative efficiencies “so that more time can be devoted to patient care.”

Forthcoming Payments
In addition to the agreed changes in business practices, Excellus has agreed to pay $500,000 toward a per capita payment to retired or deceased physicians as well as set up a $5 million fund for active, practicing physicians to obtain certain in-kind benefits. The company has also to pay $1.25 million towards community health initiatives mutually agreed upon by MSSNY and the insurer, and to pay $250,000 to MSSNY for liability advocacy.

Wellpoint/Anthem Settlement

The Deadline to Submit a Claim Form for the Wellpoint/Anthem Settlement was November 17, 2005

For the most up to date information go


PLEASE RETAIN BILLING AND MEDICAL RECORDS If you are, or have been, a physician or physician group who practiced in the United States between August 4, 1990 and September 5, 2003, and you have not filed a timely opt out notice, you are a member of the Class in a settlement with CIGNA Corporation in the class action lawsuit known as In re Managed Care Litigation.The components of the settlement include:

  • Prospective Relief-Changes in disclosure and business practices (valued in excess of $400 million)
  • Retrospective Relief (monetary payments)
  • Enforcement

While MSSNY believes that the main value of the Settlement Agreement is the Prospective Relief, including the promises CIGNA has made to change its business practices going forward, the Settlement does provide a minimum of $70 million in damages to physician class members.

Please Contribute Your Category A Share to the MES Foundation

The Medical Educational and Scientific Foundation of New York, Inc. (MES Foundation) is the charitable medical foundation founded and sponsored by MSSNY. It is a tax exempt 501(c)(3) organization approved by the IRS. The MES Foundation is organized and operated exclusively for educational, scientific and charitable purposes in the field of medicine.Pursuant to the terms of the CIGNA settlement, you may contribute your Category A share to the MES Foundation. MSSNY hopes you will strongly consider supporting the MES Foundation. If you decide to contribute your Category A share to the MES Foundation, Section II of the Category A claim form must be filled out.The Category A claim form must be completed and mailed to the Settlement Administrator at the following address:
CIGNA Physician Settlement
Settlement Administrator
P.O. Box 3170
Portland, OR 97208-3170

In order to preserve the physician’s ability to submit claims for retrospective monetary payments, MSSNY strongly urges physicians and medical groups to retain billing and medical records relating to medical services provided to CIGNA members – dating back to August 4, 1990, the beginning of the class period.

Question: When can I submit requests for payment?
The Settlement Administrator will send notices to class members that will include detailed instructions regarding how claims can be submitted. Recently, an appeal was filed to the CIGNA Settlement. This will likely delay the issuance of these notices by the Settlement Administrator. The notices will likely not be issued until the appeal (or appeals) is resolved.

Question: What kinds of requests for payment can be made?
Under the Settlement, class members may choose between two types of compensation.

  1. Category A Settlement Fund
  2. Claim Distribution Fund

A class member may seek compensation from EITHER the Category A Settlement Fund or the Claim Distribution Fund, but not both.

1. Category A Settlement Fund
CIGNA will pay $30 million into this fund. This category is for class members who choose not to submit documentation to obtain payment. Each member desiring to file a Category A claim may either receive the payment from the Category A Settlement Fund or direct that such amount be contributed to the medical foundation established under the settlement or to a medical foundation established by a state medical society such as the Medical, Educational and Scientific Foundation of New York, Inc. (“MES Foundation”) which is established by MSSNY. The amount payable to any one individual under Category A depends upon the total number of class members who elect to claim under Category A. Any class member filing a Category A Claim will not be eligible to seek Category One, Category Two or Medical Necessity Denial Compensation.

The Claim Distribution Fund
If a physician chooses not to submit a claim under Category A, the physician may instead seek compensation under the Claim Distribution Fund for certain claims that were denied or for which payments were reduced. The Claim Distribution Fund has three categories:

a. category One Compensation
b. Category Two Compensation
c. Medical Necessity Denial Compensation

    1. Category One Compensation
      • Category One Compensation applies to denials of or reductions in payments resulting from certain Claim Coding and Bundling Edits. Denials of or reductions in payment for Category One codes resulting from the application of other payment and benefit limitations (e.g. coordination of benefits rules, violations of pre-authorization requirements, violation of referral requirements) are not eligible for Category One Compensation.
      • The parties have negotiated a list of specific code combinations which qualify for Category One Compensation.
      • Category 1 Codes DeCoded can help physicians decipher the Category One Compensation List. A special thanks to the Tennessee Medical Association who was responsible for preparing the document and allowing MSSNY to post it here.Acceptable Documentation for Category One Compensation includes:
        • A copy of the relevant CIGNA HealthCare Remittance Form showing the Category One Codes that were submitted for payment under the circumstances and within the date of service limitations;
        • A copy of the HCFA 1500 form (now known as the CMS 1500) or other claim form showing the Category One Codes that were originally submitted to CIGNA HealthCare for payment under the circumstances and within the date of service limitations;
        • If the physician certifies that the CIGNA HealthCare Remittance Form and the HCFA 1500 or other claim form cannot be located and are not available, the physician may submit copies of internal accounting records (such as printout of accounts receivable records or paid account records) with the Proof of Claim Form.
    2. Category Two Compensation
      Category Two Compensation applies to denials of or reductions in payment resulting from the application of Claim Coding and Bundling Edits other than those for which Category One Compensation applies. Category Two compensation is available for any denials of or reductions in payment of Category One codes that occurred outside the circumstances and/or date of service limitations identified in the Category One Code list.If CIGNA denied the Proof of Claims it will automatically be sent to an external reviewer for a final determination.

For Category Two Compensation the documentation must include:

      • Documentation (i) that the physician was denied payment, in whole or in part; (ii) that the physician received reduced payment, including payment for a different billing code than the one(s) billed, for one or more CPT codes or HCPCS Level II Code(s); or (iii) the physician received reduced payment based upon the application of Multiple Procedure Logic.For purposes of the above, a copy of the relevant CIGNA HealthCare Remittance Form showing that payment was denied as submitted on the CPT Codes or HCPCS Level II Codes in question, in whole or in part, will be adequate. In the event that the physician cannot locate the CIGNA HealthCare Remittance Form, the physician may submit copies of internal accounting records (such as printouts of accounts receivable records or paid account records) if those records show for the underlying claim and specific date of service the CPT codes or HCPCS Level II codes that were submitted to CIGNA HealthCare for payment and those that remain unpaid.
      • Clinical Information. In most cases CIGNA requires a complete copy of the relevant medical records.

Exceptions to Clinical Information Requirement

1. The requirement that clinical notes, operative reports or other clinical information be submitted does not apply to requests for payment based on claims that:

      • CIGNA HealthCare failed to recognize modifiers 50, RT, LT, FA-F9, or TA-T9, and thus denied payment for one or more CPT Codes as duplicative of other CPT Codes reported;
      • HCPCS Level II “J” code was translated into an incorrect or overbroad CPT code.

     For claims of the type, the physician must submit:

      • A copy of the HCFA 1500 or other claim form used to submit the original claim to CIGNA HealthCare.
      • Documentation showing that payment was denied, in whole or in part, for the CPT codes or HCPCS Level II Codes concerned (such as a copy of the relevant CIGNA HealthCare Remittance Form or the physician’s internal accounting records.)

2. The requirement that clinical notes, operative reports or other clinical information be submitted also does not apply to requests for payment based on the contention that CIGNA HealthCare incorrectly processed one or more modifier 51 exempt CPT Codes and/or add-on CPT Codes using Multiple Procedure Logic when those codes were exempt from multiple procedure reduction. For these claims the physician must submit a copy of the documentation showing that payment was denied, in whole or in part, for the CPT codes concerned. Such documentation may include a copy of the relevant CIGNA HealthCare Remittance Form or the physician’s internal accounting records.

3. Compensation for Erroneous Denials on Medical Necessity Grounds
Medical Necessity Denial Compensation may be sought for claims that the physician believes were improperly denied as not medically necessary or as experimental or investigational. If CIGNA denies the Proof of Claims it will automatically be sent to an external reviewer for a final decision.


a. Documentation showing that the physician submitted claims for payment to CIGNA HealthCare for services or supplies where payment was denied for one or more CPT Codes or HCPCS Level II Codes due to CIGNA HealthCare’s determination that the medical services, procedures or supplies corresponding to such codes were either not medically necessary or were experimental or investigational. The physician may submit the relevant CIGNA HealthCare Remittance Form. If the physician cannot locate the CIGNA HealthCare Remittance form applicable to a given claim, the physician may submit copies of internal accounting records (such as printouts of accounts receivable records or paid account records) if those records show that the CPT codes or HCPCS Level II codes in question were submitted to CIGNA HealthCare for payment and remain unpaid and
b. A complete copy of the clinical information generated in connection with the services. Clinical operative or other medical records that relate to dates of service occurring more than 90 days before the date of service at issue in the Proof of Claim do not need to be submitted.

To preserve the ability to submit Proofs of Claims under the Claims Distribution Fund, it is strongly recommended that physicians retain billing records and medical records dating back to August 4, 1990 (or up to 90 days prior to August 4, 1990 as described above).


CIGNA Settlement Update – July 11, 2004
The Notice of Commencement of the claims period for the Settlement of the Class Action between CIGNA Healthcare and Physicians was mailed by the Settlement Administrator on July 8, 2004. Please read the notice carefully. You may be entitled to compensation under the terms of the settlement. The notice describes how to submit claims for compensation. The claims period will begin on August 23, 2004 and will end on February 18, 2005. A copy of the Notice is available at
Under the settlement, physicians may receive compensation from either one of two funds established by CIGNA 1) The Category A Settlement Fund or 2) the Claim Distribution Fund. The Claim Distribution Fund has three categories of compensation: Category One, Category Two and Medical Necessity Denial Compensation. If a physician chooses to seek compensation from the Category A Settlement Fund, he/she may not seek compensation from the Claim Distribution Fund. If a physician seeks compensation from the Class Distribution Fund, he/she may submit requests for payment in any or all three of the categories paid from the Fund.

Please note, once a physician submits a claim from either Category A or the Claim Distribution Fund, he/she may not change his or her mind. If a physician submits a claim under Category A, he/she will not be eligible to submit claims under the Claim Distribution Fund. While submitting a claim for Category A compensation is simple, for many physicians who experienced substantial denials of, or reductions in payments from CIGNA due to Claim Coding, bundling edits or adverse medical necessity determinations, the potential compensation from the Claim Distribution Fund may far exceed the amount that can be payable to an individual class member under Category A.

MSSNY is currently seeking vendors that will be able to assist MSSNY members in submitting claims during the CIGNA claims period. If a physician elects to submit a claim for Category A compensation, he/she may direct that his/her share be contributed to a not-for-profit foundation established by any medical society that signed the Settlement Agreement. MSSNY established and sponsors the Medical Educational and Scientific Foundation of New York, Inc. (“MES Foundation”).

MSSNY urges class members who submit a Category A claim to consider contributing his/her Category A share to the MES Foundation.

Deadline to Submit For Humana Settlement: February 17, 2006
As part of the settlement, Humana has agreed to make a settlement payment of $40 million which, together with accrued interest from the Court Preliminary Approval Date (October 19, 2005), will be distributed to physicians who are members of the Class Action and who file a timely claim form. If the settlement is approved by the United States District Court in Miami Florida, the members of the Class will be entitled to payments in accordance with formulas described below.

Question: Who are members of the Class?
Any and all Physicians, Physician Groups and Physician Organizations who provided Covered Services within the fifty (50) United States to any Plan Member or any individual enrolled in or covered by a plan offered or administered by any of the named defendants in the class action lawsuit or by any of their respective current or former Subsidiaries or Affiliates, in each case from January 1, 1990 through the Court Preliminary Approval Date (October 19, 2005). The defendant health plans in the class action include Aetna, Anthem, Coventry, CIGNA, Humana, HealthNet, United Healthcare, Pacificare, Prudential and Wellpoint.
(NOTE: The Excellus lawsuit was a separate class action in New York State court and was not part of the same lawsuit in United States District Court in Miami Florida)

Question: What if I never treated a Humana enrollee?
Even if a physician has never treated a Humana enrollee, the physician is entitled to claim the Base Amount if the physician is a Class Member and did not opt out. Check the 1st box in Section C of the claim form, or, if retired, claim as a retired physician pursuant to Section B of the claim form.

Question: What is a Retired Physician?
The category covers a Class Member who has retired from the practice of medicine subsequent to January 1, 1990 or who is the legal heir or representative of a deceased Class Member. Retired physicians will receive a pro rata amount of the settlement fund allocated to retired or deceased physicians about 2X the “Base Amount” regardless of the amount they received for treating Humana members.

Question: What is the payment formula for Active Physicians?
The Settlement payment will be based upon the gross receipts for the three calendar year period 2003 to 2005 for providing covered services to Humana members.

  • Gross receipts – zero payments to less than $5,000 = Base Amount
  • Gross receipts of at least $5,000 but less than $50,000 = 5X the Base Amount
  • Gross receipts of $50,000 or greater = 10 X the Base Amount.

Question: Is documentation necessary?
No documentation is necessary if you base claim on revenue received from 2003 to 2005.

Alternatively, If the maximum revenue for providing covered services to Humana members was during any other consecutive three year period from January 1, 1996 through December 31, 2005, submit appropriate documentation.

Documentation Required – 1099s or other forms of proof reflecting amounts of payments received from Humana.

Question: How much is the Base Amount?
This will depend upon the number of claims that are timely filed.

Question: How can I get a claim form?
Claim forms are available at

Question: What if the physician does not want to be a part of the Settlement?
If a physician does not want to be a member of the Class and participate in the Proposed Settlement, the physician BY NO LATER THAN January 18, 2006 must send a signed statement to that effect that includes the name, business address, telephone number and Federal Tax Identification Number to the following:

Humana Physicians Settlement Administrator
P.O. Box 4068
Portland, OR 97208-4068

Question: What are other components of the Humana Settlement?
In addition to the monetary component of the settlement, physicians and Humana have agreed to new levels of transparency and communication as well as a renewed commitment concerning business practices through a number of initiatives. In the agreement, Humana has
agreed to, among other things:

  • A definition of medical necessity that ensures that patients are entitled to receive medically necessary care as determined by a physician exercising clinically prudent judgment in accordance with generally accepted standards of medical practice;
  • Use of clinical guidelines that are based on credible scientific evidence published in peer reviewed medical literature (taking into account Physician Specialty Society recommendations, the views of Physicians practicing in the relevant clinical areas, and other relevant factors) when making medical necessity determinations;
  • Conform to proper coding standards including use of AMA CPT®;
  • Provide physicians with access to an independent medical necessity external review process;
  • Establish an independent external review board for resolving disputes with physicians concerning many common billing disputes;
  • Pay for the cost of recommended vaccines and injectibles and for the administration of such vaccines and injectibles;
  • Not automatically reduce the intensity coding of evaluation and management codes billed for covered services;
  • Ensure the payment of valid clean claims within fifteen (15) days for claims electronically submitted and thirty (30) days for claims submitted on paper;
  • Provide complete fee schedules via electronic communication;
  • Establish a compliance dispute resolution mechanism to address disputes regarding Humana’s compliance with the agreement;
  • Limit the use of rental networks;
  • Recognize valid assignment of benefits;
  • Establish a physician advisory committee; and
  • Provide ninety (90) days notice of changes in practices and policies and annual changes to fee schedules.

Managed Care Litigation Settlements to Date:

  • Aetna
  • HealthNet
  • Prudential
  • Wellpoint/Anthem
  • Excellus

For more information regarding these settlements see or

The Blue Cross Blue Shield Settlement Billing Dispute External Review Board (BDERB) is now operational and available to MDs and DOs who are class members (and did not opt out) of the Love, et al v. BCBSA, et al. Settlement dated April 27, 2007. Physicians (and physician groups) may file billing disputes with BDERB either online or via fax/mail by visiting Below are the BDERB billing dispute instructions and the billing dispute form.

MES – BDERB Instructions
BDRP Provider Request Form

The Settlement Fund

As part of the Settlement, the Blue Parties’ have agreed to make a settlement payment of $131,209,507 which, together with interest from June 30, 2007, will be distributed to Physicians who are Class Members and who timely file a Claim Form. If the Settlement is approved by the Court, these Class Members will be entitled to payments from the Settlement Fund in accordance with formulas that are set forth in the Settlement Agreement.

“Class Member”

“Class” means any and all Physicians, Physician Groups and Physician Organizations who provided Covered Services to any Plan Member or services to any individual enrolled in or covered by a Plan offered or administered by any defendant or by any other primary licensee of the BCBSA or by any of their current or former subsidiaries or affiliate, from May 22, 1999 through May 31, 2007. The Class excludes persons who execute a timely Opt-Out from the Class.

A Physician who provided any Covered Services since May 22, 1999 but who has since become an inactive physician, retired from practice, or otherwise ceased to practice, or has died as of May 31, 2007 (“Retired Physician”) will receive a pro rata portion of the amount of the Settlement Fund that has been allocated to Retired Physicians.

Formula for Actively Practicing Physicians

The formula is based on Gross Receipts for the calendar years 2004, 2005 and 2006 for providing Covered Services to the Plan Members of the settling Blue Plans as follows:

Active Physicians whose aggregate Gross Receipts were zero or less than $5000 Base Amount
(determined pro rata according to the $5,000 claims that are filed)
Active Physicians whose Aggregate Gross Receipts are at least $5,000 but less $50,000  5 x Base Amount
Active Physicians whose Aggregate Gross Receipts are $50,000 or greater 10 x Base Amount

The settling Blue Plans are listed in the notice.

In determining Gross Receipts physicians should include amounts paid directly by the settling Blue Plans or by intermediaries for providing Covered Services to the settling Blue Plans’ Plan Members. For example, a Physician may have provided services through an intermediary such as an IPA that contracted with a Blue Plan to provide services.

Charitable Organizations

Class Members may elect to have the amount of their settlement payment contributed on their behalf to a charitable organization set forth on page 4 of the Claim Form Instructions. The charitable organization sponsored by MSSNY is the Medical Educational and Scientific Foundation of New York, Inc.

Further information is available at the following websites:

List of Plans Participating in the Settlement
Settlement Compliance Dispute Form
Step By Step Guide to Filing a Settlement Compliance Dispute
Settlement Implementation Dates

The Settlement Administrator may be contacted by telephone at 1-877-893-2643.

Most reimbursement health insurance policies provide that out of network insurance benefits are to be based on whichever of the following amounts is lowest: (i) the physician’s actual charge; (ii) the physician’s usual charge; or (iii) the “reasonable and customary charge” for the services. The “reasonable and customary charge” is often defined as “the usual charge of other doctors or other providers of similar training or experience in the same or similar geographic area for the same or similar service or supply.” This payment scheme is commonly called “usual, customary and reasonable” or UCR. The insurance company determines the reasonable and customary portion of the UCR charge, supposedly based on information available to it but not to the general public.

This suit, which was filed on March 15, 2000, alleges that UHC’s subsidiary, Ingenix Corp., developed a database to determine UCR, but the database was derived from unreliable and insufficient data. The plaintiffs assert that the reasonable and customary charges for certain procedures are substantially higher than the insurance companies allow.

The AMA, the Medical Society of the State of New York, the Missouri State Medical Association, individual physicians and subscribers/beneficiaries are named plaintiffs. Several unions of New York State employees have also joined the case as additional plaintiffs. The suit alleges that the plaintiffs are representatives of a large class of physicians, subscribers, and beneficiaries.

Based largely on information provided by the plaintiffs in this lawsuit, the New York Attorney General undertook an investigation into the use by insurers of defective databases when determining “usual, customary and reasonable” payments made to out of network healthcare providers.  On January 13, 2009, the New York Attorney General announced that, as a result of his investigation, UHC would discontinue its defective database.  UHC paid $50 million to a not-for-profit corporation, which will develop a replacement for the Ingenix database.  Other insurance companies also contributed to this effort, so that the total amount paid is nearly $100 million.  Based largely on this same information, the United States Senate Committee on Commerce, Science, and Transportation issued its own report decrying widespread deceptive practices in the health insurance industry.

On October 23, 2009, the New York Attorney General designated a coalition of universities in New York State, led by Syracuse University, to develop the replacement database.  The data and methodology in the new database are to be accessible to the general public.  Thus, the new database is to be more transparent than the old one, and it should be free from conflicts of interest.

On January 14, 2009, United signed a settlement agreement with several of the plaintiffs in the AMA/MSSNY lawsuit, including the three medical societies.  Under the settlement, United will be paying the plaintiff class $350 million.  The trial court granted preliminary approval of the settlement, but some members of the plaintiff class objected to it as inadequate.  They are seeking to appeal the class certification.

On January 4, 2010, the trial court conditionally certified the plaintiff class and established an agenda for the remaining proceedings in the trial court.  Notice and claim forms are to be mailed to indentifiable class members by May 28, 2010, the notice is to be published by June 4, 2010, and class members are to have until May 22, 2010 to opt out of the class.  A final hearing to approve the settlement is scheduled for September 13, 2010.



Step-by-step guide to maximizing your recovery from the UnitedHealth Group UCR Settlement

UnitedHealth Group settlement: Frequently asked questions

Blank copy of transaction report

UHG Settlement Press Release 4-21

Courtesy: American Medical Association (AMA)

Health Insurance Portability & Accountability Act (HIPAA)

Revisions to the HITECT Breach Notification Rule Effective September 23, 2013 – Stricter Reporting Standard Adopted

Section 13042 of the HITECH Act requires HIPAA covered entities to provide notification to affected individuals and to the Secretary of HHS following the discovery of a breach of unsecured protected health information (PHI). In some cases, the Act requires covered entities to provide notification to the media of breaches.

In the case of a breach of unsecured PHI by a business associate of a covered entity, the Act requires the business associate to notify the covered entity of the breach. Finally, the Act requires the Secretary of HHS to post on the HHS website a list of covered entities that experienced breaches of unsecured PHI involving more than 500 individuals.

The HITECH Act defines “breach” to mean, generally, the unauthorized acquisition, access, use or disclosure of PHI, which compromises the security or privacy of the information. The Act includes three exceptions to the definition of “breach”.

  1. Unintentional acquisition, access, or use of PHI by an employee or other person acting under the authority of the covered entity or business associate of such acquisition, access or use was made in good faith and within the course and scope of employment or other professional relationship of such person with the covered entity or business associate and such information is not further acquired, accessed, used, or disclosed by any person;
  2. Inadvertent disclosure of PHI from one person authorized to access PHI a facility operated by a covered entity or business associate to another person similarly situated at the same facility and the information received is not further acquired, accessed, used, or disclosed without authorization by any person;
  3. Unauthorized disclosure under circumstances in which an unauthorized person to whom PHI is disclosed would not reasonably have been able to retain the information.

The term “unsecured PHI” is defined as PHI that is not secured through the use of technology or methodology specified by the Secretary of HHS by guidance. If PHI is encrypted in accordance with recognized standards, the PHI is no longer considered to be unsecured. It is, accordingly, strongly recommended that a medical practice that maintains or stores PHI in electronic form should consider encryption. The Breach Notification requirements may be very onerous, and encryption may enable a medical practice to avoid Breach Notification requirements.

The term “compromises the security or privacy of PHI” means poses a significant risk of financial, reputational, or other harm to the individual. To determine whether an impermissible use or disclosure of PHI constitutes a breach under the standard, covered entities and business associates are required to perform a risk assessment to determine if there is a significant risk of harm to the individual as a result of the impermissible use or disclosure. In conducting the risk assessment, covered entities are required to consider a number or combination of factors, including who impermissibly used the information or to whom the information was impermissibly disclosed; whether the covered entity or business associate had taken steps to mitigate or eliminate the risk of harm; whether the PHI was actually accessed; and what type or amount of PHI was impermissibly used or disclosed.

The Breach Notification Revision – Language has been added to the regulations 45 CFR 164.402 to clarify that an impermissible use or disclosure of PHI is PRESUMED to be a breach unless the covered entity or business associate, as applicable, demonstrates that there is a low probability that the PHI has been compromised. In other words, HHS has clarified its position that a breach notification is necessary in all situations except those in which the covered entity or business associate, as applicable, demonstrates that there is a low probability that the PHI has been compromised (or one of the other exceptions to the definition of breach applies).

In conducting a risk assessment, at least the following factors should be considered to determine that there is a low probability that the PHI has been compromised:
(i)       The nature and the extent of the PHI involved, including the types of identifiers and the likelihood of re-identification;
(ii)      The unauthorized person who used the PHI or to whom the disclosure was made;
(iii)     Whether the PHI was actually acquired or viewed; and
(iv)     The extent to which the risk to the PHI has been mitigated.

HHS stated concerns that some covered entities may have incorrectly believed that the requirement to report a breach of PHI was subject to a higher standard. HHS stated that in clarifying that the impermissible use or disclosure of PHI is presumed to be a breach, covered entities and business associates are informed of the requirement to report breaches, and a breach notification will not be necessary only if the presumption is set aside by a demonstration by the covered entity or business associate that there is a low probability that the PHI has been compromised.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law 104-191, which became law on August 21, 1996 protecting the privacy of health information given the rapid evolution of health information systems

HIPAA’s Administrative Simplification provisions, sections 261 through 264 of the statute, were designed to improve the efficiency and effectiveness of the health care system by facilitating the electronic exchange of information with respect to certain financial and administrative transactions carried out by health plans, health care clearinghouses, and health care providers who transmit information electronically in connection with such transactions. To implement these provisions, the statute directed HHS to adopt a suite of uniform, national standards for transactions, unique health identifiers, code sets for the data elements of the transactions, security of health information, and electronic signature.
The following links provide details of the genesis and progress of the HIPAA Regulations.

•HHS Issues Rule Requiring Individuals Be Notified of Breaches of Their Health Information
•Privacy Rule
•Security Rule
•CMS Guidance Document  on Electronic Protected Health Information
•HIPAA Resources
•National Provider Identifier (NPI)

The full text of the final regulations are available online at the Department of Health and Human Services at

MSSNY wishes to thank the law firm Jenner & Block for the summary and regulatory update regarding the HIPAA Privacy Rule

Published February 20, 2003
(See Federal Register Vol. 68, No. 34 pp. 8334-8381)
Compliance Date April 20, 2005

The Security Rule requires administrative, physical and technical safeguards to protect the confidentiality, integrity and availability of electronic protected health information (PHI). The Security Rule requires covered entities to implement detailed safeguards to protect electronic PHI from unauthorized access, alteration, deletion, and transmission. For assistance in complying with the HIPAA Security Regulations, the Medical Society has entered into an agreement with PrivaPlan who has developed a program that will help physicians comply with the complex security regulations. As part of the agreement, PrivaPlan will offer a significant discount to MSSNY members.

  • Contact List for MSSNY Physicians with Concerns or Questions:
    MSSNY has compiled the subsequent list of contact persons at the various NYS health plans insurers. Our member physicians who have questions or concerns regarding HIPAA and their electronic billing of claims for their patients, may access this list.
  • Now Available on Audiocassette:
    Your Medical Practice and the HIPAA Privacy, Electronic Transmission & Security Regulations.If you missed the opportunity to attend one of these informative seminars, you can order the audiocassette. Order form
  • HIPAA Privacy Workbook and Toolkit
    Get all the policies, procedures  and forms you need to comply with the privacy rule in the HIPAA Privacy Workbook and Toolkit

American Medical Association
This web site has information and policies regarding HIPAA regulation.

Phoenix Health System
This web site contains plenty of helpful information and also includes discussion groups where the user can exchange information with others including sharing of sample privacy forms. Some of the contents of this site are only available upon the payment of a fee.

Workgroup for Electronic Data Interchange
This web site contains information on the HIPAA Transaction standards development.

Health Privacy Project
This web site established by the Georgetown University Institute for Health Care Research and Policy contains a substantial amount of information including a breakdown of every state’s individual privacy laws.

American Health Information Association
This web site contains helpful information including sample forms to download. Some portions of this site are only available upon payment of a fee.

Privacy Officers Association
This web site offers HIPAA information for Privacy Officers to share and also offers training. Most information is only available upon joining the organization.

Health Care Compliance Association
This web site contains plenty of helpful information including discussion groups and sample forms, however most information is only available upon payment of a fee

North Carolina Healthcare Information and Communications Alliance (NCHICA).
This web site provides information on HIPAA transactions, privacy, and security regulations. Site also contains tools and examples to help providers comply with HIPAA.

The Accredited Standards Committee (ASC) X12
This is a web site that is comprised of cross-industry representation, delivers the most widely implemented electronic data interchange (EDI) standards that interact with a multitude of e-commerce technologies and serves as the premier source for integrating electronic applications. Through the X12 Committee’s standards and active participation in emerging and technically relevant initiatives, ASC X12 links together multiple industries and sets the norm for a more effective exchange of information.

National Uniform Billing Committee.
This web site provides HIPAA information for institutional providers. Acts as a consultant to standards development organizations and HHS on HIPAA regulations.


New York State Department of Health Medicaid HIPAA website
This site contains links to a variety of Medicaid HIPAA documents, including the Medicaid HIPAA Companion Guides.

Office of Civil Rights

This web site provides guidance for all providers to assist providers in complying with HIPAA privacy regulations.

National Committee on Vital and Health Statistics

This web site serves as a national forum for the collaboration of interested parties with the goal of improving the compatibility of private sector, state and federal health information systems while assuring the confidentiality of information collected.

U.S. Department of Health and Human Services

This web site which contains enormous amount of helpful information including guidance on the rules and regulations issued by the HHS. The user can also sign up for an email list to receive up to date HIPAA information from HHS. All information is free.

The PrivaPlan HCAT (HIPAA Compliance Assessment Tool) is an on line program to assist MSSNY members in complying with the HIPAA security rule. The Security rule has 42 standards and implementation specifications, each of which require documentation, policies and procedures. The HCAT tool provides a step by step guide for each one of these as well as detailed instruction on how to do a risk analysis.  The tool is available to our members at a discounted price and comes in two versions:

  • HCAT Standard which is an entry level version that covers all 42 standards
  • HCAT Professional which includes policies and procedures templates (ready for your customization) as well as many examples and tips.”

To access discount code call Mary Rush at 516-488-6100 ex 351.
This web site contains a newsletter and resources dedicated to health-related terminology systems and standards. The purpose of this site is to offer a clearinghouse of information on “Hipaa Code Sets” and on related healthcare terminology issues that affect clinicians, system designers, payers, policy makers …and especially patients.


This site offers information and resources focused on the privacy and security HIPAA regulations.

This site established by the Phoenix Health System provides many HIPAA resources including a discussion board.

NPI Final Rule Overview

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandated that the Secretary of Health and Human Services (HHS) adopt a standard unique health identifier for health care providers.

On January 23, 2004, HHS published the Final Rule that adopts the National Provider Identifier (the NPI) as the standard unique health identifier for health care providers. The effective date of the rule is May 23, 2005, 16 months after its publication date. Health care providers may apply for NPIs beginning on the effective date.

The compliance date for all covered entities is May 23, 2007, except that small health plans do not need to comply until May 23, 2008. When the NPI is implemented, covered entities will use only the NPI to identify health care providers in all standard transactions. Legacy identification numbers (e.g., UPIN, Blue Cross and Blue Shield Numbers, CHAMPUS Number, Medicaid Number, etc.) will not be permitted. Health care providers will no longer have to keep track of multiple numbers to identify themselves in standard transactions with one or more health plans. However, the Taxpayer Identifying Number may need to be reported for tax purposes as required by the implementation specifications.

The NPI is a numeric 10-digit identifier, consisting of 9 numbers plus a check-digit in the 10th position. It is accommodated in all standard transactions, and contains no embedded information about the health care provider that it identifies. The assigned NPI does not expire; and at the current rate of health care provider growth, can continue to be assigned for 200 years.

All health care providers, as defined in 45 CFR 160.103, are eligible for NPIs. Health care providers who transmit any health information in electronic form in connection with a transaction for which the Secretary has adopted a standard are covered entities (45 CFR 160.103) and are required to obtain and use NPIs. Health care providers who are not considered covered entities may also apply and be assigned an NPI. However, entities that do not provide health care (e.g., transportation services) are not eligible to be assigned NPIs because they do not meet the definition of “health care provider” and are not subject to HIPAA regulations.

In certain situations, it is possible for “subparts” of organization health care providers (such as hospitals) to be assigned NPIs. These subparts may need to be assigned NPIs in order to conduct standard transactions on their own behalf or to meet Federal regulatory requirements related to their participation in health plans such as Medicare. The Final Rule requires covered health care providers to determine if they have subparts that may need NPIs and, if so, to obtain NPIs for the subparts or require the subparts to obtain their own NPIs. The subpart concept does not pertain to health care providers who are individuals. Health care providers will be assigned NPIs upon successful completion of an application form. The form can be submitted on paper or over the Internet. Once a health care provider has been assigned an NPI, it must furnish updates to its data within 30 days of any changes. The National Provider System (NPS), being built under a Centers for Medicare & Medicaid Services (CMS) contract, will process the applications and updates, ensure the uniqueness of the health care provider, and generate the NPIs. The NPS will be able to produce reports and information based on requests from the health care industry and others.

A single entity, known as the enumerator, and performing under a CMS contract, will operate the NPS. The enumerator will receive applications and updates from health care providers. The enumerator will assist health care providers in completing applications and in furnishing updates, and will be responsible for resolving problems and answering questions. The enumerator will notify the health care providers of their NPIs. The enumerator will also process requests for, and disseminate information containing, health care providers’ NPIs. HHS will prepare a Federal Register Notice describing the NPS data dissemination policy. Information about NPI implementation, including information on how to apply for NPIs, will be made available to the health care industry by CMS closer to the effective date.

All HIPAA covered healthcare providers, whether they are individuals or organizations, must obtain an NPI for use to identify themselves in HIPAA standard transactions. Once enumerated, a provider’s NPI will not change. The NPI remains with the provider regardless of job or location changes.

Practice Transition Check List

Negotiating the Sale of a Medical Practice to a Hospital or Large Medical Group Checklist:

A. Moving Forward With The Sale:

  1. Identification of Practice Assets/Valuation of Practice.  Among the first things that a physician should do when contemplating the sale of his/her medical practice is to obtain a valuation of the Practice.  A valuation will take into account, amongst other things, the Practice’s revenue, assets, accounts receivable and patient mix.  This information is exceptionally helpful when negotiating a price.
  2. Consideration of Alternatives to Outright Sale- Enterprise Model.  Before going forward with the sale of a practice, alternatives should be considered.  One such alternative, particularly in the hospital context, is sometimes referred to as the “enterprise model.”  In this model, the hospital creates a new professional corporation which, in turn, enters into a contract with an existing practice.  The existing practice provides physician and clinical support services to the hospital’s PC at agreed upon rates.  The existing practice retains control over the hiring and firing and compensation of physicians and staff.  The hospital may also lease office space and equipment from the existing practice.  The hospital will generally take over billing and management functions and will negotiate reimbursement rates with third party payors.
    1. Advantages:
      1. Preserves some autonomy
      2. Practice retains existing accounts receivable
      3. If the alliance does not work out, the existing practice structure is preserved, making it easier to unwind the transaction.
    2. Disadvantages:
      1. No up-front purchase price
      2. Profitability going forward might not be guaranteed
  3. Allocation of the Purchase Price.  How the purchase price is allocated may result in different tax implications.  Therefore, a tax analysis should be performed by legal or accounting tax professional to determine the allocation of the purchase price among the various assets being purchased.
  4. Asset Purchase v. Stock Purchase.  In an Asset Purchase, the purchasing entity buys the assets of the Practice including  equipment, supplies, good will and other assets owned by the practice (accounts receivable are generally excluded in an asset purchase).  In a Stock Purchase, a purchasing entity will purchase the stock of the entity that owns the practice.  Generally, a purchaser will prefer to structure the transaction as an asset purchase in order to avoid acquiring any unknown liabilities.  However, depending on how the practice is structured, there may be tax advantages to the seller to structuring the transaction as a stock purchase that should be considered.  The due diligence by the purchaser in such a transaction will be much more comprehensive than in an asset sale.
  5. Sales Tax Any taxes to be paid in connection with the transaction, including but not limited to taxes related to the purchase of the furniture, fixtures and equipment, should be paid by the Buyer.
  6. Confidentiality Agreement/NonDisclosure.  A prospective purchaser will want to review information about the practice, such as tax returns, employment contracts and other documents, prior to proceeding.  It is important to enter into a confidentiality agreement with the buyer in order to ensure that any information disclosed in connection with the proposed sale is kept confidential.
  7. Noncompete/Nonsolicitation Covenants. A Hospital will likely require the physician to enter into covenants not to compete and not to solicit patients and employees in the event of a termination of employment for any reason or as post-sale covenants, even in the absence of an employment arrangement.  These covenants should be carefully reviewed to determine that they are reasonable and will not prevent the physician from practicing medicine in the event of termination.
  8. Assignment of Leases/Agreement.  A significant part of a physician’s Practice is the lease for the space and equipment.  As such, a purchasing practice or Hospital will oftentimes try to have the lease assigned to the purchasing entity.  The leases for the Practice’s space and equipment, as well as vendor contractors, should be reviewed to ensure that they are assignable and to determine the process for assignment of those agreements.  In the event that a physician does transfer such agreements, he/she must ensure that he/she is no longer personally liable for the lease.  If the landlord refuses to release the physician from a personal guarantee, the physician should attempt to negotiate an indemnification from the Hospital in the event that there is a claim against him or under the lease.  Another consideration is whether the selling physician’s practice holds a credential, such as accreditation or licensure, that will be subject to transfer of ownership requirements.
  9. Employees.  Many practices employ professional and non professional staff including for instance nurses, physician assistants, medical assistants, receptionist and billers.  Upon a sale of a practice, it is not guaranteed that the employees of the Practice will obtain employment offers from the purchasing entity.   As such, physicians should inquire as to the employment status of their employees following the sale of the Practice.  The physician should also clarify the degree of input, if not final decision authority, on employees hired post-sale.
  10. Retirement Plans.  The Practice’s qualified retirement plans should be reviewed to determine (i) how they will integrate with the Hospital’s existing plans or (ii) if they should be terminated or converted to a different type of plan.

Physician’s Role With The New Entity and Exit Strategy

  1. Post-Sale Status.  If a physician determines that he/she would like to continue practicing following the sale of the Practice, the physician must discuss with the entity purchasing his/her Practice what the Physician’s status will be.  For instance, the physician may become a partner of the purchasing practice, or else an employee or independent contractor.  With respect to post-sale status, it is imperative to have an agreement in place to limit termination and to comply with regulatory requirements.  Furthermore, it is important to discuss how compensation will be determined with respect to services rendered post-sale.
  2. Administrative Services.  Once a physician sells his/her medical practice, even if the physician continues to render medical services on behalf of the purchasing entity, he/she will no longer control the business of the practice.  For instance, the physician will no longer dictate how supplies will be ordered, and how the billing and collection efforts will be conducted.  Furthermore, physicians need to be aware of additional fees that the hospitals and medical practices will charge to perform administrative services on behalf of the physician.
  3. Patient Abandonment In order to ensure that the patients of the selling Practice are not abandoned, it is advised that physicians who are selling their practices make a reasonable effort to directly notify their patients how they can obtain a copy of their medical record, as well as how their care will be continued.
  4. Medical Records.  Upon the sale of a medical practice, it is important that the selling physician make arrangements with the purchasing entity to transfer custody of medical records.  With respect to medical records, a doctor has to keep a patient’s medical records for at least six years (for minors records must be stored six years and at least one year from when the patient reaches the age of minority), and ten years for Medicare/Medicaid records. After that, the physician can destroy them unless they are the subject of an active professional liability action or an audit. The sale documents must also address the selling physician’s ability to comply with HIPAA after the sale, such as providing an accounting for disclosures of protected health information that occurred while the patient’s information was held by the seller.
  5. Obligations That May Continue After The Sale:  Who will pay the physician’s medical liability insurance?  Who will be responsible for defense if the physician is audited by a public or private payer, especially for a period of time preceding the sale of the practice?
  6. Termination During The Term Of The Agreement:  Consider the reasons for which the physician or the entity may terminate the agreement during the term, with cause or without cause.  What will the termination process be?  Will binding arbitration be mandatory?  Be particularly cognizant of any “Do Not Compete” provisions that may apply mid-term or end of term.
  7. Consider The Impact Of Some Or All Of The Above Issues Post Relationship Termination:  For example:
    1. Who owns my patients’ medical records?
    2. Can I remain in my current office space?