California radiology group sues UnitedHealthcare over payment cuts

By Brian Casey, staff writer

June 5, 2007 -- A dispute over third-party insurance reimbursement for scans of contiguous body parts has broken out into litigation in California. Radiology group Radiological Associates of Sacramento (RAS) has filed suit against UnitedHealthcare, accusing the Minneapolis-based insurance giant of breach of contract for cutting reimbursement for multiple scans of contiguous body parts.

Radiological Associates filed the lawsuit on May 17 in Superior Court of California in Sacramento. The lawsuit charges that UnitedHealthcare violated the contract that RAS signed in 2003 with PacifiCare of California, an insurance provider that UnitedHealthcare bought in December 2005.

The complaint filed in the case states that RAS and PacifiCare had established a schedule that set the rates that PacifiCare would pay for specific imaging procedures that RAS performed. RAS said it was notified following the PacifiCare/United acquisition that United members would access the group's radiology services under the terms and conditions of the PacifiCare deal, the complaint states.

However, beginning on June 23, 2006, the complaint says that "United has failed and refused to pay the full amount due at the PacifiCare Fee Schedule rates in cases where RAS has provided to one of United's member(s), during a single visit to an RAS facility, two or more procedures from what United has deemed to be the same diagnostic imaging services 'family.'" United has "unilaterally" recalculated the payment rate and paid RAS less than the full amount listed under the PacifiCare fee schedule.

In these cases, United has been paying RAS the full amount for the initial imaging procedure, but subsequent procedures are reimbursed at a rate that's 50% of the technical component for the study, according to RAS attorney Michael Chase of the law firm Boutin Dentino Gibson Di Giusto Hodell of Sacramento.

Payment cuts for scans of contiguous body parts gained momentum last year when the Centers for Medicare and Medicaid Services (CMS) implemented a plan to cut reimbursement 25% for multiple imaging studies of the same body area during the same imaging session. The agency's rationale was that it was more efficient for imaging providers to conduct such scans compared to multiple scans of different body areas at different times, and that that efficiency should be reflected in a lower payment rate. The agency had originally proposed a 50% cut but later backed down.

While third-party payors frequently follow Medicare's lead in cutting reimbursement, Chase says that in the case of RAS, the group has a contract with United that clearly states the reimbursement rates that should be paid.

"The bottom line is that we have a contract that sets the rates," Chase said. "It's not tied to what Medicare does. That is not our contract."

United spokesperson Cheryl Randolph said the company had just recently received the complaint, and declined to comment while the firm reviews the lawsuit.

Fred Gaschen, executive vice president of RAS, said the group has a number of contracts based on Medicare's resource-based relative value scale (RBRVS), the system Medicare uses to determine the value of each current procedural terminology (CPT) code. But the changes implemented by United are unique, he said.

"We have never had any other insurance company state that they are following Medicare's reimbursement guidelines outside of RBRVS, like United did," Gaschen said.

Chase said that RAS anticipates the case to go to trial some time in 2008.

By Brian Casey staff writer
June 5, 2007

CMS officially ends plan for 2007 payment cut, August 25, 2006

CMS scales back contiguous body part cut, modifies outpatient cap, August 9, 2006

CMS delays, reduces proposed Medicare imaging cuts, November 4, 2005

CMS proposes cuts for 'add-on' imaging studies, July 19, 2005

Copyright © 2007


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