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As Texas Goes, So Goes the Nation?


WebMD Feature

May 29, 2000 -- The agreement reached last month in the lawsuit brought by the State of Texas against Aetna U.S. Healthcare may have solved the company's problems there, but two other key states, New York and Connecticut, are moving forward with probes aimed at reviewing the insurance giant's practices.

Attorneys general in both states signaled that they will continue their high-profile investigations of Aetna even as the company began taking steps to institute the provisions of its Texas pact nationwide.

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Sued by Texas in 1998 for allegedly using financial pressure to force doctors to cut back on necessary medical care, the company signed a no-fault settlement agreeing to voluntarily change many of its policies there.

Sea Changes in Connecticut

Aetna had hoped it could use the Texas settlement as a model for plans in other states where the policies and protocols of its widely used Health Maintenance Organization (HMO) are under investigative review. But in mid-May, after the company offered to make some changes in its procedures in Connecticut, Richard Blumenthal, the attorney general in that state, would say only that the firm's offer was a "good start." Blumenthal said his office's probe into Aetna's work in Connecticut would continue, and that he wanted the firm to consider changing its practice of paying a set fee for each patient ("capitation"), which, he said, "wrongly shifts the risk of health care to physicians and their patients."

William Donaldson, Aetna chairman and CEO, told a meeting of the Connecticut State Medical Society that his firm hoped its proposals would be given a fair assessment by the state's government and physicians. "My fervent hope is that we can form a more respectful and collaborative partnership that makes the system work better for everyone," he said. And Tim Norbeck, the medical society's executive director, responded that Donaldson's statement was "an indication that Aetna is sincere about wanting to reach out and partner with physicians."

What About New York?

In New York, State Attorney General Eliot L. Spitzer has been noticeably silent on the issue since Texas and Aetna settled. In New York, Aetna is considered the worst of the managed care companies when it comes to paying claims and dealing with providers. In four rounds of fines on the industry over the past 12 months, the New York Insurance Department has hit Aetna with more penalties than any other firm for not paying claims promptly. Officials in Spitzer's office, which has been examining Aetna's procedures for approving or denying claims and the late payment of claims, will say only that the pact does not fully address Spitzer's concerns.

In New Jersey, a doctor filed a class action lawsuit against Aetna in October, alleging that the HMO took advantage of its position by failing to pay doctors on time and, in some cases, failing to pay at all. Similar suits have been filed in Philadelphia and California.

Michael D. Towle is based in Chantilly, Va., and writes regularly on health and legal issues for WebMD.

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