Table of Contents
Private Payor Class Action Lawsuits: What you need
to know to make a difference in your practice
By Ed Gaines, JD, CCP
Introduction and Background
Over the past five years, a series of settlements in class action suits brought principally
by the American Medical Association and several large state medical societies against the
nation's major managed care companies have - to greater or lesser extents - compelled
the health plans to discontinue practices that systematically denied physicians'
reimbursement for services rendered to patients.
A primary complaint by the medical societies was the widespread carrier practice of
bundling services to avoid paying physicians for specific CPT codes. "Bundling" in this
context refers to the use of claim editing software to review certain procedure codes, e.g.
a head laceration from a motor vehicle accident, which may be used with a CPT modifier
(the -25 modifier) in conjunction with an "evaluation and management" (E/M) service,
e.g., CPT 99283 (emergency department visit involving a limited exam and moderate
Carriers essentially would bundle the procedure code into the E/M service (or vice versa)
and not reimburse for the procedure code. These practices, it was alleged, were not
compliant with the Current Procedural Terminology Version IV (CPT-4) coding, which is the
standard for professional services coding and bil l ing according to federal HIPAA
regulations (HIPAA mandated that CPT-4 codes be used for healthcare transactions). See
The settlements have included significant payouts to physicians nationwide and, among
other things, prohibited the managed care companies from automatically downcoding. The
agreements also required fair coding and bundling rules consistent with CPT, transparent
fee schedules and claim edits and a formalized dispute resolution process.
Agreement Expirations Beginning
Although the settlements marked a major victory for physicians, it is crit ical