AETNA: Sees Small Fourth-Quarter Gain

      "Aetna Inc.'s operating profits rose 4.7 percent in the fourth quarter and 3.3 percent for the full year 1997," the Hartford Courant reports. However, "Aetna U.S. Healthcare's results fell in 1997, compared with 1996 figures that assume the July 1996 merger with U.S. Healthcare was in the whole year." The insurer reported "1997 operating earnings of $594.3 million," versus $575.5 million in 1996 (Levick, 2/5) However, the Wall Street Journal reports that the "results were damped by rising medical-care costs and acquisition-integration problems that have bedeviled numerous operators of health maintenance organizations." Despite the decline, Aetna president Richard Huber "would do the merger" with U.S. Healthcare "over again." He said, "I'm very confident the merger will pay off more in the future. It's just the execution has proven tougher than we originally thought" (Scism, 2/5). Analysts were similarly optimistic, Bloomberg News/New York Times reports, "because Aetna kept the costs of treating patients under control." Cathy Seifert, a Standard & Poor's analyst said, "People hold their breath now whenever Aetna releases its earnings reports. They sort of expect the other shoe to drop and, this time, it didn't" (2/5).

The Bad News
      "[A] growing number of Arizona physicians are refusing to sign new contracts" with Aetna, the Arizona Republic reports. The doctors "object to onerous provisions in the contract that prescribe how many chairs they must have in their waiting rooms and require them to approve procedures recommended by specialists to whom they have referred patients." One local physician said, "If I had to authorize every procedure recommended on a referral, I'd be overwhelmed. It's just an attempt to discourage primary care providers from making referrals." Doctors also said they had problems with "gag" orders in the contract as well as with Aetna's reimbursement levels. Aetna spokesman Bobby Pena said, "We are trying to get all of our providers on one standard contract. All of the company's provider contracts are being negotiated."

National Complaint
      Dr. Ted Lewers, secretary-treasurer of the American Medical Association, said the AMA "has filed an official complaint with Aetna regarding the contracts, but has yet to receive an official response." The AMA's greatest concern, the Arizona Republic reports, is a "provision that allows Aetna to decline to reimburse a provider for a procedure if it concludes it was not 'medically necessary.'" Lewers said, "To limit benefits up front is one thing, but to state that it has the right to determine medical necessity is another matter." The medical society is "also concerned about a provision that gives Aetna the right to arbitrarily decline to reimburse emergency room services." Lewers said, "We are very concerned about several issues in the contracts and are recommending physicians review them and seek legal advice before signing them. The Arizona Republic reports that the Aetna contracts have received additional complaints from the state medical "associations in Florida, Texas and New Jersey, among others" (Jarman, 2/5).