Hawaii Medical Association Files Suit over Insurer’s Alleged Use of Software To Reduce, Deny Physician Claims

The Hawaii Medical Association and two member physicians yesterday filed a lawsuit against the state's largest health insurer for "unfair and uncompetitive" claims reimbursement practices, including the use software to profile physician claims, the Associated Press reports. The lawsuit, filed in state First Circuit Court in Honolulu, alleges that the Hawaii Medical Service Association, a not-for-profit health plan that provides coverage for about two-thirds of Hawaii's population, reduced and denied physician claims in favor of the health plan's financial interests. According to the lawsuit, HMSA uses computer software to automatically reduce and deny certain claims, which has cost physicians millions of dollars in lost reimbursements since 1996 and has compromised patient care. The lawsuit asks the court to force HMSA to modify the company's reimbursement practices. "They're using computer programs to deny legitimate claims," Rick Eichor, an attorney for the plaintiffs, said, adding, "It's complicated, but in a nutshell that's ... what they're doing." HMSA denied the allegations. "[W]e have to put in mechanisms to watch the way physicians make their claims," Cliff Cisco, a senior vice president with HMSA, said, adding, "We're not doing anything that is not done across the country." Attorneys for HMA plan to seek class-action status for the lawsuit (Associated Press, 8/8). For more iHealth & Technology stories, visit iHealthBeat.org, a new Web publication sponsored by the California HealthCare Foundation.