In a legal settlement that doctors said would remove an insurance company from the examining room, WellPoint Inc. agreed Monday to give physicians more say in the types of treatments for which the nation's largest health insurer would pay.
As part of the agreement, WellPoint would adopt a patient-friendly definition of "medical necessity" that mirrors the American and California medical associations', and would allow cheaper treatment only when it was at least as effective as what a doctor recommended, physicians said.
"This is a tremendous victory for physicians and patients," said Michael Sexton, president of the California Medical Assn.
If approved by a federal judge, the deal calls for WellPoint to spend about $198 million to settle two class-action lawsuits by more than 700,000 physicians who charged the company with systematically underpaying them and putting its financial interests ahead of patient care.
WellPoint also would make notable changes in the way it reimburses physicians and considers their treatment recommendations at a minimum cost over several years of $250 million, according to the agreement. It includes a ban on WellPoint's alleged use of computer programs to systemically deny and underpay purportedly legitimate patient claims.
WellPoint operates mainly under the Blue Cross banner and has 28.5 million members, including 7 million in California.
WellPoint was formed when Indianapolis-based Anthem Inc. purchased Thousand Oaks-based WellPoint Health Systems for about $19 billion last year. The sale combined two big companies selling health coverage in several states.
As part of the class-action case, WellPoint would pay physicians $135 million in damages, donate $5 million to a foundation devoted to improving medical practices and the court may approve attorney's fees of up to $58 million.
WellPoint did not acknowledge any wrongdoing. The company said the agreement would help it improve claims payment systems, which could reduce administrative costs for the insurer and for physicians, and allow doctors to spend more time on patient care.
"We see this agreement as a very important step in further collaborating with physicians," said WellPoint Chief Executive Larry C. Glasscock. "We look forward to forging a closer partnership with the physician community in order to truly transform healthcare for the better."
