1. On behalf of UnitedHealth Group, Optum (through its Physical Health division) manages the United Healthcare networks for chiropractic providers, as well as speech, physical, occupational and massage therapists, and athletic trainers. In total, Optum has an estimated 24,000 chiropractic providers in its networks across the United States, and these providers manage care for approximately 20 million subscribers. Optum does business under a variety of names, including OptumHealth, Inc., OptumHealth Care Solutions, Inc., ACN Group IPA of New York, Inc., Managed Physical Network, Inc., and ACN Group of California, Inc.
2. The Optum provider contract is not negotiated, but is offered as a take-it or leave-it proposition to the provider. Because of the size of the Optum network, and the large number of subscribers it controls, many providers have no real option but to accept the Optum contract if they are to remain in business.
3. As a means to pressure its INET providers to reduce the amount of services provided to United Insureds, as well as the insureds of other insurers who use Optum’s services, Optum has adopted a tiering plan that imposes burdensome and unreasonable administrative requirements on those providers who have been identified as having a higher level of utilization than the “norm” as established by Optum. The “norm” used by Optum to determine tier levels, however, are based on flawed and manipulated data that has nothing to do with appropriate levels of care, but, instead, are intended solely to pressure providers to reduce utilization rates in order to save Optum and United money.
4. “Tier 1” is defined in Optum’s “Operations Manual for Participating Providers” (“Operations Manual”) as follows:
Providers that meet a minimal patient volume and have clinical decision-making consistently aligned with current evidence and community standards. Tier 1 providers participate in a minimal utilization process. Following 2 consecutive years as a Tier 1 provider, while meeting a minimal patient volume, the provider moves to a no utilization review process (Tier 1 Advantage Program). Tier 1 Advantage providers, with minor plan exceptions, are no longer required to submit Patient Summary Forms.
5. “Patient Summary Forms” are identified in Optum’s Operations Manual as “a standardized health record including valid and reliable public domain outcomes-assessment instruments for documenting and submitting data regarding the demographic and historical attributes of all patients treated and the outcomes of treatment.” While purported to be used to assess proper patient outcomes, for which the form is patently inadequate to do, Optum in fact only uses the Patient Summary Forms as a means to punish providers who do not lower their utilization rates sufficiently to be deemed Tier 1 Advantage providers. Patients also complete a cursory section with answers to subjective questions on the Patient Summary Form. Optum directs providers within the Provider Manual to explain to patients the plan of care they will undergo which includes frequency, duration, type of treatment and expected outcome. Although patients participate in the submission of information to Optum – leading to the expectation of a preauthorization of care – no appeal rights are afforded to patients when the care authorized differs from the doctor’s careplan, in violation of ERISA.
6. The Operations Manual defines a “Tier 2” provider as follows:
Providers that either are new to the network, have not met a minimum patient volume or have clinical decision-making not aligned with current evidence and community standards in one or more areas. Tier 2 providers participate in a comprehensive utilization review process.
7. The “comprehensive utilization review process,” imposed by Optum on all Tier 2 providers, which means all providers that have not agreed to reduce their utilization rates to the arbitrary level established by Optum, is, in effect, a pre-certification procedure that requires all Tier 2 providers to submit for pre-authorization any care that is being planned for patients managed by Optum.
8. In implementing its improper pre-authorization requirement, Optum requires that once Tier 2 providers see a United Subscriber, they must submit “Clinical Submission” information to Optum by way of a Patient Summary Form prior to providing treatment. Based solely on the information provided in this Form, Optum relies on a proprietary database with undisclosed utilization review criteria to set the number of treatments and duration of care that will be deemed to be covered as medically necessary. Notably, Optum expressly prohibits the treating provider from requesting a specific number of visits as part of a treatment plan or the number of procedures that the treating provider believes are necessary as is common for preauthorization requests. Similarly, Optum refuses to take or consider any additional clinical information offered by the treating provider which would allow for making a proper clinical determination of the appropriate level of treatment to be offered to the patient. Instead, the treating provider may only submit the limited information requested by Optum to allow Optum to apply the coverage limits specified in its database. The coverage decision is therefore set by Optum based on “black box” computer policies that do not apply clinical information applicable to particular patients, contrary to acceptable standards under ERISA.
9. Optum refuses to allow providers to request a particular number of sessions or procedures, or to submit clinical information, in a deliberate and intentional effort to avoid its obligations under ERISA. By providing its pre-determined coverage limit based on its computer model, but without actually taking and thereby “denying” a level of requested care, Optum takes the position that it is not denying a claim for benefits and thereby does not need to comply with ERISA requirements for dealing with an adverse benefit determination.
10. Once Optum receives the Patient Summary Form from the Tier 2 provider, it provides a “Response to Submission” which dictates the approved number of visits, level of chiropractic manipulative treatment (“CMT”), number of therapeutic procedures and the timeframe within which the treatment must be given. The endpoint of this period is called the “recovery milestone.” While Optum’s Operations Manual states that the recovery milestone “is informational only” and “[s]ubmission of the Patient Summary Form is not linked to claims payment,” that is false. In fact, in virtually all cases Optum will only pay benefits that it has specifically pre-authorized as falling within its computerized paramaters for the specified recovery milestone.
11. Once the recovery milestone is met, the provider must submit new materials to Optum and seek another pre-authorized treatment plan. Optum consistently denies payment for any care a provider renders without pre-authorization beyond the recovery milestone.
12. Optum also uses the recovery milestone as a means to limit coverage for chiropractic services and to punish Tier 2 providers so as to pressure them to reduce the amount of care they provide to the patients. For example, the favored Tier 1 chiropractors may receive approval for up 12 months of care, whereas chiropractors who receive the standard “Tier 2” rating may receive approval for only up to two months of care.
13. Without offering any means to appeal a denial of benefits, Optum requires a Tier 2 provider to submit updated paperwork and request pre-authorization for any care beyond that level originally authorized. Optum then repeats the process by reauthorizing or denying care, a process that is not only burdensome, but also creates an improper break in the proper treatment plan, requiring the provider either to forego treatment, or to provide it without coverage since it is not pre-authorized. When Optum receives the renewed requests it continues to apply its proprietary computerized model, without considering clinical records. Aside from placing burdensome administrative requirements on the Tier 2 providers, Optum also uses the utilization data from the providers to place undue pressure on them to reduce their utilization rates, including threatening to reduce them to a lower tier, to not renew them into the network, or terminate them from the INET provider list if they do not reduce the amount of care they provide to their patients. Significantly, even though providers are only providing the services that have been pre-authorized by Optum, it continues to declare that the averages derived from those authorizations are inappropriate and pressures them to reduce care even further.
14. In addition to punishing Tier 2 providers improperly merely for providing treatment to their patients, it also does so without taking into account variations in patient patterns. For example, providers who happen to treat a cohort of patients who require disproportionate care (for example, providers who treat an elderly population) are nevertheless placed in the higher tier with no rationale basis for doing so. It also harms providers with a practice specialty or emphasis that causes them to perform particular services disproportionately.
15. Optum’s system ignores not only the specific needs of a particular provider’s patients, but also the terms of the health plans under which those patients are covered. On information and belief, Optum does not review members’ health plan documents prior to pre-authorizing a particular treatment plan. In other words, Optum effectively determines the level of coverage for patients without so much as consulting the health plans that cover those patients.
16. Frequently, providers who have been identified as outliers are subjected to “Provider Outreach Activities,” which means that they are subjected to threatening telephone calls and letters in an effort to pressure them to reduce utilization rates.
17. Prior to 2009, providers who exceeded Optum’s statistical parameters could be placed in “Tier 3” status. Tier 3 providers were subjected to a Performance Improvement Program (“PIP”) that encouraged them to bring their practice statistics back below Optum’s parameters, and were required to sign PIP agreements to reduce the number of services provided. Optum threatened these providers with termination from Optum’s network if they failed to meet Optum’s parameters or refused to sign the PIP agreements, and has terminated many providers on that basis.
18. Today, providers are intimidated in the same manner. Among other things, Optum reportedly targets providers who are “on the top ten percent of the bell curve” in terms of utilization for particular types of treatment and are told to reduce care or they will be subjected to additional administrative burdens (reduced to a lower tier) or removed from the network. The threat of termination was particularly significant because not only would it create a material adverse impact on providers who would have lost access to United subscribers, but any termination would also be reported to the National Provider Databank (“NPD”), which placed the provider into jeopardy with other insurers as well. Optum’s previous practice of routine termination of providers was somewhat curtailed due to this practice being brought to the attention of state regulators. Now, equally egregious, the non-renewal of providers causing interruption of care plans and interference in the doctor-patient relationship diminishes providers’ ability to provide access to care for Subscribers in their communities.
19. By imposing artificially and unsupported limits on approved services, Optum also has creates an adverse impact on patient care. Because Optum’s pre-authorization and provider tiering practices make no effort to take patients’ particular medical needs into account, they have the obvious effect of, in many cases, denying medically necessary care to patients. They also encourage, and indeed require, providers to either ignore their ethical obligations to treat patients based on those patients’ medical needs, or face the economic consequences of being terminated from Optum’s network.
20. Moreover, when patients receive notice that Optum has limited the number of authorized services, they frequently do not follow through with their recommended care plans from their health care providers due to cost concerns. This greatly lessens the benefit of the treatment that is authorized and could lead to more expensive and less effective treatments for the condition, putting greater strain on the health care plans.
21. In creating profiles for purposes of determining whether providers exceed “community standards,” Optum relies on statistically invalid data, sometimes using as few as four patients to determine average utilization rates. This is so even though internal Optum information acknowledges that no fewer than 18 patients permit for a statistically valid analysis. Moreover, by pressuring providers to reduce care, they are manipulating the data so that it continues to reduce what is reported as the “community standard” for proper levels of care, even though these standards are inconsistent with what is generally recognized as appropriate levels of care in the chiropractic community. Prior to 2005, for example, when Optum began implementing its aggressive utilization review procedure, the mean number of visits for an Optum patient was 7.0-7.5. After the restrictive utilization review procedures were imposed, the mean number of visits per patient has dropped to approximately 5, representing a decrease of approximately 30%. This decrease does not result from application of proper clinical guidelines, as Optum suggests, but through the invalid computer model and the pressure it continues to place on providers. To avoid the adverse consequences resulting from exceeding Optum approved utilization rates, many Optum providers are forced to reduce care below the levels they otherwise would recommend or to provide such treatments without reporting them to Optum. As a result, not only are the providers being unfairly reimbursed, but the data Optum relies upon for reporting standard levels of care is understated.
22. In establishing “community standards,” Optum also ignores variability among providers in terms of the types of patients they see, as well as material variations among different regions in the country based on age, economic status, weather, types of work and other variables that will influence the level of chiropractic care that is needed. Rather than using appropriate geographical-based community standards, for example, Optum has used manipulated data from one region – Minnesota. To justify its approved level of utilization rates, Optum has cited two levels provided in Minnesota, claiming – falsely – that “[t]he characteristics of patients presenting for chiropractic care are virtually identical in every market across the country.” In fact, Minnesota is a highly homogeneous region that cannot be compared to other geographic areas with many different variables. In any event, the Minnesota data itself was arbitrarily reduced as a result of Optum’s improper practices designed to lower utilization rates.
23. These “community standards” are imposed on ONET providers as well. ONET providers’ profiles are analyzed, often resulting in threatening calls with demands that certain patients be discharged. Reimbursement is reduced to Medicare rates, reimbursement checks are sent to the insured despite designations assigning benefits to the provider, and patients are sent letters directing them away from their present provider to an in-network provider. These practices serve to coerce providers into joining the Optum network. As a fiduciary of plans offering insureds the option to choose ONET providers, United failed to act fairly by attempting to coerce patients to use INET providers, and ONET providers to become INET, so it could retain greater profits. The flaws and inadequacies in the data relied upon by Optum to establish its standards for care are evidenced by the fact that they conflict with generally accepted standards of care in the chiropractic community. In August 2005, the ACA requested the New York Chiropractic College (“NYCC”), which is accredited by the Council on Chiropractic Education, to analyze the protocols utilized by Optum in light of what is taught in the NYCC curriculum. Noting that “[t]he minimum and maximum amount of care available [under Optum’s policies] is consistently less than what is in NYCC’s Educational and Clinical Care Protocols,” it then concluded: “If NYCC were to use ACN material above as a cornerstone for our educational process, we would need to significantly alter our curriculum, protocols and practices and would expect to see a significant decline in positive patient outcomes.” (emphasis added)
24. Optum’s improper practices have been recognized by various state regulators, although nothing significant has been done to halt the misconduct. In an October 19, 2006 report, for example, the Office of Insurance for the State of Kentucky (“KOI”) evaluated Optum’s conduct after a lengthy investigation. At that time, Optum was operating under the name “American Chiropractic Network,” or “ACN,” but its practices have remained largely the same, or worsened since then. The report included the following findings:
After investigating the issues advanced by the complaints [by chiropractic providers], and after discussing the issues with ACN and its parent company, UnitedHealthcare Group, the KOI makes findings as expressed below.
Documents propounded to the office evidence that ACN has been non-responsive to chiropractic providers’ requests for approval of certain procedures. ACN maintains that preauthorization of procedures is not required or implemented. However, the providers in the ACN network are under the impression that ACN must approve treatments prior to the initiation of such treatments. Whether or not preauthorization of services is required is an issue properly decided based on the terms of the insurance contract between the insurer and the insured. ACN shall only require preauthorization if the applicable insurance contracts so require. Should preauthorization be required, ACN shall be responsive to the procedure requested by either affirming the requested procedure or denying the requested procedure. Should the procedure be denied, ACN shall grant and give notice to the provider/insured of the insured’s statutory appeal rights in accordance with [Kentucky law]. . . . The failure to acknowledge a requested procedure shall be considered and treated as a denial. If preauthorization is not required according to the insurance contract, ACN shall treat the requested procedure as a claim and acknowledge the claim within the time frames established by [Kentucky law]. . . .
With respect to the handling of claims, ACN shall consider the claim in light of the benefits provided in the insurance contract. Acting as a TPA for insurers, AC is responsible for handling claims in accordance with the relevant claims’ payment statutes. Further, ACN is responsible for administering the benefits in accordance with the insurance contract. Consequently, ACN shall either affirm or deny claims in accordance with [Kentucky law]. For any adverse determination as defined in [Kentucky law], ACN shall afford the insured appeal rights granted by [Kentucky law].
Lastly, the KOI recognizes the need for insurers to manage provider networks and to implement processes and procedures that ensure that policy benefits are not misused but are delivered in a manner that is in the best interests of both the insured and the insurer. Despite this recognition, the KOI has determined that ACN’s Performance Improvement Program, as implemented is in violation of the Kentucky insurance code.
ACN has indicated to the KOI that the Performance Improvement Program is a mechanism that is used to guard against unnecessary services to the insured. Further, through extensive data collection efforts, ACN has developed “best practices” standards that providers in the ACN network are required to follow. While the premise and concept may be considered noble, the best practice standards are developed and administered in a manner that is contrary to Kentucky law. The position of the KOI regarding the Performance Improvement Program is specifically noted to be as follows:
· The Performance Improvement Plan requires providers to meet artificially established best standards. ACN’s best standards are developed based on data compiled from chiropractors that are subject to the Performance Improvement Plan rather than from a universal group of chiropractors both in and outside of the ACN network. Given this, the “best practices” standards will always be biased toward ACN’s standards. The KOI finds that ACN’s data collection techniques to be in violation of [Kentucky law.]
· Services deemed by ACN to be medically unnecessary should be treated as such through the claims process. That is, ACN should deny claims that it deems to be medically unnecessary rather than employ punitive measures against the chiropractors for delivering the services that, in the chiropractor’s professional opinion, are necessary. The Performance Improvement Programs serves to limit treatment available through the insured’s contract and permits ACN and the insurers it represents to circumvent an insured’s right to either be treated or appeal the adverse claim determination. . . .
· The chiropractic providers in the ACN network have indicated that the Performance Improvement Plan has a chilling effect on the delivery of services. Due to the threat of punitive measures associated with being subject to the Performance Improvement Program, chiropractors are reluctant to treat a patient in a manner that the chiropractor deems necessary. Consequently, the chiropractors are forced to either place their patient on a cash for service plan, change treatment options, retreat from the network, or refuse to treat patients. The Performance Improvement Program forces the chiropractor to make a decision that pits the patients’ treatment needs against the chiropractor’s reputation should the provider be subject to corrective action. This practice is in violation of [Kentucky law.]
· The Performance Improvement Plan has not been appropriately divulged in the provider contracts. The contracts reviewed by the Office refer generally to required compliance with operation manuals, policies and procedures. Providers who have been terminated from the ACN network were not appropriately warned of the Performance Improvement Program and the consequences for failing to meet the “best practices” standards established by ACN. This failure is in violation of [Kentucky law.]
It is the opinion of the Kentucky Office of Insurance that ACN is in violation of various provisions of [Kentucky law] based on the reasons outlined in this letter. The Office finds that the practices employed by ACN circumvent the laws regarding the payment and denial of claims. Further, while ACN claims that the Performance Improvement Plan is beneficial to the insured, the Office finds that this claim is not supported. Rather, the Performance Improvement Plan seemingly limits insureds’ treatment options. Further, insureds are unable to use benefit afforded by their insurance contract and may be forced to refrain from seeking necessary care.
ACN’s practices are being reviewed by other states that have received complaints similar to those received by Kentucky. Insurers that acquiesce in the practices employed by ACN are ultimately responsible for the actions of ACN and will be held responsible for harm suffered by insureds and providers. The Office offers this letter to advise of its position and to request a cease and desist with respect to (1) the improper denial of claims, (2) failure to acknowledge and act upon requests for treatment, (3) failure to afford appeal rights to insureds in the event of an adverse determination, (4) the implementation of the Performance Improvement Program, and (5) the termination of providers from the network based on the terms of the Performance Improvement Program. . .
25. While the findings of the KOI apply to Kentucky law, they are equally applicable to ERISA and each and every finding by the KOI that Optum was in violation of Kentucky law also supports a finding that Optum is in violation of ERISA. For example, as the KOI found, the extent to which pre-certification of services may be permitted must be determined “based on the terms of the insurance contract between the insurer and the insured,” and, in handling claims, Optum must do so “in accordance with the insurance contract,” which requires application of ERISA. To the extent Optum applies its pre-certification requirements to authorize a number of treatments below the level that the providers believe to be necessary, that must be treated as a denial of benefits, with appropriate “notice to the provider/insured of the insured’s statutory appeal rights” under ERISA. Further, the Clinical Support Program (which has now replaed Optum’s Performance Improvement Program) and similar policies adopted by Optum to control and oversee the utilization of services by its INET providers are “biased” and “serve[] to limit treatment available through the insured’s contract and permits [Optum] and the insurers it represents to circumvent an insured’s right to either be treated or appeal the adverse benefit determination,” as required under ERISA. Just as the KOI ordered Optum to “cease and desist” its statutory violations of Kentucky law, so too should this Court order United and Optum to “cease and desist” their statutory violations of ERISA.
26. Optum utilized the Performance Improvement Program that was the subject of the KOI findings until 2009. At that point it modified its procedures, moving to the two tier approach described herein. The same failures and inadequacies of the Performance Improvement Program, however, continue with the revised approach. Moreover, Optum’s policies continue to violate ERISA for the same reasons.
27. Optum’s pre-certification requirement which it imposes on Tier 2 providers is inconsistent with many of United’s ERISA plan documents which do not require pre-authorization before a subscriber receives chiropractic services. Because the plan terms govern the benefits to be provided by United, its imposition of pre-authorization requirements on the providers is therefore in violation of ERISA.
28. This conclusion is demonstrated by an appeal letter that was sent by one United Insured to the “United Healthcare Central Escalation Unit,” located in Salt Lake City, Utah, in May 2007. It states, in part:
In April of this year I was denied chiropractic benefits by my insurance company, United Healthcare (UHC). In the benefits book it states that I’m “limited to 24 visits per calendar year” . . . It also states that no prior notification is required.
* * * *
[The American Chiropractic Network (“ACN”), now Optum,] started interfering by requiring four pages of paperwork periodically throughout the year, annoying but doable. Then they required 3 pages of paperwork every time I went in for an adjustment. When I called to question this I was told by the ACN that I could continue to go to the chiropractor as long as the paperwork was filled out. Then they started to determine how many visits I could have and what time frame I was allowed to use the visits. The benefits book clearly states that no notification is required . . ., but I have to get permission from the ACN for visits. Then if I can’t complete all visits in their timeline I’m out of luck.
I can’t remember when the ACN started to interfere with my health care just that my quality of life has significantly declined since then. . . . I never receive any Explanation of Benefits (EOB) so I did not know that this was not reflected until I went to myuhc.com and looked up my claims. We pay over $2600 a year for health insurance. My husband’s company pays over $10,600 a year, together that’s over $13,000 a year for our healthcare.
The ACN told me there is not an appeal process. It seems to me that they need a copy of the benefits book or better yet UHC needs to “trim the fat” by cutting out unnecessary organizations instead of my healthcare. . . . I find this decision [to deny me coverage for my care] to be in breach of contract.
29. As this letter demonstrates, the pre-certification requirement imposed by Optum on Tier 2 providers is directly contrary with the health care plans of United Insureds that do not require pre-authorization. As such, by imposing pre-certification, Optum and United are violating ERISA. Similarly, as reflected in the letter, by using the pre-certification requirement to deny coverage for services, but then failing to treat such decisions as an adverse benefit determination, and then providing the proper disclosures and “full and fair” review under ERISA, Optum and United are similarly violating federal law.
30. Defendants are fully aware that their policies are misleading and violate the terms of their health care plans. For example, the former Senior Director for Consumer Health at Optum, Stephen Bolles, DC, revealed United’s agenda toward shifting more cost to consumers during an interview for an online journal on May 12, 2006, entitled, Forum with United Healthcare/ACN - Consumerism Leader Bolles on the Inexorable Retailizing of Health Care. He stated:
Healthcare providers are going to have to learn how to be retailers. They will have to learn to speak in new ways and communicate new value propositions to consumers. . . . The brave new world is this. . . . [P]lans will have to begin communicating more clearly and honestly about what’s covered. Instead of saying, for instance, that they have an “open-ended” chiropractic benefit that starts with a certain number of visits and can be adjusted upward, depending, the plan will say: If it’s acute chiropractic condition, you get six visits.” Period. The plan will not get involved in the documentation tug-of-war with the provider to increase the number of covered visits. For providers and patients/consumers, this transparency will facilitate the transition to more retail, self-pay, cash-based purchasing decisions.
31. Shortly after the interview was published, Dr. Bolles emailed the author to plead that he pull it from the site, stating: “John, I have run into a huge brick wall here with my comments and the interview. I have been informed that the interview ‘needs to come down’. I understand the journalistic implications on this. I am in very hot water. Please let me know your thoughts. Stephen.” Dr. Bolles’ job was at stake as a result of speaking the truth about United’s policies. He has since left his position with United.
32. The Bolles’ interview reflects the disparity between what United (through Optum) is doing and what its plans provide. While its ERISA plans purport to give its subscribers an open-ended level of chiropractic services, based on medical necessity, or perhaps up to a specified number of visits (from 20 to 30 sessions), Optum’s undisclosed policies and procedures in fact limit care to “acute” conditions and for a limited number of sessions. These policies are therefore in clear violation of United’s obligations under ERISA, which require it to comply with plan terms.
33. As detailed herein, United’s utilization procedures, as implemented through Optum, violate ERISA. They are used to allow United to avoid its ERISA obligations, including by denying health care benefits without complying with ERISA’s “full and fair” review requirement, and they serve to pressure providers improperly to reduce care that they would otherwise provide pursuant to United’s ERISA plans.
