Aetna Suit Against Radiology Partners Has Implications for the No Surprises Act
On December 23, 2024, Aetna (part of CVS Health) filed a lawsuit against Radiology Partners and its private equity backers in the U.S. District Court for the Middle District of Florida – Jacksonville Division. The suit claims Radiology Partners, one of the nation’s largest imaging groups, manipulated the No Surprises Act (NSA) and its dispute resolution process to boost payments improperly. Aetna's filing called this a "multiphase healthcare fraud scheme" that defrauded Aetna of "tens of millions" of dollars.
Update: On February 25, Radiology Partners filed two motions: one to dismiss the claim and one to compel arbitration in their dispute. In an associated press release, Rich Whitney, CEO and Board Chair of Radiology Partners, stated that it is "clear that Aetna is using litigation to try to shape public perception while shamelessly prioritizing profits over patient care. Aetna's strategy includes terminating physician contracts, exploiting the system and avoiding payments—even when those payments are binding and ordered by a neutral, federally approved arbiter. These tactics harm patients, contribute to the national physician shortage and waste healthcare resources, including driving up costs for Aetna's own self-funded employer plans. We vehemently refute all their manufactured allegations, and we will vigorously defend our position."
Background
Radiology Partners is a national radiology organization founded in 2012 that partners with local radiology practices through ownership and affiliation. New Enterprise Associates, a venture capital firm, has been an investor in Radiology Partners since its inception, and a handful of other private equity firms are also investors. According to Aetna, Radiology Partners has acquired or affiliated with at least nine radiology practices in Florida.
In 2018, Radiology Partners bought a prominent radiology practice in Jacksonville, Florida -- Mori, Bean, and Brooks (MBB). According to the suit, after the acquisition, Radiology Partners caused MBB to inflate its billed charges by over 60%, on average. Aetna claims that Radiology Partners had hundreds of other radiologists at other Florida locations bill through MBB (and using MBB’s tax identification number (TIN)), even though these groups “had their own in-network contracts with Aetna that remained operative”.
After several years, Aetna determined that it was overpaying providers through its MBB contract when they should have been reimbursed under their existing contract terms. In 2022, Aetna terminated its contract with MBB, making MBB an out-of-network provider, but left the other radiology groups as in-network. At this point, Radiology Partners began to use the dispute resolution process that was created under the NSA to address claims entered through MBB since MBB was no longer in-network.
What is the No Surprises Act and its Arbitration Process?
The No Surprises Act is a federal law intended to protect patients from unexpected medical bills from out-of-network providers. Before the NSA, if a patient saw an out-of-network provider, that provider could submit claims to insurers, then balance bill patients directly for any shortcomings in the insurer's payment offer. The intent of the NSA is to protect patients by having claims settled between payers and providers, so that patients will not get hit with surprise bills.
The NSA was signed into law on December 27, 2020, as part of the Consolidated Appropriations Act of 2021 and took effect on January 1, 2022. When an insurer offers a payment amount to an out-of-network provider, the provider can challenge the amount. If the provider challenges, a one-month negotiation period follows, and, if there is no resolution, the matter can be sent to Independent Dispute Resolution (IDR). The provider and the insurer propose figures to the IDR, who then chooses one price or the other with no opportunity to select another amount. The resolution is binding.
While this process has helped to protect patients, there is increasing unhappiness from insurers and providers about the process, with many claiming administrative hassles, too much money going to attorneys, and providers getting big paydays. A recent study noted “that the median IDR decision is at least 3.7 times what Medicare would pay” and “that IDR entities are selecting the provider’s offer more than three-quarters of the time.” Healthcare providers with private equity investors won 90% of billing disputes in 2023 (compared with 39% for other providers), leading some to claim that the NSA encourages providers to sell themselves to private equity groups.
Details of Aetna’s Claims
Aetna’s suit claims that there are two phases of the “scheme” that Aetna asserts are improper. Phase one was identifying MBB as having one of the highest-payer contracts in Florida and then using MBB's TIN to bill for work performed by radiologists outside of MBB to access the higher reimbursement amounts.
Central to this case is the concept of pass-through billing. Pass-through billing occurs when one entity submits bills for services provided by a different entity, usually to get higher reimbursement from the first entity's superior contract rates. Depending on how the arrangements are structured, these deals could potentially violate fee-splitting, anti-kickback, and false claims laws. Additionally, the contract terms between an insurer and providers will typically define the members of the contracted group, so billing by outside members could be a breach of contract. Finally, there may be ethical concerns for the providers that could lead to professional discipline.
According to the suit, "Through this fraud, Defendants caused Aetna and its plan sponsors to pay significantly more for the same services provided by the same physicians at the same hospitals. This was a purely profit-driven scheme and, upon information and belief, motivated by Radiology Partners’ greed and desire to gin up additional revenue to satisfy the demands of its private equity owners.” If these radiologists had their own contracts with Aetna, billing through MBB would have been a misrepresentation of the physician's affiliations.
After Aetna dropped MBB from its network, the suit claims MBB began "phase two," which continued pass-through billing of other radiologists through MBB. Now, as an out-of-network provider, MBB could submit payment disputes through the No Surprises Act arbitration mechanism. According to the suit, “Radiology Partners and MBB are violating the No Surprises Act by initiating arbitrations on behalf of MBB for services rendered by non-MBB providers, including providers who are expressly ineligible to participate in arbitrations under the No Surprises Act.” The suit claims Radiology Partners flooded “thousands of claims simultaneously to overwhelm Aetna and inhibit its ability to respond” preventing Aetna from determining whether MBB was actually providing services.
Recent research has indicated that approximately two-thirds of all NSA dispute claims come from only four provider organizations. All of these organizations have private equity backers, some with "a pre-NSA history of exploiting surprise billing as a business strategy.” Radiology Partners is one of those four. According to Aetna’s suit, “Radiology Partners is responsible for over 90% of all IDR cases involving claims for professional radiology services.”
Aetna claims that Radiology Partners “improperly billed more than 110,000 claims” on behalf of providers who were not part of MBB, resulting in Aetna wrongfully paying more than $20 million.
Response from Radiology Partners
Radiology Partners has issued a statement claiming that MBB's 98% win rate under the NSA arbitration shows that Aetna “uniformly fails to fairly compensate providers.” Radiology Partners also claims that they would be happy to have MBB back under contract with Aetna, which would end the use of the NSA arbitration process, but that Aetna hasn't shown a willingness to negotiate a contract for this. Radiology Partners insists its business model complies “with all applicable health care laws and regulations and ordinary business practices.”
Other Challenges to Radiology Partners’ Billing Practices
Radiology Partners has previously been sued on an accusation that it was using pass-through billing to acquire tens of millions in potentially fraudulent payments. In 2023, UnitedHealthcare's Texas affiliate filed a suit claiming Radiology Partners had radiologists across the state bill through a lucrative contract held by one small affiliate in Houston. United's contract with this affiliate stated it could not bill for services performed on individuals who were not the practice's patients, and couldn't assign rights to other physicians without first notifying United. United's suit was a counter-suit, as Radiology Partners had originally claimed United was underpaying their physicians. The cases were ultimately settled in arbitration. While the claim of improper pass-through billing is similar, the Florida case differs in its implication of the NSA arbitration process.
Implications of the Case
In the suit, Aetna is seeking: 1) to vacate the previous arbitration awards, 2) an injunction preventing Radiology Partners and MBB from filing more arbitrations under the NSA process, and 3) compensatory and punitive damages. This case represents the first time a health insurer is claiming providers used the NSA’s dispute resolution system to improperly raise reimbursements. It also raises questions about the ability of large insurers to quickly spot potentially inappropriate billing, such as radiologists not billing under their own group’s tax ID number.
While the No Surprises Act has largely benefited patients, this case highlights some of the displeasure many in the industry have with the law. Additionally, there are implications that providers may prefer to stay out of networks if it means the ability to access higher paydays via the IDR. Regardless of the outcome of this case, reforming aspects of the NSA through legislative activity may be a necessary step. Furthermore, the questionable use of pass-through billing, where a healthcare conglomerate may attempt to run billing through whatever entity in its orbit has the best reimbursement terms, raises yet another concern about healthcare provider consolidation.