Related article in the NY Times.
February 3, 1998
Doctors Press Oxford Health on Payments
By REED ABELSON
EW YORK -- Exasperated with the slowness of Oxford Health
Plans Inc. to pay tens of millions of dollars in medical claims it owes,
doctors and regulators are taking action against the company.
Late Monday, a group that represents 5,000 Manhattan doctors was
preparing to file two arbitration proceedings Tuesday against the health-care
giant, citing "a pattern of delays, denials and detours from acceptable
practice." The group, known as the New York County Medical Society,
described its insurrection against a managed-care provider like Oxford as
unprecedented.
One proceeding asks that an arbitrator review doctors' claims and order
Oxford to pay the money they say they are owed, while the other asks that
an arbitrator require Oxford to establish clearer payment guidelines. Under
their existing contracts with Oxford, doctors cannot take their grievances to
court.
Separately, the New York state attorney general, Dennis Vacco, who has
shown a keen interest in the company's problems since last year, issued a
subpoena Monday afternoon to Oxford requesting information related to the
settlement agreement he negotiated with the company last July. In that
agreement, Oxford had agreed to pay 9 percent annual interest on
undisputed claims more than 30 days old.
The subpoena, according to people who have seen it, tries to pinpoint how
much progress Oxford has made on the mound of back bills and interest. In
possible violation of the July agreement, the company has so far failed to
provide Vacco with a quarterly progress report that might shed light on the
matter.
"There has been no compliance report filed as of yet," said Marc Carey, a
spokesman for the attorney general's office. "We will continue to push
ahead to ensure that the document is filed."
Oxford, which has blamed computer glitches for many of its difficulties, has
been struggling to put its problems behind it. But the setbacks on two fronts
are only likely to rattle investors who have spent the last few days indulging
in takeover fantasies that were helping revive Oxford's ailing stock.
Oxford's stock closed Monday at $17.75, up 23 percent since Thursday,
though the rumors have not been substantiated.
Nicole Reilly, an Oxford spokeswoman, said Monday that the company
would not be able to say much about the doctors' imminent action. But in an
attempt to settle their obvious differences, the company dispatched
representatives Monday night to a hastily arranged meeting with the medical
society's lawyers.
As for the attorney general, Ms. Reilly said the company had received the
subpoena but had not reviewed it. "We fully cooperated with the New York
attorney general's office and will continue to do so," she said.
At the heart of both disputes lie the questions of how much Oxford actually
owes and when it might get around to paying it. According to the arbitration
filings, copies of which were obtained by The New York Times, Oxford
could owe $145 million or more. But that figure may well include amounts
owed to hospitals and doctors outside Manhattan.
The Oxford spokeswoman, Ms. Reilly, in fact, was quick to attack the
figure as "grossly overstated." She said company records for all doctors in
its plans showed Oxford owing less than $45 million in claims older than a
month.
"Only Oxford knows what it really owes," said Jeffrey Ruggiero, a lawyer
with Lester Schwab Katz & Dwyer, one of the firms representing the
medical society. "It's really a breach of contract."
With the dispute dragging on month after month, many of the doctors have
apparently concluded that something is better than nothing and are allowing
the lawyers who represent them to work on a contingency basis. That
means the lawyers can keep one-fourth of whatever they recover, unless
Oxford can also be made to pick up lawyers' fees and other arbitration
costs.
"Our level of tolerance has been tested to the absolute limits," said Valentine
Burroughs, the president of the society, who described monthly meetings
with Oxford officials that resulted in little progress. The society said some
doctors were owed $1 million or had not been paid for care they provided
more than a year ago.
In one of its arbitration filings, the medical society also contends that Oxford
is unclear about which procedures are covered and why certain claims are
denied. Elizabeth Alymeyda, a plastic surgeon who is president-elect of the
society, said that Oxford made doctors "jump through all their hoops" and
then still refused to pay. "It is very, very unfair to the doctors," she said.
Among the cases cited by the society on Monday are those in which a
pregnant woman was certified for care only to have the $6,500 bill later
denied after she gave birth. The reason stated was that she was not
covered by Oxford. Another patient, whose family had a history of skin
cancer, had a lesion removed from his nose only to have his claim denied on
the ground that it was "cosmetic surgery." Oxford said it could not comment
on either case.
Investors got a ray of hope on Friday when Oxford became the subject of
intense speculation that it would be taken over by Aetna Inc., the Hartford,
Conn., insurer that bought U.S. Healthcare, a big rival of Oxford, in 1996.
Both companies declined to comment on the speculation.
But analysts, portfolio managers and bankers say such a takeover would be
unlikely, given the uncertainty facing Oxford. Over the last several months,
the company has stumbled from badly underestimating its medical costs.
And though Oxford has already disclosed that it will show red ink for 1997,
observers are waiting for the company's fourth-quarter results to get a
better idea of the depth of its problems.
As a result, potential buyers will probably hold back to get a handle on how
valuable the business is. "It may take a while to determine what the running
current profitability is," said Douglas Sherlock, an analyst with Sherlock Co.
Oxford is also looking for a new chief executive and chief financial officer.
The company, which is based in Norwalk, Conn., and provides health
benefit plans in New York, New Jersey, Pennsylvania, Connecticut, Illinois
and New Hampshire, faces additional scrutiny from state insurance
departments in New York and Connecticut.
New York's insurance department, which has already weighed in with a
report criticizing Oxford's management, is still reviewing the company's
financial condition. That review will be completed after the fourth-quarter
results are released, a department spokesman said. The results are not
expected before mid-February. |
