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SUIT QUESTIONS LEGALITY OF AETNA'S CAPITATION

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NEW YORK-Aetna Health Plans contends a lawsuit alleging that it has violated federal benefits law by introducing capitated reimbursement of physicians is without merit.

The New York-based managed care company is the target of a lawsuit filed by a woman who contends capitation will push her doctor out of the HMO and force her and her children to hunt for a new doctor.

Although complaints by patients and doctors in newly capitated markets are not uncommon, the suit is unusual in that it claims the disruption of a patient/doctor relationship that may result from the introduction of capitation constitutes a violation of the Employee Retirement Income Security Act of 1974.

The lawsuit was brought last month in U.S. District Court in Brooklyn by Mara Maltz of North Bellmore, N.Y., both of whose children suffer from a chronic intestinal disorder. The Maltz family has been covered by an Aetna group managed care plan, through Ms. Maltz's husband's employer, for a year and a half.

The children have been treated by a North Bellmore pediatrician for the past 16 years and developed a close relationship with him, the suit states. However, the doctor recently was notified by Aetna that to remain in its network he would be required to switch from fee-for-service pricing to capitation, with the doctor to receive between $4.86 and $6.45 a month per patient.

According to court papers, the pediatrician told Ms. Maltz he could not remain her family's doctor under the Aetna HMO because of the change in payment method and because he and his partner were opposed to a "physician's incentive fund" from which Aetna would pay bonuses for lower hospitalization rates and other cost savings.

"Why should I have to switch my pediatrician after 16 years after they have developed a rapport with them? He has their whole history. For me to start with a new pediatrician, I wouldn't feel comfortable with that," Ms. Maltz said in an interview. "How can a pediatrician take care of your child at $6 a month? I'm really trying to take a stand because I think this is really unfair."

Her suit alleges that Aetna is liable for breach of fiduciary duty under ERISA, because the federal benefits law specifies that the actions of an insurer must be "solely in the interest of the participants and beneficiaries," not merely in its own economic self-interest. The suit also claims that beneficiaries were assured in plan documents that they would be able to choose any doctor, which means that a change that prompts doctors to leave is a restriction of that choice.

The suit is asking the court to enjoin Aetna from interfering with existing physician contracts and to enjoin the insurer from using its physician incentives "to reduce benefits and limit care." Aetna is now rolling out capitation in New York to those doctors with large numbers of HMO patients.

Ms. Maltz is not seeking damages but is asking to recover attorneys' fees and costs.

An Aetna spokesman in Hartford, Conn., said the suit ignores the fact that capitation not only is legal but has been shown not to adversely affect quality of care.

"Basically, our feeling is the suit is an attempt to use the courts to attack managed care and we believe the lawsuit is without basis," he said. "We've changed the way her (Ms. Maltz's) physician is compensated. We're not throwing anyone out of the network."

An attorney and benefit expert said she has a tough case to prove.

"I don't think she has much likelihood of success ultimately," said Fred Rumack, director of taxation and legal services at Buck Consultants Inc. in New York. "It would be hard to see any company being enjoined from making changes in its benefit program merely because of the incidence of cost."