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Blue Cross Blue Shield settles with Texas AG over rating system, doctor referrals

By Chris Rizo | Apr 10, 2009

Greg Abbott (R)

AUSTIN, Texas (Legal Newsline)-Blue Cross Blue Shield of Texas has agreed to stop using its doctor-rating program under an agreement the company reached with the Texas attorney general's office.

The agreement announced Friday will end Attorney General Greg Abbott's investigation into the rating system, which relied on cost-based indicators to rate physicians.

The attorney general alleged that the company's Risk Adjusted Cost Index (RACI) was based on inaccurate information and flawed methodology, and as a result patients were misled about their doctors.

Moreover, doctors whose patients required costly treatments were "unfairly penalized" by the system, the AG's office alleged in court papers.

The Assurance of Voluntary Compliance also ends a probe into the handling of so-called out-of-network referrals by Blue Cross.

Authorities alleged that the insurance company threatened doctors who referred their patients to specialists that were outside the Blue Cross provider network.

Under Texas law, insurance providers cannot interfere with patients' right to receive medical advice from their doctors, including referrals to other medical providers.

"It is not appropriate to interfere with the protected doctor-patient relationship by terminating a doctor solely for making good faith out-of-network referrals for necessary care," Abbott said in a statement.

In accepting the settlement, Richardson-based Blue Cross Blue Shield of Texas, a division of Health Care Service Corp., has not admitted to any wrongdoing.

From Legal Newsline: Reach staff reporter Chris Rizo at

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