Doctors file $200M claim over Medicare Advantage payment changes
The physicians are seeking a jury trial.
A group of Puerto Rican primary care physicians has filed a federal lawsuit alleging due process violations and regulatory breaches following changes to their compensation under Medicare Advantage plans.
The lawsuit, filed in the U.S. District Court for Puerto Rico, challenges a shift from capitation payments to fee-for-service arrangements, which the plaintiffs argue jeopardizes their financial stability and contractual agreements.
The physicians seek declaratory relief, restitution for lost income and at least $200 million in damages. They are also requesting the reinstatement of capitation payments and compliance with federal due process requirements.
The plaintiffs include Evelyn Matta-Fontanet of Caparra Internal Medicine Service Group LLC and several other doctors providing services under Medicare Advantage plans managed by MMM Healthcare and subcontractors.
These physicians were previously paid through capitation — a model where providers “receive a predictable, upfront, set amount of money to cover the predicted cost of all or some of the health care services for a specific patient over a certain period of time,” as defined by the Centers for Medicare & Medicaid Services.
Capitation models are designed to encourage cost-effective care and reduce unnecessary expenses.
In 2023, the defendants, including MSO of Puerto Rico and Castellana Physician Services, transitioned to a fee-for-service model, which compensates doctors based on the volume and type of services, according to the lawsuit.
The plaintiffs claim the shift was implemented without proper notice or an opportunity to appeal, violating federal regulations and their contracts.
Medicare Advantage organizations are legally required to provide written notice of material changes and appeal rights, which the lawsuit alleges were ignored.
The plaintiffs also argue that the fee-for-service model disrupts the continuity of care and exposes them to financial instability. They claim the changes were communicated with little notice — sometimes as few as six days — and without justification or explanation.
Financial impact on physicians
The plaintiffs report significant financial losses due to the payment change. Matta and Caparra Internal Medicine Service Group claim damages exceeding $130 million, citing lost income, reduced goodwill and reputational harm.
Salvador Ribot of Policlínica Dr. Salvador Ribot Ruiz Inc. estimates $7.5 million in losses from diminished bonuses and operational challenges. Other plaintiffs, including Pedro del Valle, José Torres-Flores and Almilcar Torres-Figueroa, reported combined losses in the tens of millions, attributing them to abrupt changes and lack of due process.
