Contract amendment imposes difficult decision on physicians
Health insurance is costing everyone more these days, and physicians are no exception. In fact, the pinch for many Memphis-area doctors has been quite painful indeed.
Physicians received notice from Blue Cross Blue Shield of Tennessee (BCBSTN) last November that the insurance company was making a unilateral amendment to its contract with physicians. The amendment stated that physicians would receive a 48 percent reduction in the reimbursement cost, set by 2013 Medicare payments standards, for all services deemed “in-office physician lab services” by BCBSTN.
The amendment went into effect on Jan. 1 of this year. At the time of the notice, physicians were given until Dec. 20, 2013, to decide whether they would accept the amendment ... or not. And if not, they would no longer be in the BCBS system. The threatened termination from the network was for all services, not just for lab services.
Approaching the one-year anniversary of this contractual change, the impact of this amendment is clear.
For most physicians, the choice was not a choice at all. Blue Cross Blue Shield is the largest insurance carrier in Tennessee. The average patient load for physicians’ practices includes 30 to 50 percent BCBSTN patients. Not acquiescing to the unilateral amendment change meant that doctors’ patient loads were going to be significantly reduced. That was a gamble that most physicians were not in a position to make.
Yarnell Beatty, in-house counsel for the Tennessee Medical Association (TMA), explains, “There were some medical practices and clinics that were big enough in their markets that they could say no — but they were few and far between. Both in rural and urban settings, only those practices that BCBSTN deemed ‘essential to the network’ — area IPAs (Independent Practice Associations) and large specialty practices – had enough clout to not accept the new terms. The largest groups of physicians who were negatively impacted were primary care providers, pediatricians and family practice groups.”
The TMA responded to BCBSTN, urging the insurance carrier to rescind the cuts or reduce the sting of a mid-contract, dramatic decrease in rates.
In a letter to BCBSTN, the TMA relayed concerns expressed by its members:
Having to outsource lab services, even driving revenue to out-of-state lab providers and laying off their own staff, because the cuts are untenable for their practices
Inconveniencing patients and their employers by having to send patients to other
facilities to obtain lab services
Delay in care and liability issues
Reducing access to care by possible closures of satellite clinics in rural areas
Reducing patient compliance with their treatment because of added burdens of being diverted to other facilities for their labs
Confusion as to scope and applicability of the amendment
The drastic nature of the cuts compared to other payers.
So in January of this year, physicians continued to carry the same overhead expenses for their practices, ordered the same lab work, yet began receiving 48 percent less of their previous lab reimbursement from BCBSTN.
It is the feeling of some physicians that Blue Cross is intentionally forcing some of the liability back on the medical practitioners to either provide the service at a loss, or bear the liability of the delay in treatment. In cases where the patient might be compromised by a delay, physicians believe that Blue Cross knows that doctors will provide the necessary service, including in-house lab work, and eat the financial loss.
Another negative impact being faced by smaller practices involves supplies. The cost of the lab reagent necessary to run lab tests actually is more than the reimbursement given by Blue Cross, so physicians are continually operating at a loss.
Regardless of the practices’ size, in most cases clinics had their 2014 budget in place well before they received notice of this reimbursement change. The managing partners had reviewed their budgetary line items such as staff salaries, health benefits, anticipated expansion and modernizing equipment, but now they were faced with meeting their budgets with less than half of the expected income from lab reimbursements.
And the impact didn’t stop with the physicians; the changes also affected patients. In some cases, primary care physicians were forced out of business. Without access to their doctors, patients had to choose between going to an emergency room for care or going without care and running the risk of getting sicker. The latter choice carried the added risk of being hospitalized for extended care. Either option incurred higher expenses for the patients — and was counterproductive in terms of patient care.
Tom Reed, former executive director of West Tennessee Physicians Alliance and West Tennessee Primary Care IPA, said, “In rural Tennessee, outside of Shelby County, doctors in independent clinics have banded together under the umbrella of an IPA as a means of being protected from antitrust scrutiny. These physicians use a Messenger Model to facilitate contracts. As BCBSTN contracts with employers to be their insurance provider, a list of participating doctors is provided. For those who opted not to accept the amendment, they were forced out of the BCBSTN network. This translated to employers no longer being able to provide access to some of the physicians that employees signed up for when they selected their healthcare plans.”
Beatty adds, “For some patients, it came down to seeing their doctor out of network and therefore paying more out of pocket, or being forced to select a new physician who was within network.”
Beatty continues, “A medical practice is a business. You can’t keep your doors open if you can’t pay your rent and retain your staff. The situation is disheartening to a lot of physicians who just want to take care of patients but are constrained by these types of decisions that are being made by those holding the purse strings.
“For example, a pediatrician sees a child and needs lab work to make a diagnosis. With in-office service, labs can be handled right then and there, allowing the doctor to make a diagnosis and a treatment plan and if necessary order a prescription. After the cuts to lab reimbursements went into effect, doctors had to decide if they were going to do as before and lose money, or take the option to send the lab work off campus, to Quest
Diagnostics or somebody out of state, where the cost is cheaper due to volume. But the latter option means the patient walks out of the office and will have to come back or get a call from the doctor to learn the lab results. For the patient, it is a hassle that translates to additional time off of work for parents and more time missed at school for children. There’s a clinical downside, as well as an economic downside, for Tennesseans."
Mary Danielson, director of corporate communications for Blue Cross Blue Shield in Chattanooga, said, “BCBSTN’s stated reason for the decrease was to put BCBSTN costs at market rate. Approximately 9 out of 10 of our total provider population accepted the lab amendments. Those who did not accept were removed from our provider network or have had (or will have) their lab reimbursement addressed during scheduled negotiations in order to allow our members access to these services at more market competitive rates.”
In a letter sent to BCBSTN in response to the amendment, the TMA stated, “Unilateral changes to rates affect a business’s bottom line, which determines jobs, supply purchases and the volume of medical services that can be delivered to patients — your company’s covered lives. TMA sees this as stymieing the growth of medicine and limiting access to healthcare in Tennessee. … The message we have inferred from senior BCBSTN officials is that the curtailment of in‐office lab services is acceptable because it will result in lower costs to BCBSTN.”
Insurance providers’ contracts routinely incorporate wording that effectively says they can change rates, payment methodologies and policies anytime they want … and if providers don’t want to accept the changes, they risk being out of the network. There have been “nickel and dime” changes from TennCare MCOs and other commercial insurance plans that have resulted in cuts. However, some clinics say they are facing unrivaled challenges from this BCBSTN amendment.
