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Rate dispute could cost patients
By Markian Hawryluk / The Bulletin
Published: November 06. 2008 4:00AM PST
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Thousands of Regence Blue Cross Blue Shield members may have to choose between higher out-of-pocket costs or finding a new doctor in 2009 after the health plan was unable to come to an agreement on a new contract with Bend Memorial Clinic.
Clinic officials maintain they are only seeking payment rates comparable to what other insurers pay them, but Regence leaders have balked at what they believe is an unprecedented rate increase.
Unless the two sides can come to an agreement, it may be patients who bear the burden of their disagreement.
Marvin Lein, the CEO of the clinic, said contract negotiations broke down because Regence was unwilling to pay the same rates as other health insurance plans with which the clinic contracts.
“They were really under-reimbursing us for the cost of the quality of care that we provide compared to everyone else that we had contracted with,” Lein said.
“We were hoping that this year, we would come to the table and have (Regence) recognize that they need to play on the same level playing field,” he added.
According to Lein, the clinic has asked other insurance plans to increase rates 4 percent for next year, despite medical cost inflation increasing 7 percent. He said Regence would face a larger increase because it had historically paid lower rates to the clinic.
Regence Presidentt Dr. Bart McMullan said their analysis of rates suggests a 40 percent increase in reimbursement rates, which would significantly increase costs to its 15,000 to 20,000 members in Central Oregon.
“I’ve never in my professional career seen that kind of a request before,” he said. “In our four-state area, I’ve never seen a medical group say we need this amount of money. We’ve never encountered it.”
McMullan said if Regence agreed to BMC’s rates, it would have no choice but to pass on the costs to its members in the form of higher premiums.
Such disputes are why many experts have called for greater transparency in the health care system. Negotiations between doctors and health plans take place behind closed doors, and their contracts are closely guarded secrets. McMullan says he has no idea what rates his competitors are paying BMC.
Patient impact
Both parties have taken steps to minimize the financial impact for Regence members. Bend Memorial Clinic says it will give patients covered by Regence the same 12 percent discount off their retail rates that other health plans now receive. That could help to offset some of the higher costs Regence members would incur by visiting providers who don’t have a contract with their health insurance plan.
Regence will continue to pay for services provided by BMC at the in-network share, paying between 70 percent and 90 percent of the standard rate they pay doctors with whom they have no contract. Plans typically pay a lower percentage of that rate, 50 percent to 70 percent, for such services outside of their network of contracted physicians.
Robb Hayden, an independent insurance agent with Northwest Benefit Groups in Bend, said the biggest impact on patients might be the additional hassle they’ll incur in paying their health care bills.
The patients will be billed for the services by Bend Memorial Clinic and will have to seek reimbursement from Regence.
Regence will send its portion of the payment to the patient who will have to forward the funds plus any remaining balance to the clinic. It’s a situation that’s far from ideal for anyone involved.
“If BMC has to collect money from the patient, usually that’s a lot more difficult than getting a check from Blue Cross directly,” Hayden said. “By Blue Cross sending the money to the patient, especially these days, there’s a chance that check that Blue Cross sends them goes to the rent and not to BMC.”
BMC is the largest multi-specialty practice east of the Cascades, but Regence members should be able to find other in-network doctors in the region for most of the care they receive. Patients may have trouble finding another kidney specialist, but McMullan said Regence would work with members needing such services to find a viable solution. The recent addition of outpatient cancer care services at St. Charles Bend has provided an alternative to BMC’s oncology services.
Cost-shifting
BMC officials said part of the dispute was the expectation that all health plans in the region would help cover the cost of treating those on Medicare and Medicaid, and the uninsured.
“BMC is the only major clinic in all of Central Oregon to accept new Medicare patients and has the largest private Medicare patient panel,” said Randal Avolio, chief operating officer of the clinic. “Many practices have either closed to these patients or even discharged them from their practices.”
The amount Medicare reimburses doctors in Oregon ranks in the bottom 5 percent in the country, and many doctors have complained those rates don’t cover their costs of providing treatment.
Lein, of BMC, said by not paying rates high enough to also cover those costs, Regence has an unfair advantage in the marketplace and is being subsidized by other commercial insurers.
McMullan said it’s true that Medicare rates are lower in Oregon and that physicians must charge private payers higher rates to cover those costs. “But is it significantly different in Bend, than it is in Klamath Falls or Medford or Eugene or Portland? No.”
Lein also questioned whether Regence was committed to staying in the Central Oregon market, after losing the Bend-La Pine Schools contract several years ago and now breaking off negotiations with the clinic.
“In light of those events, we can’t help but think (Regence) may be rethinking its Central Oregon business plan altogether,” he said.
McMullan discounted any notion that the not-for-profit health plan was abandoning the Central Oregon market.
“If we paid these rates, we would be turning our back on that community by essentially making health care more unaffordable,” he said. “We’re absolutely committed to that community. We just got new office space, and we’re expanding there. That’s why we did this. It’s making a clear statement that this kind of cost increase, which has to be passed through to members in the community, is absolutely unconscionable,”
Hayden, the independent insurance agent, said he’s seen plenty of such disputes between health plans and providers. While the two sides generally come to a compromise, it generally is only with some increase in the contracted rates.
“The bottom line is who is going to pay for it? The consumer,” he said. “I hear day in and day out, people are getting livid over what they have to pay for health care. When it starts to become a mortgage it sticks in their craw. That’s where we are, people feel like they’re cornered.”
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