BC Calif creates dual networks to cheat patients and physicians
Physicians Urged to Carefully Review Blue Cross Contract Amendment
September 15, 2008
Physicians contracted with Blue Cross of California were recently notified of the insurer’s intent to amend its Prudent Buyer contract to include Anthem’s Select PPO product, effective January 1, 2009.
The addendum in question requires contracted physicians to always refer Anthem Select PPO Members to other participating Select PPO providers, unless they have obtained authorization to refer out of network. Physicians should be aware that the underlying Prudent Buyer contract authorizes Blue Cross to unilaterally lower the physicians’ fee schedule as a penalty for referring to out of network providers. For this reason, it is important for physicians to determine if colleagues you frequently refer to and those who refer to you participate in the Select PPO network.
By Don McCanne, MD
Those supporting health care reform based on the model of private health plans competing in the marketplace have looked to Blue Cross of California (BCC) as the nation’s leader in innovative market solutions. BCC has been very effective in providing insurance products with competitive premiums by using these innovations to limit what is paid for health care benefits, in an environment of ever-increasing health care costs.
By far the most important innovation was to establish preferred provider lists of physicians and hospitals that agreed to accept contracted reimbursement rates. The providers accepted lower rates, and patients were financially penalized if they used providers outside of the contracted networks. No attempt will be made to address here the many other innovations that allowed BCC to reduce what it pays for health care, but more does need to be said about this new innovation in its preferred provider networks.
Largely because of its competitive premiums made possible by its leverage in being able to sign up physicians and hospitals in its Prudent Buyer PPO plans, BCC has been one of the most successful programs in California, success being defined from a business perspective. Its success has been so great that it is now in a position to be able to make itself its own competitor, but, as we’ll see this is not competition that is designed to benefit the patient/consumer, but rather to benefit the Anthem/WellPoint shareholders of which BCC is a subsidiary.
In addition to its well established Prudent Buyer PPO, it now also has established Anthem Select PPO, a product designed to be more competitive by offering even lower premiums. The Anthem Select PPO has established a separate contract with a much smaller number of physicians and hospitals who have agree to even lower reimbursement rates (presumably lower, though that is proprietary information). Besides lower rates, BCC also benefits by making access more difficult for patients by sharply limiting the number of Select providers available.
Patients may not realize it, but they are penalized when they continue to use their Blue Cross Prudent Buyer providers if those providers have not also signed up to be part of Anthem Select PPO. They may think they have access to the Prudent Buyer PPO list, but if the corner of their card says “A Select Network Product,” they are restricted to a much more limited choice if they expect to receive the full benefits of their plan (that is, full underinsurance benefits).
The new BCC innovation spelled out in the addendum and in the underlying Prudent Buyer contract establishes financial penalties for physicians who continue to refer to their established Prudent Buyer colleagues and hospitals without first checking to be certain that they are on the much more exclusive Anthem Select PPO list.
BCC has provided a potential out. Physicians can obtain prior authorization to refer Select patients to the Prudent Buyer providers. But talk about abusive administrative excesses! BCC is requiring the burdensome prior authorization process merely to cross refer within its own two artificially segregated networks!
The process is hardly transparent. Most physicians and their staff members will not notice “A Select Network Product” on the corner of the card. They will make the Prudent Buyer referrals as usual. When the claim is paid, the disallowed amount will be adjusted off, without the staff realizing that the adjustment is greater than it would have been had a referral been made within the more restricted Select list. The patient will receive a statement of benefits with a larger amount listed as their own responsibility, not realizing that they are being penalized for using a Prudent Buyer provider who did not also have a Select contract.
Thus Blue Cross of California has set up within its own Prudent Buyer program two separate PPO lists that it uses to play against each other for the purpose of cheating the patient, cheating the physician, and cheating the hospital. Only the shareholders benefit.
Some may feel that “cheat” is too strong of a word, but cheating is depriving by trickery, and that is exactly what BCC is doing.
For those who still believe that we can patch together reform by using private insurance plans, please read John Geyman’s “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It” (Common Courage Press).