Insurers battle and patients lose
Insurer Battles Physician Group
By Anna Wilde Mathews
The Wall Street Journal, February 29, 2012
A clash between health insurer Blue Shield of California and a doctor group that sold its operations to UnitedHealth Group Inc. highlights emerging tensions as lines blur between health insurers and medical providers.
On Tuesday, the health insurer filed a demand for at least $10.5 million in damages from Monarch HealthCare, a 2,300-physician association based in Irvine, Calif., that last fall sold its management arm to UnitedHealth's Optum health-services unit.
Among the allegations: that Monarch sought to steer Blue Shield members away from Blue Shield and toward competing health plans, and that its doctors started declining to see some Blue Shield members. The complaint says these moves violated Blue Shield's contract with Monarch, which the insurer has previously said will end on May 1.
"It seems crazy to be contracted with someone who's a direct competitor, and share everything you design with them," said Juan Davila, senior vice president for network management at Blue Shield, which has 3.3 million members. Blue Shield felt its "worry was proved true" by Monarch's alleged actions, he said.
At the root of the clash is the deal unveiled last fall for Monarch's operations arm to be acquired by Optum, the unit of UnitedHealth Group, which is also the parent of UnitedHealthcare, the nation's biggest insurer. Because California law bans most entities from directly employing practicing doctors, acquisitions involving independent-practice associations like Monarch often have complex structures.
The dispute raises issues for both sides. Blue Shield says in its complaint that it lost existing and prospective members. Also, its provider network will soon lack one of Orange County's biggest doctor groups. Monarch risks losing some patients who are Blue Shield members.
In its complaint, Blue Shield said it had around 19,200 members in commercial and Medicare Advantage plans last September who used Monarch doctors. In May, Blue Shield's members have to pay more to keep seeing Monarch doctors, who would become out-of-network providers.
Similar static is beginning to surface elsewhere as health plans have begun buying medical providers, and some providers have started making insurer-style moves, with some considering direct approaches to employers and even seeking to launch their own health plans.
WellPoint Inc.'s Anthem Blue Cross broke off a deal with Monarch to create a cooperative "accountable-care organization" and also said in a letter to doctors that it will discontinue its health-maintenance organization relationship with Monarch in the future. In the letter last October, an Anthem official said the ACO move came as "a result of the group's pending transaction" with Optum.
By Don McCanne, MD
These disputes between UnitedHealth's Monarch HealthCare, Blue Shield of California, and WellPoint's Anthem Blue Cross not only impose a great disservice on their patients, but also should outrage all of us over the fact that these health care intermediaries act as if they regard patients to be their chattel - jerking them around in order to fulfill their own business goals. How long are we going to continue to tolerate this reprehensible industry? They may need us, but we don't need them.