Medical Economics Feature - January 2010
Tex Med. 2010;106(1):37-40.
By Ken Ortolon
Choice and competition have been buzzwords in this year's health system reform debate, but Texans now have less of both in the commercial health insurance market.
On Oct. 27, Texas Insurance Commissioner Mike Geeslin approved requests from UniCare Health Plans of Texas Inc. and UniCare Life & Health Insurance Co. to withdraw from the commercial health insurance market in Texas. UniCare also recently pulled out of Illinois.
UniCare's decision to exit the Texas health insurance market impacts more than 180,000 enrollees who must find alternative coverage. While Blue Cross and Blue Shield of Texas (BCBS) has reached an agreement with UniCare to offer replacement policies with similar benefits and premiums to all UniCare policyholders, Texas physicians say the loss of even a small player in the market is not good for patients.
"The most important issue is when carriers pull out of the market like this, there's less choice for patients," said Wichita Falls pathologist Susan Strate, MD, president of Texoma Independent Physicians, a 175-physician independent practice association (IPA) that has contracted with UniCare for several years.
"Here in this town, other than Medicare, Medicaid, and TRICARE, it is gradually becoming one other payer," Dr. Strate added. "That's not in the best interest of patients and physicians."
In addition, any UniCare physicians who are not part of the BCBS network will have to apply to join it if they want to continue seeing their UniCare patients.
Bowing to Competitive Pressures
UniCare spokesperson Tony Felts says the company based its decision to pull out of the commercial market in Texas largely on its growing inability to compete with larger carriers.
"UniCare remains a financially sound company capable of paying medical claims in a timely manner," Mr. Felts said. "But we encountered some competitive pressures in the Texas market that made it increasingly difficult for us to continue to offer the sort of quality health insurance products at competitive rates that our customers have come to expect."
Those pressures largely revolved around lack of market share. According to Commissioner Geeslin's orders approving UniCare's withdrawal plan, UniCare Health Plans of Texas had only 171,890 covered persons with annual premiums of just more than $423 million. UniCare Life & Health had 11,821 covered persons with annual premiums of slightly more than $49 million.
Texas Department of Insurance spokesperson John Greeley says 2008 data on the Texas commercial insurance market showed UniCare ranked fifth among carriers with only 5 percent of the market. BCBS is first with 25 percent.
Mr. Felts says both BCBS of Texas and Illinois agreed with UniCare to offer replacement policies in both states.
"By virtue of that agreement, those UniCare customers who choose to move to the BCBS plan in Texas or in Illinois will be offered guaranteed replacement coverage with benefits and rates that are similar to what they have with their current UniCare plan," he said. "And there's no medical underwriting that would be required."
Mr. Greeley adds that not only will BCBS guarantee acceptance of all UniCare enrollees but also it will waive preexisting condition waiting periods.
Mr. Felts says UniCare enrollees can either accept the BCBS replacement policies or go out on the open market for coverage with another carrier. By seeking coverage elsewhere, however, a person "most likely would have to go through a medical underwriting process, and so there would be no guarantee of replacement coverage and certainly no guarantee that the rates and the benefits would be similar to what they had with UniCare," he said.
The company anticipates that most of its enrollees "will have transitioned" to either BCBS or another carrier by the end of the year, he says. "But we also anticipate that some members will continue to be served by UniCare into 2010."
Mr. Greeley says all UniCare policies that are not transferred to BCBS will terminate on June 1.
Margaret Jarvis, BCBS manager of media and public relations, says her company hopes most UniCare customers accept their replacement coverage and continue with Blue Cross indefinitely.
"What we want to do is earn and keep their business."
Keeping a Hand In
While UniCare has left the commercial market, it will continue its contract to cover Medicaid patients in Texas, Mr. Felts says. The company also will continue offering life and disability, vision, and dental coverage that is not connected to a medical plan.
"We also will continue to offer federal employee program benefits [in Texas]," Mr. Felts said. "And then there's also a collaboration we have in the Houston area with Memorial Hermann Health System called MHealth Insured, and we will continue to be involved in that, as well."
On the same day Commissioner Geeslin signed the order approving UniCare's withdrawal plan, the company sent letters to physicians and other health care professionals informing them of their decision to exit the Texas market. In that letter, Paul A. Beckman, UniCare vice president for health services, said UniCare expects the decision to have "minimal impact" on health care professionals in Texas. The company also indicated that a large percentage of the physicians in its network are in the BCBS network as well, meaning there should be little disruption of established patient-physician relationships.
But any UniCare physician who is not in the Blue Cross network will have to apply to join that network or risk losing his or her UniCare patients.
Ms. Jarvis says BCBS has no agreement to automatically accept UniCare-contracted physicians into its network. She says physicians can apply to join the Blue Cross network and would be admitted "if they fit all the criteria."
The Shrinking Market
Longview pediatrician Skip Brown, MD, chair of Texas Medical Association's Council on Socioeconomics, says he was not surprised to hear of UniCare's decision, given their small market share.
"I think they just looked at their numbers and said it's probably not a good business decision for us to remain with only 5 percent of the market," Dr. Brown said. "There's a little bit of a chaotic future, given the health reform debate, as to what the role of the carriers is going to be anyway."
Still, physicians like Dr. Strate are disappointed because UniCare has been easier for physicians to work with than some other health plans, she says.
"UniCare, from our perspective here in the IPA, worked well with physicians," Dr. Strate said. "Their claims processing was generally good, and they communicated well with us. And they tended to comply with their contract terms."
Officials in TMA's Payment Advocacy Department also say they receive few complaints about UniCare.
Dr. Strate is concerned that UniCare enrollees are being steered toward the company that already is the dominant player in the market.
"The way it turned out, the policyholders who had the UniCare policies are being directed to the Blue Cross and Blue Shield network. They really didn't have much time to evaluate their options or really look around," she said. "Blue Cross rapidly is becoming very dominant in this market, and that means less competition among insurers and less choice for patients."
According to Commissioner Geeslin's order, UniCare is not eligible to reenter the Texas commercial market for at least five years. Mr. Felts would not speculate whether the company would consider getting back into the market in the future.
"It certainly allows the possibility for us to reassess the competitive situation in five years, but at this point it's hard to speculate as to whether that is something we would exercise or not."
Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail at Ken Ortolon .
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