Low Blue Cross Payments Prompt Pathologists' Revolt

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Cover Story - April 2006  

By  Ken Ortolon
Senior Editor  

When Blue Cross and Blue Shield of Texas slashed pathology fees for its Blue Choice PPO network last summer, pathologists in Houston, Dallas, Austin, and other parts of the state bailed out of the network in droves. That left many hospitals who had signed up with Blue Choice in those cities without in-network pathology services; Blue Choice beneficiaries were stuck paying for non-network pathology services out of their own pockets.

After some angry complaints from physicians and patients, as well as intervention from the Texas Medical Association and the Texas Department of Insurance (TDI), Blue Cross has boosted fees for pathologists in most markets. And company officials say pathologists are slowly coming back into the network.

Pathologists in the Dallas-Fort Worth area, however, say Blue Cross still is unwilling to renegotiate fees there because at least one large pathology group, AmeriPath, accepted the Blue Cross   proposal, thereby giving Blue Cross some cover against charges that its physician network is inadequate in that market. 

Cut Till It Bleeds  

Pathologists in Dallas and Houston say the fee schedule that took effect June 1, 2005, was so low they simply could not afford to stay in the Blue Choice network.

"The fees were unacceptable, so we went out of network," said Richard Hausner, MD, who provides pathology services at Cypress-Fairbanks Medical Center and several Houston surgery centers. Most Houston pathologists independently made the same decision.

Paul Handel, MD, vice president and chief medical officer for Blue Cross, says the fee cuts resulted from consultants' reports that indicated Blue Cross was paying higher fees than other carriers in the Texas market.

"Blue Cross wants to be competitive in the marketplace," he said.         

Blue Cross officials say an estimated 250 pathologists dropped their Blue Choice contracts because of the fee cuts, mostly in Houston and Austin. However, some pathologists in Dallas, San Antonio, Midland, and other markets also dropped out of the network.

Elizabeth Wyand, practice administrator for MD Pathology in Plano, says her five-physician group would have taken a significant fee cut for CPT code 88305 - which she calls the "bread and butter" code for anatomical pathology - had they accepted the new contract. CPT code 88305 includes interpreting breast, gastrointestinal, skin, and other biopsies.

Ms Wyand says fees for other codes also were cut significantly. "We could take it on some of the other codes possibly because the volume isn't nearly as high," she said, "but we can't take it on an 88305."

By last September, Blue Choice-contracted hospitals across the state found themselves with little or no in-network coverage for pathology services. Information posted on Blue Cross' own Web site at the time showed virtually no hospital-based pathologists contracted in Houston and a wide swath of Southeast Texas that included Austin, Brazoria, Calhoun, Colorado, DeWitt, Fort Bend, Galveston, Goliad, Grimes, Harris, Jackson, Lavaca, Matagorda, Montgomery, Victoria, Walker, Waller, Washington, and Wharton counties.

The University of Texas M.D. Anderson Cancer Center and St. Luke's Episcopal Hospital were the only Houston facilities with in-network pathologists. Only three other hospitals in those counties - in Galveston, Bellville, and Brenham - had in-network coverage.

Wichita Falls pathologist Susan Strate, MD, chair of TMA's Council on Socioeconomics, says her council looked at Blue Cross' network data and saw it had "huge holes" in its network in several hospital-based specialties, including radiology, emergency medicine, neonatology, and anesthesiology. But pathology was the worst.

Having virtually no contracted pathologists, she says, is bad for patient care and unfair to those paying health insurance premiums.

"No. 1, when there are inadequate networks, it's disruptive to a patient's care, and No. 2, the patients pay an upfront premium for health insurance and they expect they're going to get prepaid health care," Dr. Strate said. "Then, when they need health care, they end up holding the bag for a lot of out-of-network bills."

In addition to the fee cuts, Houston pathologists say Blue Cross also threatened to stop honoring assignment of benefits for physicians who dropped out of the network. That meant Blue Cross would pay the patients, and the pathologist would have to try to collect his or her full fee from them. That threat later was dropped. 

Opening a Dialogue  

At a September 2005 meeting with Blue Cross officials, the TMA Council on Socioeconomics raised several concerns about the company's operating practices, including network adequacy. Then in November, TMA President Robert T. Gunby Jr., MD, Executive Vice President and Chief Executive Officer Louis J. Goodman, PhD, and other senior TMA staff met with senior Blue Cross executives to again discuss the issues. The talks included TMA's request that Blue Cross immediately fill out needed primary care and specialty panels to make the PPO network comply with state regulatory requirements for adequacy.

Also in November, TMA informally brought the network adequacy issues to the attention of TDI's Consumer Protection Division, and regulators reviewed the Blue Cross network. Ms. Wyand says that prompted Blue Cross to begin addressing the pathology issue. Within a few days of the review, she adds, Blue Cross representatives were renegotiating contracts with physicians across the state, except in the Dallas-Fort Worth market.

Then-Blue Cross President Pat Hemingway Hall responded in December by assuring Dr. Strate that Blue Cross was taking steps to ensure network adequacy and promising to demonstrate measurable improvement in the network in bimonthly reports to TMA.

TDI declined to comment on any action it may have taken on the Blue Choice PPO network other than to say it had completed a triennial review of the company and found no problems.

Jerry Hagins, TDI public information officer, says no one in Houston or any other market complained about Blue Cross network adequacy.

TDI officials, however, acknowledged that the September data from the company's own Web site showed almost no in-network pathology coverage. They never directly responded to  questions about whether Blue Cross' pathology network satisfied network adequacy requirements. 

Getting Back In  

Today, the situation is much improved. Dr. Handel says that as of early January, 168 pathologists, including 15 different pathology groups, had rejoined the Blue Choice network. All but two of those groups are in Houston. The remaining two are in Midland and San Antonio, he says.

"Particularly with the pathologists, there has been a complete review of the contracting and the rates, which caused a lot of terminations to occur," Dr. Handel said. "We have renegotiated a large number of contracts."

Dr. Hausner had not yet rejoined the network as of early February but anticipated doing so once details of the new contract are finalized. Since the first of the year, Blue Cross has made his practice a more reasonable offer, he says.

He says Dr. Handel has been able to facilitate communication between Blue Cross and the physicians, adding that he "has been very willing to interface and function as someone we could talk to about this."

Dr. Strate also praised Blue Cross officials for their willingness to work with TMA and the pathologists to resolve network adequacy and other issues.

"We have been able to have some very frank, substantive dialogue that has enabled us to come to an understanding, first of all, of what the problems are; second, how to alleviate those problems; and, third, how to monitor going forward to make sure we correct them," she said.

Still, Ms. Wyand says Dallas-Fort Worth area pathologists continue to wait for Blue Cross to offer a better fee schedule there.

"Blue Cross won't renegotiate because of AmeriPath," she said. "We never got a knock on our door. Never."

AmeriPath is a nationwide pathology group that describes itself as "one of the leading anatomic pathology practices in the United States." The company has more than 400 pathologists and doctorate-level scientists who provide pathology services at more than 40 independent laboratories and more than 200 hospitals across the country.

AmeriPath has 15 practices with nearly 100 pathologists in Texas, mostly in the Dallas-Fort Worth area but also covering Lubbock, Texarkana, San Antonio, and Sherman.

Ms. Wyand says her group has exclusive contracts to provide pathology services at Presbyterian Hospital of Plano, Presbyterian Hospital of Allen, Baylor Frisco Medical Center, and Presbyterian Plano Center for Diagnostics and Surgery. That means Blue Cross patients who go to those facilities have no choice but to use out-of-network pathologists if they need pathology services.

"We absolutely hate to be out of network because the patients don't see pathologists" Ms. Wyand said. "We just see pieces of the patient, we see the blood, we see the tissue. The patients don't know who the pathologist is and we understand that. So we try very hard to never be out of network."

Ms. Wyand says MD Pathology has had numerous complaints from patients who received bills they thought should be covered by their insurance. She says she asks them how they would feel if their boss asked them to take a substantial pay cut.

"They say, 'Well, I couldn't do it,'" she said. "That's just it, I can't do it either. We're a five-man pathology group with 13 support staff. We can't afford to take that kind of pay cut."

Ms. Wyand says she advises patients to complain to their employer or to Blue Cross directly. Blue Cross might relent if enough people complain, she says.

Dr. Handel, meanwhile, is working to address the Dallas-Fort Worth market but admits there is "resistance" within the company to renegotiate fees there because company officials do not believe the market dictates that they do so. 

Balance Billing Back  

While Dr. Handel believes Blue Cross' network adequacy issues have largely been resolved, a broader dispute within the health plan industry over network adequacy and balance billing has not. Health plans tried hard in the 2005 Texas Legislature to ban balance billing, thereby forcing physicians to take whatever fees the health plans offer.

Eleven separate bills were filed on the issue last year, including eight that would have stopped balance billing or would have harmed physicians' ability to negotiate fees.

At TMA's Winter Conference in February, Sen. Robert Duncan (R-Lubbock), chair of the Senate State Affairs Committee, said he plans to revisit the issue again in 2007.

"Balance billing is a real problem for some of our constituents," Senator Duncan said at the conference. He said the debate will force "a study on network adequacy, which I think is an issue we can all agree on."

Senator Duncan sponsored a bill that originally would have banned balance billing. It later was amended to require telling patients they may be billed for out-of-network services. The bill passed the Senate but failed in the House.

However, Lt. Gov. David Dewhurst in February directed Senator Duncan's committee to study the issue before next year's legislative session. Dr. Strate says TMA will follow that study closely and weigh in on any bills filed next year.

"The basic issue is there needs to be disclosure," she said. "The health plans need to provide employers and patients and other purchasers with accurate, up-to-date lists of contracted physicians. And they need to have adequate networks for the services that are going to be covered."

Dr. Strate also says TMA will encourage TDI to develop and enforce stricter rules on network adequacy.

"The core of the matter is that patients deserve to know what they're buying," Dr. Strate added. "And patients who buy health insurance need to be informed what the adequacy of the network is when they sign up and that, indeed, the network will provide them with reasonable access to all the classes of physicians that they might need for the services that are covered."

Ken Ortoloncan be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email at Ken Ortolon.  

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