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Patients Pay More When PPOs Omit Hospital Physicians

Posted on: Tuesday, 23 August 2005, 21:00 CDT

Aug. 21--Lisa Schmidt learned about one of the quirks of health insurance when she went to Oconomowoc Memorial Hospital with severe abdominal pain.

She knew the hospital was part of her health plan's network. She didn't know that the doctors who staff the hospital's emergency department were not.

"Nobody even tells you that is a possibility until you get the bill in front of you," Schmidt said. "And then you are trying to figure out what happened."

At the time, Lake Country Emergency Physicians, which staffs the hospital's emergency department, did not have a contract with her family's health plan, Blue Cross Blue Shield of Wisconsin.

As a result, Schmidt had to pay a larger share of the bill for seeing a doctor who wasn't part of the health plan's network.

It's one of the potential pitfalls of preferred provider organizations, the most popular type of health plan.

A PPO is a network of doctors and hospitals that has given discounts to a managed care company in exchange for being given preferred access to the potential patients in a health plan.

The catch is that a hospital may be part of a health plan's network, but the radiologists, anesthesiologists, pathologists and emergency physicians who work at the hospital may not be.

There's no practical way, though, for people to know that.

"I could not have interviewed every person who was going to take care of me and ask, 'Are you part of my network?' " said Schmidt, who lives near Pewaukee. "As a patient, there are only so many things you can do. That is what is so frustrating."

The problem -- while not widespread -- has generated enough complaints to prompt the state insurance commissioner to propose a rule that effectively would require hospitals to warn patients for elective care when a doctor is not part of their health plan's network.

It also has prompted some managed care companies to take steps designed to put pressure on hospital-based physicians to sign contracts with them -- steps that one consultant likens to "blackmail."

The problem suggests that for all the talk of people becoming more involved in their health care decisions -- what is called "consumerism" -- the intricacies of the health care system have a way of surprising people.

"It seems there's a different set of rules for every little thing," Schmidt said.

After all, how many people would think to ask whether the radiologist who reads an X-ray or the anesthesiologist in the operating room is part of their health plan's network?

Even if they did ask, there's not much they could do about it. That's because hospitals typically give exclusive contracts to the physician groups that staff their emergency, radiology and pathology departments. The doctors basically have a monopoly -- and patients don't get to shop around when hospitalized.

The problem is an outgrowth of the ever-present tension between doctors and managed care companies over fees.

The managed care companies blame the doctors, contending that their monopoly gives them little incentive to negotiate on price.

Doctors, on the other hand, complain that managed care companies know that hospitals will pressure the physicians to sign contracts.

"You sometimes are expected to take the contract, and they know it," said Robert Chang, owner of Health Care Management Consulting, an Elm Grove firm that advises doctors in small and midsize groups on business and practice management.

For their part, health care systems "encourage" -- but don't require -- their hospital-based physicians to sign contracts with health plans that contract with the hospital.

"We understand the problem and don't want to see patients in the middle," said Anne Ballentine, a spokeswoman for Covenant Healthcare. "There are instances of it in our system. It's not widespread."

Other health care systems take the same position.

"Aurora has largely been able to avoid the problem," said Jeff Squire, a spokesman for Aurora Health Care. "But we agree it can be a significant problem for patients."

Some of those patients have made their frustrations known to state regulators.

"This was a frequent complaint," said Eileen Mallow, a spokeswoman for the Office of the Commissioner of Insurance.

The pending rule would require health plans to include language in their contracts with hospitals and physicians that requires them to tell patients if an out-of-network doctor will be involved in their care. It is part of a broader rule regarding the regulation of preferred provider organizations.

The state insurance commissioner expects to submit the proposed rule to the Legislature early next month. The Legislature then can recommend changes or hold a hearing on the proposed rule. If approved by the Legislature, the rule would go into effect Jan. 1, 2007.

It would not affect health plans of employers who self-insure. Those plans are regulated by the federal government.

Some managed care companies welcome the proposed rule.

"It is going to give consumers more information than they have now," said Karen Geiger, a lawyer with Blue Cross.

The managed care companies, which put together preferred provider organizations and oversee health plans, have taken their own steps to deal with the problem.

Beginning around April, UnitedHealthcare changed the way it pays hospital-based doctors, such as radiologists and emergency physicians, who won't sign contracts.

The company used to pay its share of the bill by directly reimbursing the doctor. Now, in some cases, it sends a check to the patient.

As might be expected, some of those patients cash the check but don't pay the doctor.

The move is designed to remind doctors of the advantage of belonging to a health plan's network.

"That's exactly what we are hoping will happen," said Jay Fulkerson, president and chief executive of UnitedHealthcare of Wisconsin.

UnitedHealthcare isn't alone in trying to pressure hospital-based doctors to sign contracts. For several years, Blue Cross hasn't sent checks to doctors who don't sign contracts.

"Being paid directly by an insurer is one of the incentives of joining a network," said Jill Becher, a spokeswoman for Blue Cross.

Some physician groups aren't happy about the practice.

"What they are trying to do is blackmail the providers," said Donald Stewart, a partner in Healthcare Management Consultants, a Menasha firm that advises medical groups. "They are holding a club over the doctor's head."

For hospital-based physicians, belonging to a preferred provider organization doesn't bring them additional patients, since they already treat all of the hospital's patients who need their services.

At the same time, doctors who work out of hospitals must treat everyone admitted to the hospital. For this reason, they see more uninsured patients and provide more charitable and uncompensated care than their counterparts who are based in clinics.

They also see a larger share of Medicare and Medicaid patients. The two programs, particularly Medicaid, pay less than private health plans.

A doctor who works in a clinic, in contrast, can choose not to see people without health insurance or who are enrolled in the Medicaid program.

That said, hospital-based physicians typically earn a nice living.

Compensation for radiologists, for instance, ranges from $201,699 to $412,217 a year, according to a review of surveys on physician compensation compiled by Merritt, Hawkins & Associates, a recruiting firm.

For anesthesiologists, it ranges from $258,277 to $341,407 a year. And for emergency physicians, it ranges from $167,621 to $236,000.

Some doctors believe they should contract with all the health plans that contract with the hospitals where they work.

"If I am treating a patient for cancer, the last thing they need to worry about is their insurance," said Mitchell Pincus, a radiation oncologist at Aurora St. Luke's Medical Center and Aurora Sinai Medical Center.

That can mean accepting whatever contract is offered by the managed care company.

"You try to negotiate for the best rate you can, but they also know they got you, and there's not a lot of negotiating," Pincus said.

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Copyright (c) 2005, Milwaukee Journal Sentinel

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Source: The Milwaukee Journal Sentinel

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