A fight over physician reimbursements has escalated into a battle for the hearts and minds -- and bodies -- of North Carolina's patients.
Among the most recent volleys was an Aug. 5 press release from Blue Cross and Blue Shield of North Carolina announcing MedPartners-affiliated clinics would drop one of the insurer's plans, effective Oct. 13.
Then, on Aug. 20, Healthsource of North Carolina received a letter from Raleigh Medical Group stating that it is "not sure" how long it will continue to do business with the insurer once its contract expires in January.
Wrangling between North Carolina doctors and insurers over physician reimbursement has been festering over the past year. With the Blues and Healthsource -- North Carolina's largest health insurers -- having cut their rates this year, tensions with doctors are higher than ever.
"I think in 1998 we have seen the intensity of the conflicts accelerate," says Sandy VanderVaart, the North Carolina State Medical Society's director of managed care.
The tensions resulting from the payment issue showed in the Blues' news release. It depicted MedPartners as an out-of-state boogeyman intent on loading its financial problems on North Carolinians' backs by demanding higher reimbursements and limiting patients' choice of doctors.
The Chapel Hill-based Blues claimed 20 North Carolina practices representing 120 doctors, located mostly around Raleigh, wanted their reimbursements raised by 20% to 30%. The Blues said the doctors also wanted to limit referrals for enrollees in the insurer's Personal Care Plan, an HMO paying capitated rates, to MedPartners specialists.
The insurer is trying to hold the line on medical costs. At 140% of Medicare payments, these costs are the highest of 21 states surveyed in 1996 by the Brookfield, Wis., office of insurance consultant Milliman & Robertson, according to information provided by the Blues. President Ken Otis says the not-for-profit company issued the release "to let our customers know what was going on. The choice we are left with is an unhappy one of being, in effect, held up for an increase in costs, which would translate to an increase in premiums. The bottom line is we're standing up for consumers."
Yeah, right, say MedPartners doctors. The clinics dropped the Blues because it paid below-cost rates that were half those other insurers in the state paid, says Alan Hayes, president of Raleigh-based Cardinal Health Care, a 135-physician multispecialty group practice. Local doctors -- not MedPartners' Birmingham, Ala., corporate office -- made the decision, Hayes says.
He disputes the Blues' claim of a 20% to 30% increase request. He says any increase sought was because of the Blues' low rates, not MedPartners' financial losses.
If the Blues follows past form with other clinics that have dropped one of its plans, both Hayes and VanderVaart say it will cancel contracts MedPartners-affiliated clinics have to care for patients under its three other plans. Otis denies the Blues engages in such conduct. Mark Payne, the state Department of Insurance's deputy commissioner for managed care, says he hasn't seen a scorned Blues drop clinics, although he has heard such talk "bantered about."
The affected MedPartners clinics, mostly around Raleigh, contracted with the Blues under the Personal Care Plan to take care of 11,000 Blues enrollees -- half their primary-care patient load. The number also represents 40% of the Blues' 27,500 HMO customers in the Raleigh-Durham area.
"This isn't a decision we've come to lightly," Hayes says.
Payne says he thinks MedPartners and the Blues may be saber-rattling before they come up with a new deal. "I didn't see anything (in the release) that said they had parted company, never more to speak," he says. But at the least, the Blues' release is a sign of how badly relationships have deteriorated.
The battle over reimbursement rates in the state, always a point of contention, became more heated when the Blues and Healthsource instituted rate decreases this year. Specific figures were not released.
After Healthsource, a unit of Cigna Corp., instituted its new rates Jan. 15, so many physicians threatened to break away from the insurer that the state's Department of Insurance began monitoring the situation for possible mass physician defections.
Instead, only 20 of 9,000 physicians left, says Steve White, president of Healthsource and Cigna of the Carolinas, and some of those doctors would have left even if rates had not gone down. Thanks in part to the affiliation with Cigna, which will be complete Jan. 1, Healthsource actually has added hundreds of doctors this year, White says.
However, Raleigh Medical Group, with 20 doctors serving 50,000 patients, could be a high-profile defector. The group confirmed the letter it sent to Healthsource also went to its patients.
Doctors reserved their greatest wrath for the Blues. In March, the insurer instituted a plan in which, in six specialties, it would automatically downcode evaluation and management of level-four and level-five claims -- generally the most expensive -- to level three unless certain documentation was attached. The Blues says it hoped to keep doctors' cash flow intact during claim disputes.
The move drew a slew of physician complaints. The required documentation was attached to only one of 1,100 claims submitted through May, Payne says.
Under pressure from doctors and the insurance department, the Blues on July 28 suspended its downcoding plan and agreed to pay back claims under their original coding, says Jeff Copeland, its vice president of healthcare services. The Blues plans to reintroduce the program after consultation with member doctors, Copeland says.
It was more than the coding conflict that pushed MedPartners' clinics to drop the Blues, Cardinal's Hayes says.
For years, the company has paid below-market rates, but doctors felt they needed to stay in the insurer's network to treat longtime patients, Hayes says. Doctors might have been willing to keep working for the Blues' rates if the company had been able to provide information, such as hospital utilization rates, that would have helped them manage risk, he says.
Doctors weren't the only ones having trouble getting information from the Blues. In February, the Department of Insurance fined the insurer $300,000 for failing to provide records requested during department examinations.