What started as a contract dispute between Aetna U.S. Healthcare and a Louisville, Ky., independent practice association is evolving into a referendum on the insurer.
The Kentucky Department of Insurance is conducting a public hearing to determine if Aetna's practices in Kentucky are unfair, cause public harm or violate state insurance laws. Of primary concern is Aetna's recent contract disputes with The Physicians Incorporated, a 1,800-physician IPA in northern Kentucky and southern Indiana.
In March, TPI terminated its contract with Blue Bell, Pa.-based Aetna, effective July 3. At issue, says TPI Chief Executive Officer Paul Jennings, was Aetna's all-product contract, which requires physicians to accept all Aetna patients and products, including HMO enrollees.
Aetna argues that the contract, which faces opposition across the country, will preserve continuity of care. For example, it allows enrollees to stay with their physicians even if they transfer to an HMO from a PPO. But a number of physicians--including TPI members--say they cannot afford to accept HMO patients because their reimbursement rates typically are very low.
In late April, Aetna ran a full-page advertisement in the Louisville Courier-Journal explaining its stance on the all-product contract in a letter to members.
"We are profoundly disappointed that TPI acted in a way that will undoubtedly cause our membership needless confusion and concern," the letter read. "We are particularly troubled that they would do so over a policy Aetna put in place to preserve the patient-physician relationship."
After the IPA terminated the contract, member physicians were given the opportunity to sign up independently with Aetna. The insurer says about 1,000 of the 1,800 physicians renewed, but TPI says only 500 did so.
TPI suggested that physicians who terminated their Aetna contracts continue to treat enrollees until the end of the period covered by the plan or the end of the calendar year, whichever came first, Jennings says. The extra time would allow patients to find new physicians.
"The doctors had determined the last thing they wanted to do was put patients in the middle of this," Jennings says. He adds that the physicians were "rather surprised" to find out Aetna did not agree to this plan.
The insurer said it would decide on a case-by-case basis whether it would pay for patients to stay with TPI physicians. Patients who want to see TPI doctors without Aetna approval would have to pay higher, out-of-network fees.
That sparked the interest of Insurance Commissioner George Nichols, who early last month required Aetna to turn over the names of all physicians with whom it contracts. Nichols wants to determine if the TPI termination leaves enough physicians to care adequately for Aetna's 200,000 Louisville-area enrollees, says Insurance Department spokeswoman Paula Freeman.
Nichols found the network size adequate but was troubled by Aetna's refusal to continue to pay for treatment of TPI patients after the contract termination date. He ordered a June 7 public hearing, which will be led by an independent hearing officer from the attorney general's office.
According to Freeman, the hearing will determine whether Aetna misled enrollees about the size of the provider network, since the insurer knew it was in negotiations with TPI doctors and that changes were likely.
According to the Department of Insurance, the contract termination would have far-reaching consequences. At least 10,000 Louisville patients would be forced to find new doctors or pay higher out-of-pocket network costs, and the number of specialists in the network would decrease substantially. For example, the number of gynecologists would drop to 3 from 10, pediatricians to 69 from 217 and cardiologists to 42 from 100.
Nichols says the department is prepared to pursue legal measures to make Aetna honor and maintain its original provider network for the entire health plan year for all agreements signed between Jan. 1 and July 1. For example, if a company or policyholder renewed July 1, Aetna would have to continue the plan and the original provider network through July 1, 2000.
Jack Bellante, Aetna's general manager of Kentucky, defends both the network's size (claiming the numbers cited by the department are not an accurate reflection of the current network) and the insurer's actions.
"We have pledged our commitment to a plan of transitional care for all pregnant women and other members who are in the midst of a course of active treatment, and we will continue to take all appropriate steps to ensure that member disruption is minimal," he says.