New News - Class 7
Dispute between Blue Cross & Blue Shield of Illinois and Rush University Medical Center
One of Chicago's highest-profile hospitals is in a contract dispute with the state’s largest insurer. In 2005 about 67,000 Blue Cross members received outpatient medical care at Rush and another 7,400 received hospital care there.
Less than one year after Blue Cross & Blue Shield of Illinois and Rush University Medical Center entered into a settlement agreement in September, 2006, that was supposed to last through 2010 it looks like per a letter sent to employer groups, obtained by Crain's dated August, 2007, Blue Cross says it intends to drop the Chicago Near West Side hospital from its provider network for all its health plans on Dec. 31, unless the two can reach “contract terms that have been mutually agreed upon.” Also, the letter says Blue Cross began notifying Rush-affiliated doctors on July 25 of a possible contract termination.
Rush claims the settlement agreement centers on money owed to Rush for services it provided Blue Cross members during a nine-month period last year when the two sides did not have a contract in place.
RUSH SAYS: According to a statement from Rush (per Crain's) Blue Cross refused to abide by the terms of the settlement agreement,” and “(Blue Cross) is terminating Rush’s ongoing contracts as a way to force Rush to allow Blue Cross to entirely back out of its obligations.” Rush says it would offer individual contracts to employers who use Blue Cross if the dispute isn’t resolved.
BLUE CROSS SAYS: Rush is "attempting to change the interpretation" of the contracts entered into last year, which would result in "significantly higher health care costs for our members."
Advocate Health Care Billing and
Collection Practices
An Illinois Senate committee is investigating claims that
Advocate Health Care System uses predatory collection practices to get
underinsured patients to pay overdue bills. A
recent report by the Service Employees International Union (SEIU) prompted the
investigation. The report by
SEIU’s health care research and advocacy unit compares debt collection
practices at Advocate’s eight
Advocate claims:
(1) it is mandated by
a federal law that requires a “diligent” effort be made to recover costs. If
Advocate doesn’t comply with those regulations, it will not be allowed to
treat Medicare patients who make up roughly 50% of Advocate's total volume.
(2) It outsources most of its
bill collection services to a source commonly used by many other facilities as
well. (3) It treats a higher volume
of patients than other private hospitals in the Chicago area, which results in
more lawsuits filed and still the number is relatively low., that of the 1.6
million patients Advocate treated in 2001, the year on which SEIU’s report is
based, about 1,150 lawsuits were filed to collect debt.
In June, the union’s Hospital Accountability Project
published a study on what hospitals charge the uninsured and concluded Advocate
patients are expected to pay more, sometimes more than twice as much, for the
same services than those covered by private insurance.
A month after the report,
Class Action Status
A federal judge approved the $470 million settlement
reached between
Humana Pending Settlement with
Cincinnati-area doctors
Humana,
Faster Payment to Providers
Sensing an opportunity in new federal rules that require
insurers to automate their billing systems if a physician, hospital or other
health care provider requests it, Chicago based BankOne is offering a suite of
services aimed at streamlining the cumbersome process by which doctors and
hospitals collect payments from the insurers that cover most of their patients.
According to Bank One Health care providers
spend $6 to $7 per payment submitting claims, recording disbursements from
insurers and reconciling discrepancies between the two.
The bank estimates by automating almost every facet of the process,
providers will save 80% of the cost, or $4.80 to $5.60 per payment and that the
average 25 minutes now spent by physicians’ offices processing a paper claim
would be reduced to a five-minute
electronic transaction (Crains Chicago Business, 10-26-03)
Providers terminating contracts with HMOs
"Patients Caught in Insurance Disputes" Chicago Tribune 10-21-03: Advocate has eight hospitals and more than 2,600 physicians used by more than 40,000 people covered by United Healthcare. Advocate claims the negotiations are over with United Healthcare and the contract will terminate on December 31, 2003. What are the choices for the people currently covered under the contract? Perhaps, their employer group offers health insurance plans that their providers are participating in or they will have to find new providers or pay out of pocket to continue services with their own preferred provider.
Northwestern Medical Faculty Foundation Inc.'s 500 physician groups is ending its 20 year relationship with HMO Illinois, the state's largest HMO potentially disrupting coverage of more than 24,000 patients. The Northwestern group no longer want to be paid fixed fees leaving the doctors at risk for certain emergency services, medical tests and other ancillary services. The group plans to continue to accept less restrictive health plans such as PPOs and point of service plans.
Doctors and hospitals say they are being with with soaring medical malpractice premiums, rising numbers of uninsured patients who cannot pay, and a squeeze in payments from government health programs.
700,000 Doctors in Class Action Suit against Aetna - Aetna to pay $170 Million
Per Chicago Tribune (May 22, 2003) section 3 page 1 & 4: A class action lawsuit that was filed in the late 1990s against Aetna Inc. and other large health insurers in the U.S. District Court in Miami is pending settlement. Physicians alleged Aetna and others delayed payments on purpose and shortchanged physicians by bundling fees which reduced the payments. Aetna has agreed to settle the case and pay $170 million in which $100 million is to pay the approximate 700,000 doctors in the class action suit and includes changes in the way Aetna will do business which could mean an additional $300 million or more for the physicians over the next several years. Aetna will create a physician advisory committee to be run by doctors and will set aside $20 million to create a foundation that will be run by doctors and focus on a variety of health-care initiatives including reducing the number of uninsured Americans and preventing childhood obesity. As part of the settlement, Aetna agreed to be more transparent in how it operates and include physicians in its decision-making. Doctors have complained about the take it or leave it insurance contracts. Under the proposed Aetna settlement agreement, doctors will receive more prompt payments and have fewer claims to resubmit.
Cigna Corp. has been in federal mediation with physicians over settling a similar case that would pay physicians for past claims and change how doctors are paid.
What is a Chief Medical Officer (CMO) at a hospital?
Depending on who you talk to, the definition and duties of a Chief Medical Officer (CMO) varies from hospital to hospital. Dr. Lee Sacks, Advocate's chief medical officer after learning about Visicu's technology a year ago went with a dozen doctors and nurses to see the first operating example of the technology at a hospital in Virginia. This technology is a software system that tracks various patient vital signs that ICU equipment normally monitors like blood pressure, heart rate, and body temperature providing early alerts to potential problems using video cameras in intensive care units so specialist physicians can supervise patient care around the clock by remote control. They determined they need to do this as fast as possible. Advocate would use this new technology: (1) to market itself to patients; (2) help the hospitals attract ICU nursing staff - as there is a nursing shortage and ICU nurses may have less experience than they once did and even be new grads; (3) Leapfrog Group, an association of large employers that finance health insurance for their employees has identified as a standard that enriched patient monitoring by critical care specialists as the greatest single step hospitals can take to reduce patient death and suffering. [For more details on this technology see Class 5, "New News"]
Blues and Advocate Settle
11-15-02: Per Crain's Chicago Business: Blue Cross and Blue Shield of Illinois and Advocate Health Care settled a two-month long dispute over reimbursement rates. Neither side would discuss the terms of the settlement. Under an earlier offer, Blue Cross officials promised to increase reimbursement to Advocate hospitals by 7% in 2003 and again in 2004. Blue Cross also offered to increase the amount it pays for HMO services by 10% to 15%, depending on the medical group.
As a condition of the settlement, Blue Cross will drop the antitrust lawsuit it filed against Advocate, which claimed the health system’s effort to negotiate on behalf of independent physicians who send their patients to Advocate hospitals was illegal.
An example of what some say is typical of what is going on in the United States as providers consolidate and wield a lot more power than they have in the past: Advocate in Contract Negotiations with the Blues
9-23-02: Per Crain's Chicago Business: Advocate Health Care, Chicago area's largest hospital group controlling about 15% of the local hospital market, is in contract negotiations with Blue Cross and Blue Shield of Illinois, the area's largest health insurer. Advocate claims that it has not received a reasonable share of the double-digit premium increases levied on employers in the last three years and plans to give Blue Cross a termination notice on September 30 canceling its hospital contract effective January 1. According to Advocate, if Blue Cross wants to renegotiate the contract it will have to set new rates for at least 1,400 physicians who until now have "accepted the one-size-fits -all fee schedule issued by Blue Cross annually to all doctors in the region." Physicians who have signed over their negotiating rights to Advocate are prepared to deal with the consequences if no agreement is reached according to Lee Sacks, Advocate's executive vice-president and chief medical officer. Blue Cross says it may challenge Advocate's right to negotiate on physicians' behalf and would consider removing from its network any physicians who join Advocate's rate-hike push.
According to this article, the "brinkmanship isn't new for Advocate" because in 1995 Advocate cancelled its contract with Aetna which kept Aetna members out of Advocate hospitals until last year when a new agreement was reached. The approach by Blue Cross and Blue Shield which negotiates hospital and physician contracts separately uses a one-fee system for physicians' services so that for example, an allergist in Chicago is paid the same amount as an allergist in a suburb of Chicago, such as Evanston. According to Philip G. Lumpkin, Blue Cross' vice president of provider affairs, the insurer objects to paying one physician more than another. Lumpkin says " Is it fair to say, because Advocate has a bigger arm and muscle, their doctors should get more than other doctors who are doing great things?"
Advocate claims that the public will be sympathetic to their argument in that Blue Cross has not given the physicians any rate increase in 2000 or 2001 and increased rates 7% this year and that those rates are not in keeping with premium increase or medical inflation. [See Class 10 for more on Antitrust]
Doctors Win First Round in Lawsuit in Kansas City, Missouri
Per AmedNews (7-1-02): A Kansas City inner city group of pediatricians successfully sued a Health plan based on a Medicaid pilot program risk sharing capitated contract they had entered into. The Missouri jury awarded six of the physicians more than $6 million - half of which was for punitive damages. The physicians claimed that the Blues health plan did not share the financial gains as they were required to by the contract but that the company also tried to hide the profits. The Blues plans to appeal the decision.
Frank Vaughters et al. v. Blue Cross and Blue Shield of Kansas City
3-10-02: From Crain's Chicago Business (3-10-02), the University of Chicago Primary Care Group has terminated its contract with Illinois largest HMO HMO Illinois (the HMO of Blue Cross and Blue Shield of Illinois) effective July 1, 2002. The physician group claims reimbursement from this HMO does not cover the cost of care for patients with serious health problems, that the U of C physicians are so that they are losing money on the arrangement. According to a Blue Cross spokesman in the article, the termination of this contract will cause 14,405 HMO Illinois members to find new doctors as they currently seek care from the U of C physicians group.
1-23-02: According to the Center for Studying Health System Change (HSC) article on 1-23-02, "Physicians More Likely to Face Quality Incentives Than Incentives That May Restrain Care" by Jeffrey Stoddard, Joy M. Grossman, and Liza Rudell, "physicians are more likely to be subject to incentives that may encourage use of services, such as patient satisfaction (24 percent) and quality (19 percent), than to financial incentives that may restrain care, such as profiling (14 percent)." Further this article states that: "critics contend incentives can create a conflict of interest between physicians' personal financial gain and their patients' best interests, which could compromise quality and patient trust. Supporters counter that incentives to encourage cost-effective care are necessary to hold down overuse of services that fuel runaway costs."
See: http://www.hschange.org/CONTENT/396/
12/3/01: Per amednews.com, "Power Struggle: Doctors Get Mixed Results in HMO Fight," with subtitle "When a Utah Group Took on the State's Dominant HMO, it Learned that their Leverage was Limited, and that Victory Comes Where you Can Get It" - Ogden Orthopedic and Neurosurgical Specialists represented 15 out of 16 surgeons in their specialties in the Ogden, Utah area says payments from the Salt Lake City-based Intermountain Health Care have been virtually halved since 1992; fed-up, they decided to hold out for a 38% increase, rather than the 4% Intermountain offered and the physicians wanted no part in a newly devised risk-based contract. Besides higher rates, CEO for the Ogden group said the doctors were looking to end Intermountain's maintenance of exclusive panels and the bureaucracy of the plan's standard practices, such as prior authorizations and preapprovals. When the physicians didn't get what they wanted, the Ogden group quit Intermountain, thinking that would get management's attention. Intermountain executives then refused to talk with the physicians and the health plan ran negative ads against the group, and began a search to hire doctors to replace them. According to the article, after several months of no progress and falling revenue, three of the 15 physicians returned to the HMO and the others along with 100 of the 130 or so orthopedists in Utah joined the Federation of Physicians and Dentists, a physician union. The Ogden group is hoping that public pressure generated from this fight will help them get what they want from Intermountain. Intermountain owns 22 hospitals, employs 400 doctors in Utah and Idaho (Note: For further information- see class 8 re: Integrated Delivery Systems), and is a significant presence in the region's health care market. In the town of Ogden, Intermountain has 83,000 members or 25% of the market. Statewide, the plan has a market share of 22%. Intermountain told the group that besides its own plans, it administered 49 other plans, and the doctors could not see any members of those plans either. According to the article, Intermountain's vice president of health plans said that "Employers are struggling with cost issues," and that "We've established a fee schedule for specialty groups that is consistent throughout the state. For Ogden, the schedule is same as in Salt Lake City, St. George and Provo." The insurer has been sending patients an hour away to Layton, Bountiful and Salt Lake City. Now the Ogden group is asking the Federation of Physicians and Dentists to work as its third-party messenger. In this role, the federation can share details of negotiations between physicians who, barred by antitrust laws, cannot discuss terms directly with each other. "Doctors have few cards with antitrust laws, while insurers are protected," said the executive director of the federation. (NOTE - FOR FURTHER INFORMATION ABOUT ANTITRUST - SEE CLASS 10). According to this article, some tactics that HMOs may use to help their position in negotiations with doctors is to (1) individually credential and contract with doctors so that it is easier to pick and choose who they want on their panel during contract renewal times; this way the insurer can dismember a group; and (2) hire its own physicians - bring its own doctors into a city to undermine negotiations with area physicians. Consumer choice might be the greatest bargaining chip for physicians such as patients who are upset about driving an hour to see their doctor when they have services available locally.
Are More and More Doctors Learning to Shun Bad HMO Contracts?
10/15/01: According to an article in AmNews (10/15/01) And they say they get more as a result. More job satisfaction and less aggravation. More time to spend with patients, because the patient loads are smaller. More money and less red tape.
Dr. Hess, whose last HMO contract expires this year, gets paid about 25% more for seeing fewer patients.
Some anecdotes of ways the doctors who refused capitation and stuck to fee for service survived:
 | A Mountain View, Calif., neurologist, looked through all of his insurance contracts and identified the worst plan to do business with. "I said, 'Who's giving us the most trouble? Who's not paying? Who's paying at the lowest rates?" He gave that plan an option of renegotiating. The plan wasn't interested. He sent notification he was dropping the contract. When presented with all-or-nothing contracts, he opts for nothing and claims to get more as a result: More job satisfaction and less aggravation; more time to spend with patients, because the patient loads are smaller; more money and less red tape. |
| A family physician in Austin, Texas, cut all but one HMO contracts, and lost more than 650 patients and $12,000 in monthly income, but was able to withstand the hit because he also practices alternative medicine and has other businesses. About 33% to 50% of those patients eventually came back, he said. |
| A family physician in suburban Portland, Ore., saw that his Medicare patients were willing to pay more out of pocket premium to stay with him when he opted out of participating with some HMO plans. |
| In 1989, a Roseville, Calif., general practice physician, started his practice as fee for service, no HMO, "The first day we were open I saw three people. I thought this was a bad thing," Dr. Taylor said. "I starved for the first two years." He survived by doing physicals for truck drivers, pre-employment screenings for grocery store chains and signed with other PPOs. A year ago, the office stopped taking new patients. |
Other Viewpoints:
| According to the article: "While some doctors are encouraging about dumping HMO contracts, others warn that a physician attempting to go without them must have an established practice, preferably in a more affluent community."; and that |
| This is not an option for doctors who take care of people at medium- or lower-income levels," |
8/30/01: According to an OIG Inspection Report actual acquisition cost of brand name drugs averaged 21.84 % below AWP in 1999 for prescription drugs reimbursed by States under the Medicaid program, not including dispensing fee. This is based on research of 200 brand name drugs with the greatest amount of Medicaid reimbursement in 1999 in which it was calculated that as much as $1.08 billion could have been saved if reimbursement had been based on a 21.84 percent average discount from AWP. Most States use average wholesale price (AWP) minus a percentage discount as a basis for reimbursing pharmacies for brand name drug prescriptions. This discount averaged about 10.31 percent nationally in 1999. Centers for Medicare and Medicaid Services (CMS) will encourage States to review their estimates of acquisition costs in light of these findings.
Consider exclusive contracts between physician groups and hospitals. If a hospital decides to enter into an exclusive agreement with a particular physician group then would a physician not part of that group be entitled to a notice and hearing under the hospital bylaws prior to the exclusive agreement being granted?
The Illinois Supreme Court recently considered this issue in the case Garibaldi v. Applebaum. In this particular case, Abel Garibaldi, MD, a board-certified cardiovascular surgeon, had clinical privileges at St. Francis Hospital and Health Center in Blue Island, Ill. Dr. Garibaldi had been a member of a cardiovascular group that dissolved due to differences among its members. A new group was formed that did not include him. A member of the newly formed group, Robert Applebaum, MD, entered into an exclusive contract with the hospital that allowed only himself, employees of the new group and those who subcontracted with him to perform open heart surgery at the hospital. This case held that Dr. Garibaldi's privileges were not removed, suspended or reduced based on the first exclusive contract. While this case was proceeding through the court system, the Illinois' Hospital Licensing Act was amended to direct hospitals that contemplate exclusive contracts with professional groups to adopt bylaws that provide for notice and hearing procedures for practitioners affected by the contract.
For a good overview of restrictive covenants and corporate practice of medicine issues in Illinois see the case: Carter-Shields v. Alton Health Institute and Community Primary Care Physicians, 5th District, November 3, 2000, No. 5-99-0359. http://www.state.il.us/court/2000/5990359.htm
This is a recent Illinois appellate court case in which a physician entered into an employment contract with a health institute. The employment contract had a restrictive covenant in it, specifically a two -year, 20 mile radius non-compete clause stating that essentially the physician agreed for a period of two years from the date the agreement is terminated for any reason that she will not, without the prior written consent of the health institute:
"directly or indirectly (i) provide or become associated with any other hospital group or other entity of any type engaged in the provision of medical or health care services or related administrative services within the medical practice area, which for purposes of this Agreement is the area within a twenty (20) mile radius of the Office; (ii) solicit, divert, take away, interfere with, or contract to provide or render medical services to patients treated by Physician during the term of this Agreement; or (ii) [sic] solicit any person who is now or is hereafter an employee of [health institute] or is now or hereafter engaged as an independent contractor of [health institute] to become an employee or to be engaged as an independent contractor of a hospital medical group or any other entity that is competitive with [health institute] (collectively the 'Non-Competition Covenant')."
This Appellate Court basically held that the employment contract was void in the first place based on the principles of the corporate practice of medicine and that even besides that, the non-compete clause in the employment contract was an unreasonable restraint of trade, did not protect any legitimate business interest, and was unenforceable on public-policy grounds. The Appellate court in this case reversed the trial court's decision of allowing, though modifying, the restrictive covenant.
This Appellate Court looked at how covenants not to compete are generally not looked upon with favor by Illinois law because they operate at least as partial restraints of trade. Though, there are situations where enforcement of a covenant not to compete is warranted. This Court also looked at the American Medical Association's position of disfavoring restrictive employment or partnership agreements among physicians as not being in the public interest (Section 9.2 of the Opinions of the Council on Ethical & Judicial Affairs of the American Medical Association (1986).
An interesting point raised in this case about the corporate practice of medicine issue was the quote used from a 1935 case in which this Appellate Court states that "those words, spoken 65 years ago, are no less true today. The Appellate Court states that:
"In large part, the public-policy prohibition against the corporate practice of medicine stems from concerns about lay control over professional judgment. Most patients would agree that a physician's loyalty should be to his or her patient and not to an employer concerned about cost control and business decisions.
The quote from the 1935 case, that this Appellate Court writes "those words, spoken 65 years ago, are no less true today" states:
"To practice a profession requires something more than the financial ability to hire competent persons to do the actual work. It can be done only by a duly qualified human being, and to qualify something more than mere knowledge or skill is essential. The qualifications include personal characteristics, such as honesty, guided by an upright conscience and a sense of loyalty to clients or patients, even to the extent of sacrificing pecuniary profit, if necessary. These requirements are spoken of generically as that good moral character which is a prerequisite to the licensing of any professional man." Dr. Allison, Dentist, Inc. v. Allison, 360 Ill. 638, 641-42, 196 N.E. 799, 800 (1935).This Appellate Court case distinguished itself from the Illinois Supreme Court Berlin case (Berlin v. Sarah Bush Lincoln Health Center, 179 Ill. 2d 1, 688 N.E. 2d 106 (1997) by stating the essentially the Berlin case was limited to only licensed hospitals and this Appellate Court declined to extend the holding in Berlin to the health institute or any similar health care provider.