by Mark Friedman on Monday, Feb. 23, 2004 12:00 am
"We did call [Arkansas Blue Cross and Blue Shield] immediately upon learning the news on Friday," Fodi said. "And our calls were not returned."
Southwest has been trying to get in the ABCBS network for years, but to no avail.
ABCBS spokeswoman Max Heuer said she didn't know with whom Fodi left messages, but ABCBS has a procedure in place for health care providers to apply to participate in its networks.
"And that procedure is pretty much in place, and it's not going to change
until the appeal process is over," she said.
For nearly 10 years, ABCBS has resisted having to open its managed care networks to "any willing provider" and frustrated those wanting in. But the tables were turned when Moody lifted his permanent injunction barring enforcement of the Patient Protection Act that the Arkansas General Assembly enacted in 1995.
The Patient Protection Act requires insurance companies to pay the same benefits to any provider willing to accept the same terms as the incumbent in-network providers.
ABCBS said it will appeal Moody's order and warned if it is unsuccessful, health care costs will rise. Proponents of AWP insist that patient costs should not rise, although the law may encourage more competitors to enter the market. Hospitals, for instance, may find that more of their staff physicians are setting up competing outpatient services that they currently refer to hospitals.
Still, many hospitals across the state have been effectively locked out of the system that controls more than half of the state's insurance market since 1993, when ABCBS partnered with Baptist Health of Little Rock to form the health maintenance organization known as Health Advantage.
Other than increasingly strident complaints from hospitals that lacked access to ABCBS' hundreds of thousands of insured customers, ABCBS was under no pressure to open its provider lists to Baptist's competitors. After all, Moody had issued a permanent injunction against AWP in 1998 after finding that it violated the federal Employee Retire-ment Income Security Act.
Then, last April, the U.S. Supreme Court reopened the debate by ruling that a similar law in Kentucky was acceptable.
ABCBS and its subsidiary, USAble Corp., responded by filing a lawsuit in U.S. District Court in Little Rock asking a judge to settle the question. The insurance companies named St. Vincent Infirmary Medical Center, Little Rock Cardiology Clinic P.A., Southwest Regional Medical Center and the state of Arkansas as defendants.
All of the defendants except the state responded with countersuits claiming financial damages as a result of not being allowed in the Blue Cross networks. Although the damages weren't specified, one attorney working on the case estimated it could be more than $50 million.
If Moody's ruling is upheld and AWP is enforced, several in the health care industry are unsure what will happen.
"It's a new experience for most of us in the state, if it happens," said St. Vincent Health System President and CEO Steve Mansfield.
On the one hand, Mansfield said, patients will be able to choose what doctors or hospitals they use without having to pay more because the physician is "out of network."
On the flip side, he said, patients whose insurance plans now steer them to St. Vincent could choose other hospitals instead. And hospitals could even lose patients to the doctors who are on staff.
For instance, Mansfield said, doctors who own or buy a computed tomography (CT) scanner could send the patients to their own machines rather than to a hospital and be assured of being reimbursed the going rate by the patients' insurance plans.
Some insurance companies currently deny doctors the right to bill for the cost of running the machines.
"Any willing provider may change that; I don't know," Mansfield said.
Dan Caldwell, executive director of Little Rock Cardiology Clinic, said he didn't know what impact AWP would have on the lawsuit his business filed against Baptist Health on Feb. 11.
Six cardiologists who are partners in the clinic accused the Little Rock hospital system of canceling their staff privileges to limit competition. The cardiology clinic has an ownership stake in Arkansas Heart Hospital in Little Rock.
Baptist Health spokesman Mark Lowman said the hospital doesn't comment on pending litigation.
Caldwell said, however, that if ABCBS complies with AWP, access to Baptist Hospital would no longer be essential.
"We (would be) set because we can provide care at the Heart Hospital or St. Vincent," he said.
Still, there are other issues in the lawsuit that need to be addressed, he said.
"There's a number of reasons that our doctors need to stay on the Baptist Medical staff other than being in the Blue Cross plans," Caldwell said.
ABCBS said the problem with AWP is health care costs will jump.
Heuer, the spokeswoman for ABCBS, said closed networks give health insurance companies the leverage to negotiate price discounts with providers, holding down the cost of health care as much as possible.
"If there weren't any networks and if everything looked the same, there wouldn't be any incentive for providers to negotiate because there would be no benefit for them," she said.
Heuer said she expects costs to rise at least 10-12 percent, based on the price difference between a PPO network it has now and an indemnity plan, which allows patients to see any doctor they want.
But Mansfield said he couldn't follow Heuer's logic.
"I don't think they can make that claim," he said. "I think what any willing provider may do is it may reduce some of their profit. That's a whole different issue."
Under any willing provider, ABCBS saw a $48.16 million profit on $751.59 million in premiums in 2002.
Mansfield also disputes the idea that ABCBS has used closed networks to negotiate the best possible prices.
St. Vincent has twice made formal proposals to provide hospital services for 10 percent less than ABCBS' current contract with Baptist Health. In a Jan. 5 letter to Mansfield, ABCBS President and COO Sharon Allen rejected the first offer, saying it couldn't discuss the offer because of the confidentiality of network agreements with Baptist.
The second offer Mansfield made on Jan. 27 is still open, he said. It expires Feb. 28.
Mansfield said if ABCBS took the offer it could save between $15 million-$20 million.
"I don't think Mr. Mansfield knows anything about our business," she said. "I would assume he's busy trying to run his business. All we know is that everything we do, we try to keep costs down to our members. Mr. Mansfield's facility is part of a network, and I'm assuming they're trying to do the same thing."
David Wroten, assistant executive vice president of the Arkansas Medical Society, also said he didn't believe insurance costs would rise as a result of any willing provider.
"Insurance rates are going up every time we turn around," he said. "There has never been any proof that any willing provider increases insurance rates."
Patrick Padgett, staff counsel for the Kentucky Medical Association, said health care costs there haven't risen as a result of any willing provider.
The health plan sets the payment, and the doctors accept it or not.
"I don't know how that would increase the cost because if that physician didn't perform the service for that cost, another physician would have," Padgett said.
But Rachel Phelps, executive director of the Kentucky Association of Health Plans Inc., said the ruling has caused rates to rise, although she didn't know how much.
Kentucky Insurance Department spokeswoman Ronda Sloan said she was unaware of any study on insurance rates after enforcement of AWP.
"Any willing provider has been a mixed bag. It's good for the consumer because it broadens choice and allows for continuity of care," Sloan said. "Some insurers think it hampers their ability to do business. To the extent that they believe that, it could cause an increase in rates."
Winner and Losers
Wroten said the big winner in any willing provider is the patients.
Dr. Scott Beau of the Little Rock Cardiology Clinic said he doesn't know how much money he's lost as a result of ABCBS' closed networks, but he estimates that more than 100 patients who wanted to see him had to go to another doctor because he wasn't in their network.
"That's a pretty traumatic experience for a lot of patients," he said.
Caldwell, the executive director of the clinic, said the clinic's doctors still see hundreds of patients who are out of its network.
"It's more expensive to (the patients), and we have to discount a lot more to try to help out on that," he said.
Since 1997, the clinic has lost $4 million-$5 million by discounting patients' bills, he said.
Fodi, the Southwest Regional CEO, said admitting any willing provider to the Blue Cross network will certainly increase revenue to the hospital. But she wasn't sure how much.
"We had to turn away patients because of the insurance issue," she said.
She said careful management had allowed the hospital to survive without having contracts with ABCBS or Qualchoice of Arkansas Inc., which combined control about 70 percent of the market.
"It certainly can be doing better," she said.
- Video: ASU Exploring On-Campus Hotel, Convention Center
- After Supremes' Decision, Womack Urges Congress to Act on Online Sales Tax
- WSJ Examines Mark Pryor, Tom Cotton Senate Race
- #ARWX: Mike Beebe Declares Statewide Emergency as Winter Storm Arrives 26 mins ago
- Update: John Stacks, Banker and Owner of Mountain Pure Water, Indicted on 11 Counts 2 days ago
- Arkansas Best to Close 30 Service Terminals 22 hours ago
- Stratton's Market Growing In Both Size and Offerings 4 days ago
- Goodwill to Open 9th Little Rock Store Next Week 16 hours ago