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FMA plan could cost $11M

By Carol Gentry
4/10/2009 © Health News Florida

The Florida Medical Association’s number-one legislative priority for this session -- changing the way doctors are paid in the state's self-insured health plan -- took a hit on Thursday when an actuary said it could cost $11 million.

That hole in the state health insurance fund would have to be made up by taxpayers. Lawmakers have already ruled out a jump in premiums for state workers, who have not had a raise in three years.

But there isn’t any extra money in the state budget to tap this year – quite the opposite. The prospect of rising costs has consumer groups joining with insurers in opposing Senate Bill 1122.

“We pay twice what Europeans pay for health care already,” says Richard Polangin of Florida Public Interest Research Group. “Now is the wrong time to raise costs.” 

Orthopedic surgeon Michael Wasylik, the FMA’s managed-care committee chair, says the figures are wildly inflated because of an underlying assumption – that if it passes, a lot of doctors will drop out of health-plan networks. That’s not so, he says.

“I’m flabbergasted that there’s so much resistance,” he said. That resistance is being led by Blue Cross and Blue Shield of Florida.

SB 1122 involves changing the insurance payment system in preferred provider organizations, or PPOs. These plans offer doctors a deal: If you join our network, we’ll give you access to lots of patients in exchange for substantial discounts.

Blue Cross can get deep discounts because it’s the state’s largest insurer, with 4 million customers. It also serves as administrator for the state's self-funded PPO, which covers about 42 percent of those eligible for state coverage, about 44,000 people. HMOs cover 45 percent of the state group, and nearly 13 percent are uninsured.

If a Blue Cross PPO patient sees a doctor inside the network, the insurer sends the payment directly to the medical office. But when members get treatment from a provider outside the network, they pay the bill themselves and get reimbursement later from Blue Cross for its share of the bill. Current law requires PPO's to make direct payment to out-of-network providers only in emergencies.

On its face, SB 1122 appears simple and innocuous: It requires insurers to pay providers who aren’t part of their PPO network directly, instead of sending the payment to the patient, as long as the patient authorizes it. That authorization is called "mandatory assignment." 

“It doesn’t change what they pay,” says the FMA's Wasylik. “They’re just sending the money to the doctor instead of the patient.”

He gave an example of why this is important to FMA: Patients who seek treatment for drug addiction outside their network have been known to take the insurance check and spend it on drugs rather than pay for their treatment. Doctors end up trying to collect the money.

But opponents say this issue is not that simple. It would allow doctors outside the network – who haven’t agreed to discounts – to bill Blue Cross directly at rates much higher than the in-network doctors receive, said company lobbyist Paul Sanford.

That would influence some to drop out of the network, he said. And even though patients’ co-payments would be higher if they went to the out-of-network doctors, some would do so rather than change physicians. Also, they would have to pay only their share of the bill, rather than the full payment upfront.

An actuary hired by Blue Cross to forecast what would happen if SB 1122 passes said more than one in four visits would be to out-of-network providers and that the insurer would have to raise in-network doctors' payment rates by 11.5 percent to keep them from dropping out, especially in regions and specialties where there is great demand for services.

All of this would push up state costs by nearly $16 million this year and double patients’ out-of-pocket costs, the Blue Cross consultant predicted.

The matter is so complicated that the Florida Department of Management Services (DMS), which contracts with health insurers to cover state workers and retirees, hired its own actuary.

A report by Gabriel Roeder Smith & Co. (GRS) made public on Thursday forecast that the behavior of both doctors and patients would likely change in significant ways if SB 1122 passes.

While GRS’ assumptions were more moderate than Blue Cross’s, they were still grim: 15 percent of visits would be out of network and payments to doctors in the network would rise by 7 percent. GRS did note, however, that this sort of forecasting is not an exact science.
"Predicting provider and member behavior is difficult," the report says. "The reaction to mandatory assignment is likely to vary by provider specialty and market," with rural areas likely feeling the greatest impact.

Even though the bill sounds as though it would make life easier for consumers, some consumer advocates are fighting it because they believe the actuaries and fear costs will jump. They say insurers need the leverage of reserving direct payment to doctors in their network to discourage doctor groups from opting out.

“I don’t think there’s any doubt that networks would be weakened” if the PPO bill passes, said FPIRG’s Polangin.

A crippling amendment, attached earlier this week, would limit fees by providers who aren’t in the network to 80 percent of the current Medicare fee schedule except in emergencies – an amount so parsimonious that it’s unlikely to find any takers.

But there’s a sense that the amendment will likely be stripped from the bill as it moves on, putting the issue back in play.

--Contact Carol Gentry by e-mail or at 727-410-3266.