Anesthesia Practices Prepare for the Health Insurance Exchanges

Health insurance exchanges (HIEs) will open in every state by October 1, 2013, as mandated by the Affordable Care Act (ACA).  Their basic role will be to permit consumers to compare and purchase qualified insurance plans online.  Estimates of the numbers of individuals who will enroll in HIE plans during the six-month enrollment period that starts on October 1st vary from seven million (Congressional Budget Office) to four million (Citigroup investor survey released last Monday).  Many of these enrollees will be eligible for federal subsidies to help pay for the coverage.

The issue for anesthesiologists and other physicians is whether to participate in the HIE health plans that are seeking to sign them up.  The clock is running; coverage under the HIE plans will begin as early as January 1, 2014.  This Alert will discuss the questions and considerations that will help groups decide how to proceed.

Bear in mind that some of the HIEs will be run by the state, some by the federal government and some through a state-federal partnership, as noted in our Alert dated July 22, 2013, “Will the Health Insurance Exchanges Mean More Patients for Anesthesiologists?”  Because each HIE is unique, the numbers and types of health plans offering products through that exchange or “marketplace” will differ from one state to another.  There are general categories of issues to understand, but be wary of extrapolating from one qualified plan to any other.

Avoiding Involuntary Participation

Before looking at the merits of the participation decision, make sure that the practice remains in charge of the decision.  Many insurance companies have sent out “Dear Provider” letters inviting physicians to participate in their HIE plans.  Other letters require physicians contracted with their commercial products to opt out of new HIE products or else be automatically included on the HIE plan provider panel, with non-negotiable payment rates unilaterally set by the plan.

Despite the autocratic tone of some insurance company letters, the rules of contract law still apply.  The ACA did not do away with those rules or otherwise impose involuntary participation on anyone.  Physicians have the right to opt out of unsuitable health plans—but typically the “Dear Provider” letters have set very tight deadlines for the physicians to exercise that right.  Recipients of Anthem’s March letter inviting them to participate in the payer’s various PPO products in the Ohio Exchange Networks, for example, had fewer than 30 days from the time the letter reached them to notify Anthem of their decision to opt out.  Another Ohio third party payer, Buckeye Community Health Plan, set an opt-out deadline of fifteen days from receipt of its letter (and promised to call the physician who chose to opt out to discuss his or her decision).

Some insurers, it should be noted, have been quite reasonable about releasing anesthesiologists who did not respond by the deadline considerably later.

If a practice does not manage to opt out in time and the health plan insists on holding its physicians captive, however, there will always be another opportunity to de-participate from the HIE product.  Even the October 24, 2012 “Dear Provider” letter from Anthem Blue Cross in California, which was so misleading as to require a special explanation to members from the California Medical Association (CMA), was accompanied by a proposed contract amendment that contained provisions for opt-outs or later de-participation (“Either party may terminate this Addendum [i.e., PHYSICIAN GROUP’s participation in the Individual/Exchange Network] by giving at least ninety (90) days prior written notice to the Other.”). 

The November 13, 2012 CMA Alert spelled out the bottom line:  “As always, physicians are encouraged to carefully review all proposed amendments to payor contracts. You do not have to accept substandard contracts that are not beneficial to your practice.”  In general the latter statement is true, but in one situation practices may have to put up with substandard contracts until the applicable renewal date:  when their participation agreements with managed care plans obligate them to participate in all of the plan’s current or future products.  The consequences of these all-products clauses are so nefarious that groups should negotiate explicit exclusion of other products without their affirmative agreement when participation contracts—even those that are silent on the point—come up for adoption or renewal.  In any event, it is a good idea to review your current contracts so that you know whether they commit you to new plans, or to unilateral rate modifications such as those set forth in some of the “Dear Provider” letters or their addenda.

Wording matters greatly in contractual documents, including letters inviting contracted physicians to opt in or requiring them to opt out of HIE plans.  Read correspondence and attachments from your own health plans very closely and take the indicated action.  If something is unclear, contact the plan representative for an explanation.

If you do not know whether your health plans consider you to be participating in their HIE products, first determine whether they are offering products through your state HIE.  The largest commercial health insurers are “keeping a low profile,” according to an article headed “Big Insurers Skip Health Exchanges” appearing on page B2 of the Wall Street Journal on September 19th:  Cigna and UnitedHealth will each offer HIE plans in fewer than six states and Aetna in only seven.

Once you have found out whether the health insurers with whom you participate are selling HIE products in your state, it would be prudent to check with them directly as to your inclusion on the provider panels.  You may also want to discuss with them some of the issues raised by the decision whether to participate, below.

Deciding Whether to Participate

Assuming that the choice is yours, how do you decide whether to accept a health plan’s invitation to participate with its HIE product(s)?  Again, the “Dear Provider” letter and any attached documents such as fee schedules or contract amendments should give you important guidance on some of the key issues.

Which insurance products?  California Anthem Blue Cross announced that it was amending Blue Cross Select PPO network physicians’ contracts to include their practices in the new "Anthem Individual/Exchange Network," serving both Individuals who purchase coverage through the HIE and Individuals who enroll in Anthem products outside of the HIE.  The effect would be to apply the unilaterally-set fee schedule rates to all individual business, and not just to HIE enrollees.  Similarly in Ohio, Anthem invited physicians to participate in both its HIE and commercial individual and small-business health insurance products. 

The point is that you may be agreeing to participate in more products than just an HIE plan, and the greater number of potential patients may alter the financial picture.

Adequacy of payment rates.  The HIEs are designed to create competition among health insurers.  The ACA regulations limit variation in benefits, so the insurers will compete by minimizing provider costs.

The “Dear Provider” letters usually include information about the HIE plan fee payment rates.  In South Carolina, the Blue Cross Blue Shield plans have indicated that they will pay 100% of Medicare.  The anesthesia conversion factors that we have seen range from $0 to $11 less than the current contracted rates.  The announced payment for non-anesthesia services has been as low as 85% of Medicare.  If the rates given in the “Dear Provider” correspondence are incomplete, e.g., a sample rather than a full fee schedule, do not sign up until you have received satisfactory information. 

Whether there is any room for negotiation depends, as always, on the extent to which the insurer needs the physicians on its panel.  The popularity of narrow networks, which restrict the number of providers—Blue Shield of California will limit HIE plan enrollees to about 50% of its regular physician network; Health Net HIE product patients in Los Angeles will have access to only 30% (“Insurers limiting doctors, hospitals in health insurance market,” Los Angeles Times, September 14th)—may have the unintended consequence of enhancing the bargaining power of the anesthesiologists whom the narrow network wants.

Anesthesia practices will need to analyze their own costs and capacity to determine whether participating in the HIE plans makes financial sense, just as they do with other payers. 

Number of patients.  Practices will also need to weigh the financial impact of increased numbers of patients and cases against reduced payments.  This calculation will have to be very rough given the difficulty of predicting the size of HIE plan enrollments.  There is a widespread expectation that many of the new enrollees will have been uninsured and therefore are more likely to have chronic diseases or other medical conditions that will make them heavy users of health care services. 

We also know that more employers will continue providing insurance to their workers rather than dropping the benefit and relegating the employees to the HIEs.  In 2012, only about half of employers said that they would continue to offer coverage.  This year that figure rose to 70%, according to the International Foundation of Employee Benefit Plans (“Employers firm up health insurance benefit plans for 2014,” Amednews.com, June 10, 2013).

Other contract terms.  In order to decide whether to sign up, it is imperative that you understand the parties’ mutual obligations.  If the contract itself looks benign, it may nevertheless incorporate by reference an administrative procedures and policies manual that you cannot accept.  These include the amount of time to file and to pay claims as well as reporting and recordkeeping requirements. As another example, appeal procedures and dispute resolution policies could be so onerous as to negate any real recourse.

Requirements related to quality and performance may or may not be acceptable.  The basic contract may be silent or vague on the subject.  Request and examine any external documents that are made part of the contract.

Is your hospital/surgery center going to participate?  If not, there is less reason for you to do so.  If your hospital(s) go after the HIE business, however, your practice may wish to align itself. 

Many hospitals are hard at work helping their uninsured patients obtain coverage through the HIEs.  Some are hiring contractors to enroll consumers or receiving federal grants to train enrollment "navigators."  The California Hospital Association recently released a guidebook to help hospitals enroll uninsured patients in Covered California, the state HIE.  The idea is clearly that as long as the hospitals will be caring for the patients who currently have no insurance in any event, they would do well to help them enroll in the new HIE products and thus obtain some level of payment.  Some insurance money rather than no insurance money might be attractive to the participating hospitals’ anesthesiologists as well.

A number of the HIE plan participation contracts require the provider to refer only to other network providers except for emergencies or prior authorization to go outside the network.  If the hospital is a participating provider, and the anesthesiology group opts out, the group might jeopardize its exclusive hospital contract.  Consider the possibility.

We can expect many interesting developments as we all gain experience with the new health insurance exchanges and the health plans that offer HIE products.  Your comments and questions are welcome, and we will try to provide the answers.