Squeezing HMO Docs and the Patient Aftermath

In an article entitled "Battling Over Payments: Patients Caught In Aetna-AMA Out-Of-Network Fight " (Hartford, CT Courant), January 11, 2008, we learn of yet another dispute about how much, in this case, Aetna, "pays out-of-network doctors in some instances and the right of those doctors to bill HMO members for charges the insurer doesn't pay." While, it's not unusual for someone who controls a certain market share to constrain pay or funds to a supplier, is it kosher to corral and squeeze doctors who are not direct suppliers to the HMO? Worse, where does it leave patients?

The background is that Aetna entered a nationwide settlement with doctors in 2003; it curtailed massive litigation over their claim payment practices, delays, denials and so forth. Nevertheless, apparently physicians feel the problem never went away; Aetna, however, says it's network approach is fair and it is only "trying to protect members from high charges."

In other words, if a huge insurer's HMO members "end up getting care from physicians who aren't part of the insurer's network because there was no opportunity to choose an in-network doctor," is it the patient's fault? The article says that dilemma is not uncommon in emergencies and with in-hospital surgical interventions when patients aren't necessarily in the right frame of mind to hand pick or check the references of in-network anesthesiologists or other specialists.

Now it should be noted that as of June 1, 2007, nationally, save New Jersey, Aetna HMOs have been reimbursing out-of-network providers 125% of Medicare's rates, which is less than what many doctors charge--thus, the balance billing of patients. In addition, Aetna tells HMO members who "involuntarily got out-of-network care that they're not liable for the balance billed by the physicians" and they send an "explanation of benefits" (EOB) to the patient "showing what it paid the doctor, and a letter telling members that if the doctor bills them for the balance, to send the bill to Aetna." That plan seems fairly passive-aggressive to me, especially since patients are still getting hit with the difference and the outside doctors, may of whom are a scarce resource in a community or on-call to the hospitals, are placed in an "adversarial position."

As the American Medical Association (AMA) finds it, this policy "fails to recognize each physician has different practice costs as reflected by their billed charges… "It is simply arbitrary and capricious for Aetna to deem 125 percent of Medicare to be a fair payment across the board."

There's another side to this story, however: "Some doctors charge three or four times what Medicare would pay." and Aetna says "It's our obligation,… "to develop mechanisms to protect members and employers from these kinds of billing practices when members do not have a meaningful opportunity to select a participating [in-network] provider."

Below, some reader responses:

From: Harvey Frey, MD, PhD, JD

Sent: January 11, 2008 11:04 am

How unreasonable is a payment of 125% of what Medicare would pay?

Should a doctor or hospital who bills 3-4X Medicare automatically get it?

Certainly, the notices I get from Medicare show them routinely slashing the amount billed. Does that mean providers are overcharging, or that Medicare is underpaying?

From: Phil C.

Sent: January 11, 2008 2:55 PM

Whatever the number is, the HMO purpose is to force physicians into a fixed payment rather than to negotiate a contract. It is a huge issue in California pitting the DMHC against the ER docs.

Does Medicare pay to little or too much? Well, if you are an HMO withholding service and testing, you can make a lot of money off Medicare, especially here in California. On the other hand, if you truly try to evaluate seniors within the oath and following their collage of symptoms to the point of trying to catch cancer early, the Medicare pays much too little. So I think the docs are offering 150% of the Medicare rate. For me. I am too busy to participate. But I told DMHC that I was not happy that they were trying to force me into HMO contracts that I have hoped to escape in rural medicine.

From: Gilbert R.

Date: January 11, 2008 3:24 PM EST

If a patient must for reasons of medical necessity have care provided to them by a non-par provider, it is the HMO's responsibility to pay the bill in full, or by settlement with the provider. The patient should not be harmed at all, regardless. ER and Ambulance are common examples.

However some physicians have used monopolistic agreements with hospitals to refuse to contract with plans, and to charge rates that are exorbitant. 3-4 times Medicare would be a good deal, I have seen them 20-30 times. That then gets into a debate as to what is reasonable and customary, and a physician's obligation to bill reasonably and customarily. there is discussion in some states to put a cap on these charges by non-pars. The hospital granted monopolies to anes, er, neonatology and path are sometime exploited. Should the hospital not have an obligation in this regard? The non-par rates that are exorbitant are not charged uniquely to the HMOs, but to the general community, self-insured and uninsured? Should not the payer, patient or plan, be protected in some manner from such actions?

If the patient goes to a par hospital, and uses are par surgeon, and then finds that the anesthesiologist is not par, then there is an interesting issue of who is responsible, if it is elective. Should the hospital have warned the patient? The surgeon? Has the hospital put themselves in a voluntary bailment situation, and are they responsible? Or should the HMO end elective surgery at that hospital to protect the patient from the economic exposure (economic in a deductible or no-coverage for non-par use, or from higher premium due to higher anes rates).