Anesthesiologists say Blue Cross NC ‘abusing’ surprise billing ban to drive down rates

Dive Brief:

  • An anesthesiologist organization is accusing Blue Cross Blue Shield of North Carolina of using the upcoming surprise billing ban as justification to “strong-arm” in-network clinicians into lower rates.
  • The payer, which covers roughly 3.8 million people in the state, has been sending letters to anesthesiology and other physician practices, including radiology and emergency physicians, threatening contract termination unless the physicians agree to payment reductions ranging from 10% to more than 30%, the American Society of Anesthesiologists said.
  • In the letters to 54 practices sent earlier this month, Blue Cross NC cites the No Surprises Act passed in December as the reason for the payment reductions, though it doesn’t go into effect until 2022. The payer defended its actions, with a spokesperson citing the need to curb the high cost of medical care and noting only practices charging hyper-inflated rates received the letters.

Dive Insight:

The fight between payers and providers over specifics of the ban’s implementation has been heating up, with ASA raising the alarm against what it perceives as Blue Cross NC’s “take it or leave it” ultimatums to in-network clinicians, using the consumer protection legislation as a bargaining chip to negotiate more favorable rates.

“The clear intent of the insurance company in taking this action is to improve its negotiating position against community physician practices in the dispute resolution process outlined in the recently released Interim Final Rule implementing the legislation,” the ASA said.

The purpose of the No Surprises Act is to protect patients from unexpected out-of-network bills, which can be exorbitantly expensive. The legislation calls on payers and providers to resolve any payment disputes through an impartial third-party arbitration process but left it up to HHS to determine specifics, resulting in fierce lobbying from both sides as to their preferred method of arbitration.

Provider interests were furious when the Biden administration in October set payments from plans to any out-of-network providers, or the “qualifying payment amount,” as the median in-network rate for the same or similar specialty within a geographic area.

Doctors argued that step, which solidifies the baseline for arbiters to consider, unfairly benefits payers. Exact and final QPAs aren’t yet available pending the rules’ finalization.

But in the letters, Blue Cross NC said the law and the determination of the QPA allows for a “significant change” in its contracting approach with emergency service providers, hospital-based providers and air ambulance services.

VP of provider networks Mark Werner writes that Blue Cross NC has previously contracted with some practices at what it considers an inflated rate, and is now able to seek to contract at a more reasonable and market-based rate.

“The Interim Final Rules provide enough clarity to warrant a significant reduction in your contracted rate with Blue Cross NC,” Werner writes in one letter sent Nov. 5.

“If we are unable to establish in-network rates more in line with a reasonable, market rate, our plan is to terminate agreements where the resulting out-of-network QPA would reduce medical expenses to the benefit of our customers’ overall premiums,” Werner said.

Blue Cross NC asked for an immediate reduction in rates to buy the plan “breathing room” before negotiating the final rates when the QPA amounts are established. That way, the payer won’t need to terminate outlier contracts to avoid payment levels after Jan. 1 that are significantly higher than the default out-of-network QPA, Werner said.

A spokesperson for the Durham, N.C.-based payer said some in-network providers have been charging its members significantly higher prices than other specialty practices in the state, and up to 500% higher than what they charge Medicare patients.

The 54 practices that received letters are a “small percent of the thousands of contracts we have with providers and hospitals across the state who have agreed to negotiate more reasonable rates,” the spokesperson said.

ASA President Randall Clark argued the move threatens anesthesiologists’ ability to fully staff hospitals and other healthcare facilities.

But anesthesiologists are often fingered as one of the biggest drivers of surprise billing, as they’re often out-of-network even at in-network facilities and bill patients separately. That results in mammoth charges for patients who thought they were receiving covered care.

A study published last year found one in five commercially insured patients undergoing an elective surgery with in-network physicians received a surprise medical bill. Anesthesiologists were associated with the most out-of-network charges, with bills averaging more than $1,200.

But Blue Cross NC’s actions have “demonstrated what we explained to Congress and the rule-making agencies would happen: insurance companies will use their overwhelming market power and the No Surprises Act’s flawed rules to push more physicians out of insurance networks and fatten their own bottom line,” Clark said.

Despite the hubbub over the QPA, payers say establishing a median in-network baseline is essential to keep down what they perceive as inflated rates, and taking out-of-network charges into account in the arbitration process would result in sky-high payouts to doctors, driving up premiums for consumers.

Consumer and patient advocacy groups also supported the outlined process in the interim final rule.

But controversy over the method has resulted in multiple legal challenges to the ban from provider groups, including the Association of Air Medical Services and the Texas Medical Association, which argue the dispute resolution process gives the QPA (and, correspondingly, payers) too much weight.

Congress is also split, with 152 lawmakers penning a letter earlier this month stating the latest rules don’t reflect the intent of the law and create an imbalanced process to settle payment disputes.

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