Abington medical dispute highlights wide friction with insurers
January 29, 2012 | By Stacey Burling, Inquirer Staff Writer
Up to 10,000 Aetna subscribers are caught in the middle of a contract fight between the insurance company and a 19-member cardiology group that says it provides most of the heart care at Abington Memorial Hospital. Negotiation battles between hospitals or doctors and insurers that go down to the wire - and beyond it - have become more common in recent years as insurance companies have faced more pressure from subscribers and employers to curb costs.
The contract between Aetna and Abington Medical Specialists (AMS) expired Jan. 1. Patients can continue to see the doctors but are no longer covered in-network by Aetna. That leaves them with the choice of paying higher prices or finding new doctors.
Adam Cohen, a doctor at the practice, which has 17 cardiologists and two internists, said the dispute was about reimbursement. He said the group had not had a raise since 2006 and was paid well below national average rates. While Aetna has agreed to pay more, he said, their offer is well below what the doctors seek.
"They really exhibited no willingness to negotiate in earnest," he said.
Aetna said it has a responsibility to save money for its customers. Its offer, said spokesman Walt Cherniak, reflects "medical trend" in the area and what other cardiology groups are being paid. The cardiologists' demands, he said, "have been unrealistic." Cherniak said Aetna wants to keep the group in its network.
Independence Blue Cross, the region's other major private insurer, had disputes last year that left two significant urology groups out of its network. Premier Urology Associates, which has eight doctors in Langhorne, left IBC in July after the company cut its rates, said Ravi Rajan, a doctor in the practice. IBC and Academic Urology, which has 48 doctors in multiple locations, terminated their contract Nov. 30. According to IBC, Academic served 12,300 of its members.
Bernie Lynch, senior director of payer relations for the Pennsylvania Medical Society, said that it was still rare for doctors to drop their contracts with insurers in Pennsylvania, but they had become more careful about signing anew. "They've become more astute about what's included and what the fee base is and how it's going to affect the practice," he said.
Alan Zuckerman, president of Health Strategies & Solutions in Philadelphia, said more physicians had been leaving insurers' networks as insurers tried to freeze rates. "We're seeing a noticeable uptick of it nationally where physicians feel that they are not getting contracts that are acceptable," he said. "It doesn't usually last for very long because the reality is that the physicians generally can't function without a contract from an important payer."
Doctors, particularly those in small groups, are in a tough bargaining position, he said. Many feel they have little choice but to accept what insurers dictate. "It's not about being fair," he said. "It's a business deal."
After three years of tough economic times, he said, "doctors have to share the pain."
The economic pressures are leading many doctors to merge with other groups or become hospital employees.
AMS's Cohen said Aetna had been doing well enough financially to pay his group more. The company had operating earnings of half a billion dollars in its third quarter last year. Ronald Williams, who retired as Aetna chief executive officer in 2010, received $18 million in compensation that year, exercised stock options worth more than $50 million and got a pension valued at more than $9 million.
"What we pay our CEO is not related to what we pay cardiologists in Montgomery County, Pennsylvania," Cherniak said.
Cohen said the doctors want a contract that brings Aetna, which pays them less than Medicare or Independence Blue Cross, more in line with other insurers and national averages. They originally asked for a 27 percent increase in the first year and have now come down to an 18 percent raise spread out so that it results in a 14 percent increase that year, followed by a 6 percent raise the next year, and 3.5 percent the year after.
Aetna originally offered a three-year contract with increases of 3 percent each year. Cohen said they are now offering annual increases of 4 percent, 3.5 percent, and 3.5 percent.
Cohen said that the impasse had created a "major access-to-care issue" for Aetna patients in Montgomery and Bucks Counties.
Cohen's group cares for 85 percent to 90 percent of cardiology patients at Abington Memorial Hospital. In a written statement, Laurence M. Merlis, president and CEO of the hospital's health system, Abington Health, said: "In the best interest of our valued patients and employees, we sincerely hope that AMS and Aetna can come to an agreement very soon. We are encouraging both sides to continue active discussions for a quick resolution."
Academic Urology submitted a letter to the editor of the Philadelphia Inquirer in response to:
Abington medical dispute highlights wide friction with insurers
Dear Editor:
The Inquirer's reporting on the disputes between physician groups and health insurers ("Insurers, medical providers do battle" Jan. 29) emphasized economic disagreements without drawing the crucial link to quality patient care which should be the focus of health insurers, as it is with doctors.
In the case of Academic Urology, one of the groups cited in your article, Independence Blue Cross (IBC) demanded reduction of its payments by 38 percent from what the insurer had paid under our prior four-year contract. While that may seem desirable to the insurer in economic terms, it undermines the patients' experience of our quality care, advanced training with technology, and the intensely personal relationships patients have with their physicians.
And patients have felt the impact. On the very first day Academic Urology was without an IBC contract, a patient called seeking treatment for a stone in her only kidney. Upon learning her preferred urologist was "out of network," she felt compelled to seek an in-network doctor, who could only see her five days later. With her care thus delayed, she developed a life-threatening infection that required emergency surgery to treat--at a considerably higher cost than would have been the case had the insurer been willing to keep Academic Urology in its network. Another IBC-insured patient of ours recently had coverage for his prostate cancer surgery denied. He was told simply to "find another doctor," as if the choice of surgeon for something as serious and intimate as prostate surgery were the same as picking an entrée off a menu.
Academic Urology has successful relationships with virtually every other private insurer in the region. While we share their concern about healthcare costs, we know that maintaining quality care now avoids higher costs later. Cost and quality must be managed together. Unilateral and non-negotiable cuts by insurers are not in the patients' best interests. For Academic Urology's part, we have invested considerable time and effort in helping our patients arrange new health coverage or alternative payment options just so they can maintain their established medical relationships and the quality care with which they are familiar. This is paramount for our patients, and is at the core of everything we do.
Sincerely,
David J. Ellis, MD, FACS
President
Academic Urology, LLC
Cardiac unrest at Aetna
By John George
January 20, 2012
Another Philadelphia-area physician group is in a contract dispute with a health insurer over payment rates.
Abington Medical Specialists, a group of 17 cardiologists and two semi-retired internists, dropped out of Aetna's managed-care provider network Jan. 1 after the two sides could not come to an agreement on a new deal.
The Montgomery County doctors’ group, which employs a staff of 85, has offices in Abington, North Wales and Warminster. Its cardiologists handle about 85 percent to 90 per- cent of the heart-related procedures and consultations at Abington Memorial Hospital.
Aetna, based in Connecticut, is the Philadelphia region’s second largest health insurer behind Independence Blue Cross. It has almost 1.1 million managed-care members in the region.
Dr. Adam Cohen, a cardiologist with Abington Medical who has been with the group since 2003, said the practice has received no rate increases from Aetna since its contract began in January 2006.
Abington Medical Specialists’ position is the rates being paid by Aetna are at least 30 percent below the national average paid by commercial health insurers, below other lo- cal payers and less than the federal government’s Medicare program — which Cohen noted nationally is generally the lowest payer of physician bills.
In addition, Cohen said since Aetna is paying physicians in this area at reimbursement rates “well below national averages” it is difficult to recruit residents and fellows to come to or stay in this area after completing their training. Abington Medical supervises and teaches the house staff and fellows-in-training at Abington Memorial Hospital.
During negotiations over last year, the group initially sought a first-year 27 percent increase, Cohen said, “to get us near the prevailing rates,” followed by increases of 4 per- cent in the second and third years.
Aetna countered with a 3 percent increase per year for three years, according to the physician group.
Abington Medical later twice lowered its request for a three-year deal — initially to 21 percent in the first followed by 3.5 percent and 3.5 percent in the second and third years, then to 18 percent (consisting of two 9 percent increases in the first year), followed by 6 percent and 3.5 percent.
The doctors say Aetna’s last and best offer put forth on Dec. 15 was for 11 percent spread over three years (4 percent, 3.5 percent and 3.5 percent).
“We can’t run a business with that kind of reimbursement,” Cohen said. “We are fo- cused on caring for patients. They seem to be focused on finances.”
Walter Cherniak, an Aetna spokesman, said the company does not agree with the med- ical group’s contention that they are underpaid.
“We tried to negotiate with them through much of 2011 and have not been able to come to an agreement,” Cherniak said. “It was pretty clear to us some months ago we would be unlikely to get to a resolution with them, they were pretty well-entrenched. The offer they made to us was unrealistic. They are paid in line with what others are being paid.”
Cohen disputed the assertion saying Abington Medical inadvertently obtained a memo from Aetna in which the company stated the practice was underpaid compared to other groups in the area.Abington Medical Specialists’ doctors care for more than 8,000 Aetna patients, which represents about 15 percent of the practice’s patients.
Cohen said Aetna members wishing to continue being treated by an Abington Medical Specialists physician can still do so, but must pay the higher co-payments and deductibles associated with receiving care from an out-of-network doctor.
Aetna is not the only insurer encountering payment disputes with physicians.
Last month, Academic Urology, the largest urology specialty medical group in Pennsylvania, dropped out of the provider network at Independence Blue Cross when the two organizations could not agree to terms on a new contract.
David J. Ellis, president of Academic Urology, said IBC’s last contract offer would have cut the reimbursement rates paid to its more than three dozen physicians by 38 percent.
A spokeswoman for Philadelphia-based IBC, the region’s largest health insurer, said the health insurance company offered, but the medical group declined, an opportunity to jointly develop a pilot program for urologists, which would have allowed Academic physicians to earn more for superior care and results.
Both sides in the dispute say they are open to continuing negotiations. They disagreed on how many patients are affected.
Academic Urology, which operated 16 practice sites in Philadelphia’s western suburbs, said about 30,000 patients were affected by its contract not being renewed. IBC, the region’s largest health insurer, put the number of its members who have used Academic physicians at 13,000, adding that it still has 151 urologists who practice at more than 500 locations throughout the area in its network.
IBC got into another public contract dispute in 2008 when it failed to reach a deal with Gastrointestinal Associates Inc., one of the region’s largest gastroenterology practices. The two parties have since sutured their ruptured relationship.
Gastrointestinal Associates, an 18-doctor group with offices in Rydal and Doylestown, was out of the IBC network for seven months before reaching terms on a new contract that took effect Feb. 1, 2009.
http://www.bizjournals.com/philadelphia/print-edition/2012/01/20/cardiac-unrest-at-aetna.html
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AMA Reports on Insurance Control in PA
By John George
February 8, 2011
The American Medical Association released the results of a study Tuesday that found, not surprisingly, nearly all of Pennsylvania’s metro area markets are controlled by one or two health insurers.
The report — again in news that would not shock anybody in the local health-care industry — found competition in Pennsylvania’s commercial health insurance market was lowest in Philadelphia, where Center City-based Independence Blue Cross had a 68 percent market share.
Overall, a single health insurer controlled 50 percent or more of the commercial health insurance market in 11 of 14 Pennsylvania metro areas studied by the AMA. The three exceptions were the Allentown-Bethlehem-Easton, Lancaster, and Reading regions.
“The market power of health insurers places physicians and patients at a significant disadvantage,” said Dr. Cecil Wilson, president of the AMA. “When insurers dominate a market, people pay higher health insurance premiums than they should, and physicians are pressured to accept unfair contract terms and corporate policies, which undermines the physician role as patient advocate.”
More information on the heath insurer competition study is available here.
Philadelphia Business Journal
John George, Reporter
February 8, 2011
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Philadelphia Inquirer Editorial: Insurers aren't playing fair
October 02, 2011
Health insurance companies appear to be ratcheting up premiums to pad their profits before more elements of the federal health-care reform kick in.
That's the unavoidable takeaway from the latest report showing skyrocketing increases in health insurance costs this year.
Even with high joblessness and fewer people rushing to the doctor amid a still-ailing economy, average family premiums rose by a staggering 9 percent.
Insurers say they simply overshot the mark in estimating how quickly the economy would recover. They say they set higher rates on the assumption that businesses would start hiring and more people would seek medical care.
That's not much consolation, though, for employers and workers, who in ever-greater numbers are being pushed into high-deductible health plans. The premium increases give every American who needs affordable care an even greater stake in seeing the full enactment in 2014 of President Obama's signature domestic policy.
The premium hikes also make it an even smarter move for the Obama administration to push ahead with its request last week that the U.S. Supreme Court take up challenges to the reform law sooner rather than later.
The increases in insurance premiums this year are the polar-opposite outcome of the intended cost controls under the health-reform law. More important, most of the increases cannot be blamed on the Affordable Care Act, signed into law last year.
Indeed, a report on premium increases released Tuesday by the respected Henry J. Kaiser Family Foundation and the Health Research and Educational Trust said only about 20 cents of every additional $1 in premiums could be attributed to provisions of the law. Among those are covering twenty-somethings on a parent's policy, and barring co-pays for preventive care.
The contrast of the larger rate hikes this year to the average 3 percent increases last year raises the suspicion that profitable insurers kept a lid on rates during 2010 to tamp down congressional fever for reform.
Unwarranted increases in premiums in anticipation of further patient-care mandates and stricter limits on rate increases simply should not be permitted. That's why Obama officials recently made $109 million available to a number of states, including Pennsylvania, to contest "unreasonable" rate hikes.
While the new law will put limits on premium increases greater than 10 percent, it will bring health insurers millions of new customers. That should make insurers partners in the successful implementation of health-care reforms.
Unreasonable rate hikes that are certain to raise consumers' ire only put health insurers at odds with the nation's best hope for the overhaul and reform of the health-care system.
Inquirer Editorial: Insurers aren't playing fair______________________________________________________________
Health Insurance Costs Rising Sharply This Year, Study Shows
By REED ABELSON
September 27, 2011
The cost of health insurance for many Americans this year climbed more sharply than in previous years, outstripping any growth in workers’ wages and adding more uncertainty about the pace of rising medical costs.
A new study by the Kaiser Family Foundation, a nonprofit research group that tracks employer-sponsored health insurance on a yearly basis, shows that the average annual premium for family coverage through an employer reached $15,073 in 2011, an increase of 9 percent over the previous year.
“The open question is whether that’s a one-time spike or the start of a period of higher increases,” said Drew Altman, the chief executive of the Kaiser foundation.
The steep increase in rates is particularly unwelcome at a time when the economy is still sputtering and unemployment continues to hover at about 9 percent. Many businesses cite the high cost of coverage as a factor in their decision not to hire, and health insurance has become increasingly unaffordable for more Americans. Over all, the cost of family coverage has about doubled since 2001, when premiums averaged $7,061, compared with a 34 percent gain in wages over the same period.
How much the new federal health care law pushed by President Obama is affecting insurance rates remains a point of debate, with some analysts suggesting that insurers have raised prices in anticipation of new rules that would, in 2012, require them to justify any increase of more than 10 percent.
In addition to increases caused by insurers getting ahead of potential costs, some of the law’s provisions that are already in effect -- like coverage for adult children up to 26 years of age and prevention services like mammogram screening -- have contributed to higher expenses for some employers.
The Kaiser survey includes both big and small companies using employer-sponsored coverage representing about 60 percent of all insured Americans of working age. The annual growth in premiums, according to the survey, had slowed in recent years to 5 percent, rising just 3 percent in 2010, in part due to the lingering effects of the recession. After years of double-digit increases, the moderation was a welcome relief.
The unexpected increase in premiums raises questions about whether health care costs are, in fact, stabilizing at all, as people have postponed going to the doctor or dentist and have put off expensive procedures. “No one quite knows,” said Mr. Altman.
Throughout this year, major health insurers have defended higher premiums — and higher profits — saying that their expenses would rise once the economy recovered and people believed they could again afford medical care. The struggling economy will probably keep suppressing demand for medical care, particularly as people pay a larger share of their own medical bills through higher deductibles and co-payments, according to benefits consultants and others. About three-quarters of workers now pay part of the bill when they go see a doctor, and nearly a third have a deductible of at least $1,000 if they have single coverage, up from just one in 10 in 2006, according Kaiser.
Although demand for care appears to be growing relatively slowly, insurers and benefit consultants also say prices for medical care continue to climb as prescription drug makers and hospitals charge more. “If they’re a popular brand or anchor hospital, they’re going to negotiate a significant increase if they can,” said Edward A. Kaplan, a benefits expert with the Segal Company, which recently surveyed insurers about medical costs.
The question for employers and insurers is whether the lackluster economy, as well as recent efforts by employer and insurers to better manage the medical care of workers, will keep premiums increasing at a more moderate level. Early responses to a survey by Mercer, a consulting firm, suggest employers are expecting the cost of providing health benefits to go up about 5 percent next year, according to Beth Umland, Mercer’s director of research for health and benefits. These companies may be factoring in the more pessimistic view of the economy, she said, where any recovery seems further off than it did a few months ago.
Employers are reporting that their workers are using less medical care, said Ms. Umland, but they and insurers have been slow to estimate costs that reflect the lower demand. “It always takes a while for underwriting to catch up with reality,” she said.
Some small business say they expect their premiums to moderate, but only because of changes in their work force — partly caused by younger, healthier employees — that make it less likely that the companies will incur high medical claims. “Up until last year, we saw very hefty increases -- double digits,” said Heather Gombos, an executive for R. M. Jones & Company and affiliated businesses in New Britain, Conn. , a group that insures about 50 of its 80 employees.
Family coverage is now running $12,000 a year, Ms. Gombos said, and she is waiting to see what rate increases her insurer proposes for the coming year. She thinks premiums will not rise as sharply in 2012. “What it comes down to is we’ve had some good luck,” she said.
Some businesses say they anticipate relief from higher costs in the coming year for a variety of reasons. At Ogilvy & Mather, the New York advertising firm, the company believes its efforts to encourage wellness and better oversee its employees’ health through an on-site medical clinic are paying off. "We are not anticipating any cost increase for employer and employee," said Gerri Stone, the senior partner who oversees the firm’s benefits strategy.
Ms. Stone acknowledged that the firm’s 3,600 employees were relatively young and healthy, helping it avoid some of the sharp increases experienced by other businesses. "We’ve never gone into the double digits," she said. Family coverage runs about $16,000 a year, she said.
Insurers and benefits consultants say, however, it is difficult to predict whether health care demand will again take off when the economy rebounds or whether some other factor is at play. "We’ve seen a moderation in the increase in health services, particularly in discretionary services," said Tom Richards, an executive with Cigna. While he attributes some of the moderation to the poor economy, he says the increase in cost-sharing by employees and programs that more closely monitor their health could be having a more permanent impact. The question, he said, is "what is the economy going to be and what is the new normal."
Obama administration officials argue that new regulations are forcing insurers to be more circumspect about raising rates. Insurers seeking to raise premiums next year by more than the 10 percent maximum will have to publicly justify their rate increases, and the new law requires the companies to spend at least 80 cents of every dollar they collect in premiums on medical care. If they end up taking too much in premiums, they will have to refund the money to consumers.
But employers and others say much more still needs to be done to control overall costs, especially when workers’ wages are essentially flat. Of the $15,073 in average premiums paid for family coverage, Kaiser found that employees paid $4,129 towards the cost, in addition to whatever out-of-pocket costs they shouldered.
“We’re going to continue to have this yawning gap,” said Helen Darling, the chief executive of the National Business Group on Health, which represents employers that provide health coverage to their workers. Health care costs continue to climb much faster than overall inflation, she noted. “The health economy acts as if it’s a boom economy,” she said.
New York Times, September 27, 2011
Link: Health Insurance Costs Rising Sharply This Year, Study Shows
