Testimony on House Bill 1763: Fair Contracting

Good afternoon Chairman Micozzie, Chairman DeLuca and members of the House Insurance Committee. My name is Marilyn Heine, MD, and I am the president of the Pennsylvania Medical Society. By way of background, I practice both emergency medicine and hematology/oncology in Montgomery and Bucks counties. I genuinely appreciate the opportunity to take a few minutes to share with you why we support House Bill 1763 and why you should support it as well.

House Bill 1763 is a very unusual piece of legislation, the basis of which was agreed to as part of a legal proceeding by some who are here today to oppose its passage. But before I begin, let me take a few moments to share with you how we got to where we are today and what led to the language found in this bill.

In 2007, citing unfair provider contracts, North Carolina physician Thomas Love won a federal lawsuit that he had filed, along with a restricted class of litigants, against Blue Cross and Blue Shield of North Carolina. As a result of that litigation, the Blue Cross Blue Shield Association entered into a settlement agreement widely known as the “Love Settlement.” Pennsylvania’s Blues plans signed that agreement. Let me repeat that. Highmark, Independence Blue Cross , Capital Blue Cross, and Blue Cross of Northeastern Pennsylvania all agreed to the terms of the Love settlement. While the provisions of the Love settlement have had a positive effect on physician practices and to some degree have improved patient care, the settlement agreement was limited to four years from the date it was approved by the federal court. For Independence Blue Cross, Blue Cross of Northeastern Pennsylvania, and Highmark, their agreements have already expired. For Capitol, their settlement agreement will expire within the next year.

Simply put, House Bill 1763 is the Love settlement. Sadly, it is a measure that should not be needed. Unfortunately we are already seeing, in a number of physician contracts, strong indications that the Blues are setting the “contractual stage” to revert back to their old practices of taking unfair advantage of physicians and their patients. In Pennsylvania where health plans have market dominance or a monopsony over the provider community, they force physicians into “take it or leave it” contracts. The provisions in this bill are fair and reasonable. Let me take a few minutes to provide some examples of what the Blues had previously agreed to in the Love settlement, but now seem to oppose in House Bill 1763.

Fee Schedules—Like the Love settlement, House Bill 1763 would require health insurers to provide complete fee schedule amounts to physicians.

Contractual Changes—Like the Love settlement, House Bill 1763 would require health insurers to give physicians 90 days notice before they make changes to physician contracts.

Claims Payments—Like the Love settlement, House Bill 1763 would require health insurers to apply the same claims payment rules to all physicians in their plans.

Medical Necessity—Like the Love settlement, House Bill 1763 would statutorily define and clarify the definition of “medical necessity.” A statutory definition would be uniformly applied across all Blues plans and their respective insurance products and resolve ongoing discrepancies.

Billing Software Changes—Like the Love settlement, House Bill 1763 would require health insurers to disclose to physicians any adjustments or “significant edits” that are implemented through their billing software.

All Products—Like the Love settlement, House Bill 1763 would prohibit health insurers from using “all products” clauses in contracts with physicians.

Lowering Payments—Like the Love settlement, House Bill 1763 would prohibit health insurers from changing or lowering payment for care already provided to a patient.

These are just a few of the reasonable provisions found in the Love settlement and contained in House Bill 1763. Again, fair and reasonable.

Health plans each impose slightly different hurdles on physician practices. The roadblocks to care and lack of standardization drive administrative costs—costs that do not help a single patient get better. Research shows that the number of hours physician practices spend weekly interacting with health plans is four times greater in the US than in Canada.

As a practicing physician I love caring for my patients. My physician colleagues feel the same way. It’s why we dedicated the necessary time, in some cases up to 16 years, to educate and train ourselves to be physicians. While the rewards of practicing medicine are apparent with each and every patient encounter, the ugly side of medical practice often begins as soon patients leave the exam room. It is at that point when medical practice ends and medical business begins…battling insurers for payment.

There are countless examples of how health insurers operate to the detriment of physicians and patients. Take for example a physician whose clinical judgment calls for a patient to have an MRI of the knee. The physician’s staff calls the insurer for authorization to proceed with giving the patient a prescription for the study. The insurer provides the physician’s staff with an authorization number approving the test. Of course, the issuance of the pre-authorization number comes with a disclaimer that, while authorized to have the test, it is not a guarantee for payment. The patient has the MRI. Later, the physician learns that payment for the scan has been denied. This happens every day. In fact, as I sit here this morning, I can’t help wondering how many denials for payment our practice has received thus far today.

Now don’t get me wrong, in some cases, the insurer may reconsider payment. However, it will require my staff to spend considerable time making numerous telephone calls and exchanging multiple forms to finally get paid. More often than not the process requires my having to take time away from patient care to convince a non-physician on the other end of the line that my course of treatment was within the standard of care.

It is for this reason that House Bill 1763 addresses the certification and precertification issue. Like the Love settlement, House Bill 1763 would require health insurers to openly share with physicians services and supplies that require “precertification” or advanced permission to provide care. The bill would also require insurers to honor their precertification decision after the care has been provided.

You may be thinking that our support of House Bill 1763 is based solely on economics. Of course, while I am a physician, I am also part of a small business. In my case, we have nearly 50 staff members whose employment and health benefits rely on the financial health of our practice. On average, each privately practicing physician employs nearly six full-time staff. When you do the math, physicians, as a group, play a significant role in our state’s economy by supporting nearly 170,000 jobs. So to that extent, the economics of medical practice is unavoidable.

What also causes me great concern is how an insurer’s unfair practices can adversely affect my patients financially and potentially destroy the patient-physician relationship. Let me give you an example.

Let’s assume that I have a cancer patient whom we will call “Margie” who suffers from lymphoma and whose care I have managed for 20-plus years. Margie has had her spleen removed and a malignant tumor removed from her spine. She was twice hospitalized for systemic infections as a result of a compromised immune system, and she has undergone chemotherapy and radiation therapy. I now have reason to suspect that, given her blood tests, her immune system is again compromised. I suggest that we administer a drug called Neulasta that helped her in the past. The drug is $2,500 per dose and requires preauthorization. My staff receives the necessary preauthorization from the insurer. The patient receives the drug. Unfortunately it fails to help Margie this time and she requires admission to the hospital.

Shortly thereafter, I learn that coverage for the Neulasta has been retrospectively denied. The avenues to reverse the denial are unsuccessful, the treatment now becomes a non-covered service, and I am forced to bill Margie in order to maintain the financial viability of my practice. What happens next is that the the trust I had with my patient over the past 20 years becomes strained. If she can’t pay, and the viability of my practice depends on payment, I send the bill to a collections agency. You can probably figure out the rest. The bottom line, the physician-patient relationship has now been destroyed as a result of an insurer’s unwillingness to honor its agreement.

Physicians are uncomfortable discussing matters related to reimbursement. From the time we enter medical school, our focus is on the health and well being of our patients. We are dedicated to what we do. But, the manner in which health insurers “game the system” -- to the detriment of a medical practice’s economic viability and the patients whom we serve -- is unacceptable. The time has come to mandate that the Blues continue following the contractual guidelines set in the Love settlement.

Thank you for the opportunity to share with you our thoughts on this recurring problem. To the best of my ability, I will be happy to take answer any questions you may have.