Legislation Attempts to Corral Regence BlueCross BlueShield

The local insurer has been trying to coerce ambulatory surgery centers to join their networks by sending checks to patients

March 8, 2013 — Regence BlueCross BlueShield is attempting to coerce ambulatory surgery centers to sign their insurance contracts by sending the checks to the patients, leaving it up to the center to collect the payments, according to Evalyn Cole, administrator of the Spine Surgery Center in Eugene who testified earlier this week in front of the Senate Health Committee. At times, those checks amount to $50,000.

Furthermore, up to 3 percent of patients never pay the bill, requiring the surgery centers to send those people to collection agencies, according to Kecia Norling, a past president of the Oregon Ambulatory Surgery Centers Association.

In other instances, Regence has sent the check to person holding the insurance card, which may not even be the patient. That happened to a University of Oregon student who was sent to a collections agency after her father, living in New York, received the payment for the surgery without any written notice of what the check was for, except saying the student could log onto a website to learn more.

Checks have also gone to ex-husbands who pocket the money intended for their ex-wife’s surgeries.

“When the check goes to the spouse who was not the patient, they’re not really inclined to send that check to pay for their ex-spouse’s medical bills,” said Cole. “We’ve had to hire an attorney and file a complaint in court and get a judgment against an ex-spouse to garnish his wages for the check that he had kept.”

Although Regence is the prime offender, occasionally other health insurers follow the same pattern -- United Healthcare, Cigna and LifeWise. “Providence never sends the check to the patient, even though we’re out-of-network with them,” Cole said.

Sen. Alan Bates, D-Medford, sponsored Senate Bill 366, which would prohibit insurers from sending such checks to patients and instead route them directly to the physicians who provided the care.

Before voting on the measure, Committee Chair Sen. Laurie Monnes Anderson, D-Gresham, asked both the ambulatory surgery center and Regence to clarify some issues about credentialing and charges.

The practice of sending checks directly to patients is illegal in California and several other states, according to Cole.

“If we provide services, pay us for those services, and don’t make us track down the payment,” said Greg Miller, a lobbyist from PacWest Communications who lobbies for the Oregon Ambulatory Surgery Centers Association.

Alison Goldwater, the vice president of provider services for Regence, said sending bills to patients is a way to keep providers in their network who otherwise might terminate their contracts when Regence won’t pay what they demand,

“Having that incentive for them, if you do that, the payment is going to members is an incentive for them to stay in-network,” Goldwater said.

At times, providers try to charge 10 times the Medicare rate, said Goldwater, adding that 98 to 99 percent of its claims are actually from in-network providers who sign contracts with the insurer for agreed-upon prices. She said Regence has a policy of excluding providers who are uncredentialed and those who charge exorbitant rates.

But, Sen. Chip Shields, D-Portland, was skeptical of Goldwater’s testimony. “I don’t know that you have some evidence that ambulatory surgery centers are asking these outlandish prices. I’d like to see it.”

Dr. Jonathan Sherman, a neurosurgeon at Spine Surgery Center, said Regence and other insurers have tried to get him to sign contracts at only 25 percent of his cost. And, the checks that insurers send to patients only represent 40 to 60 percent of physician charges.

The surgery center then lowers their fee from a retail price to the amount of the check, plus a co-pay percentage equal to what the insurer would pay the hospital.

Tom Holt, a lobbyist for Regence, accused the surgery centers of gaming the system by knocking down the charges and that in-network contracts were needed to protect some providers from gouging insurance companies and patients with unsustainable charges and rate increases.

“Basically, providers by Oregon law can write down to what the contracted rate would be, and there’s nothing illegal for providers to do that,” Shields told Holt and Goldwater. “If they’re going to what the contract would be anyway, then that argument that they’re six, seven or eight times more expensive doesn’t hold as much water.”

After the hearing, Cole told The Lund Report she thought Goldwater’s testimony was false and misleading. She said several ambulatory care centers in her association are excluded from Regence’s network and none charge any more than five times the reimbursement of Medicare for surgery and even then because Medicare does not cover implants needed for knee surgery to fix a torn anterior cruciate ligament or ACL.

Few seniors tear their ACL, so the Spine Surgery Center just absorbs the extra costs if surgery is needed. But for younger people covered by commercial insurance, the injury is a common sports injury.

Regence also followed Medicare’s lead in refusing to reimburse for implants like the plates and screws that are left in a knee after ACL surgery, Cole explained.

Cole said Regence patients choose surgery centers because they get more personalized care, have a shorter wait than at the hospital and a lower rate of infection. They also pay less at Spine Surgery Center than they would if they went to Sacred Heart Medical Center in Eugene, even though the hospital is in-network and the surgery center is out-of-network.

“Our charges are always lower than hospitals, and hospitals get paid at about 80 percent of what their charges are by insurance companies,” said Sherman, the neurosurgeon at Spine Surgery Center.

SB 366 has the backing of the Oregon Medical Association, which argued that physicians provide services to patients with the expectation of being reimbursed, regardless of a network contract.

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First off let me state I have been in the healthcare field for 20+ years, and I do not work for, and I have never worked for, any insurance company. That said, as much as I really, really hate to agree with her, Alison Goldwater is correct. There are many ASCs that are significanlty overcharging for surgeries as out-of-network providers, and pocketing huge profits on the backs of Oregonians and employers. Ms. Cole's assertation that they are "only" charging 5 times Medicare is accurate, and a definate slap in the face to patients. At 5 times Medicare, the ASC will make 60-80%+ in profit. The example cited in the artile is for an ACL - the Medicare allowable for an ASC for an ACL in Portland (public information) for 2013 is: $3,564.79. If the ASC is charging 5 times that amount, they are charging $17,823.93!!!! - even if an insurance company reimburses the ASC at 60% that equates to $10,694 - in no way does this reflect their costs - and is an extremely high reimbursement. While Ms. Cole's surgery center only overcharges by 40%, other ASCs charge 10 times Medicare or more - why? becasue they can. Senator Shields' statement "then that argument that they’re six, seven or eight times more expensive doesn’t hold as much water." would be valid if the patient was given a choice, but they are not. Physicians tell patients where their surgery will be done, and they do not give them any option of going to an in-network ASC, where the cost to the insurance community, the patient - and therefore the employer is significantly lower. In these circummstances, patients are usually given no financial information or other options for places to have their surgery, and in fact are often enticed to have their surgeries done at these high cost ASCs with the promise that they will not have to pay anything Senator Shields - in this time of the State's focus on the cost of healthcare, is this type of wide spread abuse of a loophole by Out-Of-Network ASCs acceptable? Senator Shields, if you wish to meet and discuss this further, please feel free to post an answer here and contact information, and I can provide proof of what the costs are to an ASC and how these providers are significantly negatively impacting the cost of healthcare in Oregon.

Usually insurers, offer 1 1/2 - 2 X Medicare and pay only one procedure, or 50% on the second and 25% on each additional. One of the "serious" offers on my desk presently for spine surgery - not a rated Medicare procedure - is $9,000 for a surgery with implants that cost our ASC $8,000. Do you really believe if a surgery center was offered a contract that covered its costs and a reasonable margin, it would turn it down?! Instead, ASCs are offered less than half what the insurer pays a hospital! And many insurers are OK with paying the hospital more because they and the hospital have joint owners. What other industry would tolerate a purchaser of its products asking for proof of what it paid for raw materials and then dictate to it what would be paid for the finished product? Try that next time you go grocery shopping. "How much did it cost you for the flour, salt and sugar for that bread? Well, you should be thrilled that I will pay you 10 cents over cost...that's my final offer." Yet, IF an insurer pays anything for hardware, they demand ASC's to send purchase invoices and say, "We will only "reimburse" what you paid for those babies! Because, well you know, we couldn't possibly pay million dollar bonuses if we pay ASC's more than cost." Something is seriously wrong with this picture and excellence in healthcare is its victim.

This is not just happening to Surgery Centers and Physicians, most all Blue Cross plans are paying the patient for services provided by non-contracted providers. Laboratories are sufffering the most -- they cannot refuse service. The samples (blood, urine, ect) is processed before the insurance information has been entered and billed. Labs cannot discriminate or hold samples, they have to process. And in most cases the patient was referred to the lab by a Blue Cross provider. I work in the laboratory industry and know of many that have lost millions because the payment went to the patient and the patient spent the money. In most cases, the Blues never notifies the lab that payment has been made to patient so there is a time lapse between the patient receiving a check and the lab billing. I In cases of drug screening laboratories (for addiction programs), the Blues are literally putting money in the hands of addicts. Addicts are getting the checks then going out and buying more drugs. What happens if a patient overdosed on the drugs they bought, using the money that the Blues sent them? Would they be responsible for the death of that patient? They would never claim to be, but they would be responsible for the catastrophic costs of treating and overdose whether or not the patient lives. Why Labs have if harder... this policy was put into place not to encourage out of network labs to contract with the Blues, but to enforce their non-compete exclusive agreements with LabCorp and Quest (both of which often can not offer the same services as small specilized labs). The Blues refuse to open their networks to small labs. The only reason this is not ridiculously illegal, is because of the billions of dollars AL the blues plans contribute (pay-off) to different campaigns and govt programs