1. CMA Trustees to Consider Balance Billing Pilot Project
CMA’s Board of Trustees at its next meeting will consider a proposal to create three concurrent pilot programs that would test different methods of resolving billing disputes between health plans and noncontracting physicians.
Four years in a row, legislation has been introduced that would prohibit noncontracting physicians from balance billing patients when health plans fail to pay fairly for services provided to their enrollees. CMA strongly opposes the current health-plan backed legislation. It would give insurers a free hand to pay noncontracted physicians as little as possible and would also eliminate any incentive for the plans to contract with physicians at fair rates. Nevertheless, CMA understands that patients do not want or expect to be billed because their insurance companies don’t pay reasonable charges for covered services.
While in previous years legislative authors have worked with CMA to address this problem, this year we witnessed a blatant attempt by health plans to place physicians in a completely vulnerable position by prohibiting balance billing without offering any protections against unfair payments.
That bill (AB 1321 by Assemblyman Leland Yee, San Francisco) narrowly made it out of its first committee. Although the bill has been held up, the debate revealed the public’s anger and confusion about balance billing and the Legislature’s intent to do something about it this year. Clearly, even CMA’s friends in the Legislature want a resolution. With that prompting, CMA staff created several concepts that would protect noncontracted physicians’ right to balance bill, while addressing the specific concerns that arise when HMO patients are treated in hospital-based settings.
These limited pilot projects will be conducted over a period of years to assess the viability of different dispute resolution mechanisms. These projects will be studied and can be rejected if proven unmeritorious.
Two of the proposed pilot programs that the trustees will discuss would test “baseball-style” arbitration, one with state oversight and one with local oversight. In baseball arbitration, the arbiter considers competing proposals from each side and simply chooses the most reasonable. The idea encourages the two sides to make reasonable offers to avoid having their proposal eliminated as unrealistic. The third program would test traditional arbitration overseen by a local medical society. After two to three years, a neutral party would make a recommendation to the Legislature as to which of the three worked best for all. Many important details are yet to be decided, including who would pay for the arbitration, what evidence can be introduced, and how much time the arbiter should be allowed to take to render a decision. These and many other important details will have to be debated, and even then the results are unpredictable. This uncertainty explains why there is strong support for pilot programs. Because it is such an important matter to a large number of physicians, no one is willing to endorse a single solution for the entire state.
Members are encouraged to discuss this with their trustee prior to the July 29 meeting. Click here for more information. BACK TO TOP
2. CMA Legislative Priority: Ending Silent PPO Abuses
CMA has made ending the abuses of silent PPOs a top legislative priority.
Silent PPOs take many forms. Most physicians have had a patient present a “discount card” that they never agreed to accept, only to discover that they are indeed on that plan’s list of providers. This happens because major health plans often sell their networks of contracted physicians to other third-party payors, such as self-insured employers, union trusts, or even other health plans. These silent PPOs allow the third-party payors to take advantage of discounted rates that large health plans have negotiated with their contracted physicians.
Another form of silent PPO encountered by physicians are illegitimate “repricers.” These repricers buy as many physician networks as possible and organize them into large databases. They then allow other payors, for a fee, to access their database, find a physician’s lowest contracted rate, and then pay the physician at that rate.
Health plans make a great deal of money selling physician networks. Health plans commonly conceal silent PPO clauses in lengthy contracts and use language that applies in perpetuity. Physicians are not told when their contract has been sold. By some estimates, these silent PPOs have become a $15 billion industry nationwide, and all of that money comes at the expense of providers.
CMA is currently sponsoring legislation (AB 757) that would reform the PPO industry by ensuring that physicians are aware of every payor to whom their discounts are sold and requiring that those payors abide by all the terms of the original contract and not just choose those parts that are favorable to them. The bill would also prohibit health plans from forcing physicians into other lines of business (i.e., workers’ comp) at the discounted price and provide that all sold or leased contracts are canceled when the underlying PPO contract is terminated.
The bill passed out of the Assembly Health Committee, but was held by the Assembly Appropriations Committee. CMA is also investigating, as directed by the association’s House of Delegates, other strategies for redressing the problem of silent PPOs and unfair discounting, including potential litigation.
Click here for more information. BACK TO TOP
3. CMA Develops P4P Guidelines for Medicare and Others
“Pay for performance” is a hot topic in health care circles. Many payors, including Medicare, are considering programs to improve the quality of care provided to patients through the use of financial incentives. Indeed, two bills being considered by Congress this year would create mandatory pay-for-performance (P4P) programs for Medicare.
CMA is working to ensure that these and other P4P programs do not simply shift costs from one physician to another. CMA believes that any P4P initiative must provide for strong physician input on how “quality” is defined and measured, ensure physicians are appropriately reimbursed for clinical care, and protect patient access to care.
The bill before the Senate (S 1356) is seriously flawed. It would mandate a significant new quality measurement and quality payment process for Medicare physicians, but does not address the serious and growing access problem of the flawed sustainable growth rate (SGR) formula. The Senate bill rewards quality through bonus payments, but it also cuts reimbursement for physicians who do not meet the quality standards.
A second P4P bill will be introduced in the House of Representatives in early August. That bill would not only implement a quality measurement and a related bonus incentive payment system, but would also—at CMA’s insistence—address the larger Medicare payment problems by scrapping the current SGR formula and replacing it with the Medicare Economic Index (which measures physician practice cost inflation). The SGR formula—which allows Medicare spending on physician services to grow at the rate of the gross domestic product (GDP)— penalizes physicians because the cost of physician services rises more rapidly than the GDP. Under the current SGR formula, physician reimbursement will likely be cut by 26 percent over the next five years.
The House bill may help reshape the Senate approach, but clearly physicians need to take the lead in defining the future of Medicare reimbursement and quality measurement. To this end, CMA trustees will consider a set of guidelines for P4P programs developed by CMA’s Pay-for-Performance Technical Advisory Committee.
The trustees will also discuss a specific proposal for Medicare’s “value based purchasing” P4P program. The proposal outlines a multi-specialty and solo-friendly five-year plan to phase P4P into the Medicare program.
Click here for more information, including a copy of CMA's draft P4P guidelines and Medicare P4P proposal. Members may also request copies of these documents by contacting CMA at 415/882-3368 or jgreaves@cmanet.org.
CMA members are encouraged to contact their trustees with comments, questions, or concerns about CMA’s forward-looking approach to quality measurement and assessment.
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4. Protecting Stability in Medical Liability Premiums
CMA was successful earlier this year in thwarting a significant legislative effort to modify California’s nationally recognized medical liability insurance protections. MICRA (the Medical Injury Compensation Reform Act of 1975) caps noneconomic damages at $250,000, limits attorney fees, and protects access to care. It has kept medical malpractice insurance available and affordable in California for the past 30 years. CMA continues to monitor this issue closely and is ever vigilant in preserving these important legal protections for all California physicians.
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5. CMA’s RICO Lawsuit
The RICO class action lawsuit won another significant victory this past month when Anthem/Wellpoint settled with physicians. It is the fifth major insurance giant to settle with CMA and the other plaintiffs. Through this and previous settlements, physicians will receive more than $344 million in cash payments from health plans and court-ordered reforms valued at more than $1 billion.
CMA started the case five years ago, challenging the rapacious tactics of the for-profit managed care industry. The case allowed physicians to air profound grievances against an industry that has arrogantly and unfairly exploited them for well more than a decade.
As a federal appeals court said in 2004: “It would be unjust to allow corporations to engage in rampant and systematic wrongdoing, and then allow them to avoid a class action because the consequences of being held accountable for their misdeeds would be financially ruinous.”—11th Circuit Court of Appeals, September 1, 2004.
The suit grew to become the largest class-action health care lawsuit filed in the United States, with more than 800,000 physicians and 19 state and county medical associations joining CMA as plaintiffs. The suit alleges that the defendant health plans—WellPoint, PacifiCare, Health Net, Aetna, CIGNA, United, Anthem, Coventry, Humana and Prudential—have engaged in fraud and extortion in a common scheme to wrongfully deny payment to physicians, in violation of federal civil racketeering law. The case is being heard before Judge Federico Moreno in federal district court in Miami and is set for trial in January.
What Has Been Accomplished to Date
Damages and Prospective Relief: More than a year ago, the court approved settlements with Aetna and CIGNA, This year, preliminary approval was given for settlements with Health Net, Prudential, and WellPoint/Anthem.
In addition to $585 million in monetary damages—about two thirds going directly to physicians and one third to our lawyers—these settlements reflect a binding commitment by these companies to provide an unprecedented level of transparency and fairness in their future payment practices and other business dealings with physicians for a minimum of four years. These prospective commitments have been valued far in excess of the monetary relief—at well over $1 billion.
Physicians’ Foundations: The Physicians’ Foundations set up under these settlements have more than $100 million on deposit, with more to come. The foundations are dedicated to forward-looking research and development that improve practice viability and make it easier for physicians to provide quality medical care to their patients. CMA CEO Jack Lewin, M.D., is vice chair of both these foundations.
Enforcing Your Rights
Damages: While the Aetna and CIGNA claims periods have passed, virtually all physicians are still eligible to obtain some monetary relief in connection with both the Health Net and WellPoint/Anthem settlements. All that is required is the timely filing of simple claims forms. The proof-of-claim deadline for the Health Net settlement is September 21 and for the WellPoint/Anthem settlement, sometime in November.
Prospective Relief: Physicians should ensure these plans keep their promises. Each settlement includes an easy to use “compliance” process, which is available without charge to every physician in the country who has not opted out of the settlement. Each health plan that settled has also agreed to a streamlined, external dispute resolution process for individual payment disputes.
More Information
Click here for more information on the RICO settlements, including a complete list of the health plans’ commitments and step-by-step guides to recovering damages and using the billing and compliance dispute mechanisms.
For more information on the Physicians’ Foundations, go to
http://www.physiciansfoundation.org. BACK TO TOP
6. Board Highlights Available at www.calphys.org
Highlights from CMA’s July 29 Board of Trustees meeting in Los Angeles will be made available to physicians at the California Physician website.
A notice will be published in CMA Alert when the highlights have been posted. To view highlights from past meeting, click here.
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