Forced Contracting: BCBS’s Answer to Balance Billing

Coercive Contracting of Facility-based Physicians

Coercive Contracting of Facility-based Physicians

In what may be the most aggressive effort to date by a commercial health plan to undermine the value of physician services, and put a halt to surprise balance billing; Blue Cross Blue Shield of Georgia sent out a notice to all facilities (hospitals and ambulatory surgery centers) that are contracted with the plan that their facility-based physicians MUST agree to contract with BCBS “at the current BCBS GA market rates” or else the facility will bear any costs to BCBS GA as a result of failure by these physicians to sign these contracts.  This forced contracting policy applies to, but is “not limited to, an emergency room physician, radiologist, pathologist, neonatologist, hospitalist or anesthesiologist”, provided they are not employed directly by the facility.  In addition, rather than implementing this policy through a change in the agreements between the plan and the facilities, BCBS GA simply revised their Provider Manual, thus putting this policy change into effect immediately, giving the facilities and their facility-based physicians 60 days to comply.  The new policy also requires that “the Facility shall take any action necessary to ensure that its contracted Facility based physicians cooperate with, participate in and are bound by the BCBS GA utilization and quality management programs and coordinate as appropriate with the admitting physician and PCP.”

Coercive contracting has been around for some time, with pressure applied by many plans on hospitals to get their hospital-based physicians to participate in the plans’ networks.  Sometimes this pressure results in hospitals encouraging the physicians who staff their EDs, Anesthesiology Departments, Hospitalists services, and Radiology Departments to negotiate with these plans, and at other times this pressure is expressed as unadulterated coercion:  sign the contract and agree to whatever rates the plan offers, or find some other place to work.  As the medical director of a busy ED, I personally faced such direct coercion; and it was only through the intervention of the hospital’s Medical Staff that I was able to get the leeway to negotiate more acceptable terms with the plan.  Coercive contracting, to a greater or lesser degree, is often a challenge for hospital-based physician groups; and in fact language to this effect is found in many hospital staffing agreements with these physicians.  However, it is rare to see this financial threat to hospitals laid out in such direct language and terms, with huge and unlimited potential penalties.  Typically, hospitals will push back in negotiations with health plans when such network participation mandates are proposed, in order to give the physician groups that staff these services some room to negotiate reasonable rates with the plan.  In fact, there is some attorneys who believe that such language could violate laws in states (like California) that preclude hospitals from predicating medical staff privileges on participation in health plan networks; or that this kind of ‘tit for tat’ between hospitals and plans could violate Stark referral rules or anti-trust provisions.

It is possible that BCBS GA sees this policy as a strategic counter to efforts by providers and legislators to require plans to pay a reasonable benefit amount for out-of-network (OON) services, since even if physicians are threatened and coerced into accepting deeply discounted rates from the plan; they are prohibited from balance billing the patient, or even disputing the underpayment in an independent dispute resolution process.  Thus, BCBS GA’s coercive contracting policy could pre-empt any state law designed to address out-of-network benefits and balance billing, even the greatest of three standards for OON benefits in the Affordable Care Act.  If this policy goes unchallenged, it will be adopted by plans all across the country (especially where there is little protection against forced plan contracting], faster than a cute puppy video goes viral on social media.  Recently, the American College of Emergency Physicians decided to sue the federal government for failure to facilitate enforcement of the greatest of three standards for OON benefits; but BCBS GA’s forced contracting policy to make this suit moot, as soon there will be no such thing as an out-of-network emergency physician anywhere (except perhaps in the few hospitals that avoid contracting with commercial health plans).  I have no doubt that with momentum for this policy behind them, plans will then turn their forced contracting sights on other specialists that are dependent on in-hospital and in-surgicenter services for much of their income; such as general surgeons, interventional cardiologists, neurosurgeons, and in fact just about every physician who performs procedures for a living.  As I have said on many occasions, the surprise balance billing issue is not just about OON services, it is about the value of ALL physician services, in or out of network.

In addition, this policy is not just a threat to physicians, it is a threat to almost every independent and community hospital.  The ultimate intent of health plans in fostering forced contracting is to transfer liability from their own companies onto the backs of patients (initially) and then finally to hospitals, who will have to either employ all these physicians, or subsidize their practices to make up for the loss of revenues that inevitably comes from coerced participation in discounted-fee networks.  Hospitals with limited margins (and most qualify) will be faced with few options:  close, cut back on services, or survive with only the least qualified physicians on their staff.  In any case, this is bad for patients, communities, and providers.  It is only good for health plan profits, and then only in the short term.

Time for physicians and hospitals and their advocates to push back, and push back hard.




Forced Contracting: BCBS’s Answer to Balance Billing — 10 Comments

    • Well, James, I would not have expected BCBS to open itself up to a lawsuit for blatant and tortious interference in physician-hospital staffing contracts. They have plenty of lawyers on staff who should have considered this possibility and advised the plan to continue to take a more subtle approach to forced contracting.

  1. Pingback: BCBS GA Walks Back Forced Contracting Policy - THE FICKLE FINGER

  2. We are battling it out here in California where the same issues has gone to legislators. It looks like we will lose and by de facto I, as an OON provider, will have a “contract” with a set rate cap with every insurer and managed care plan whose patients I take care of. The insurers have been very stealth here in tagging onto to the consumer advocacy groups so the optics are good. They have made doctors out to be greedy.
    There has to be a legal angle to this type of contract mandated by law.

  3. The other side of the coin is when somebody has a procedure or an ER visit at the hospital and all those non contract specialists are “out of network” and they charge that family or the payor 10,000 times usual and customary. Specialists and some doctors love to take advantage of ERISA covered patients and perform a wallet-ectomy then pass them off to the billing department to get raped. Don’t pretend it doesn’t happen. It happened to me!

  4. This appears to be older article…but a patient perspective…if I go to an in network facility..and do not choose who sees me..I expect that provider to all so accept at in network pricing..they have a captive patient base.

    • I don’t disagree with you when it comes to hospital based physicians, but not all of the on-call specialty physicians called to care for you in the ED can be expected to contract with all health plans the hospital is contracted with. Furthermore, there should be some leverage applied to health plans to ensure they are contracted with the ED physicians, anesthesiologists, etc in a hospital that is in the plan’s network. The best way to do this is to require the plans to pay any out-of-network physcians at an in-network hospital at the lesser of the provider’s charge or the 80th percentile of usual and customary charges for these services in exchange for prohibiting surprise balance billing by those physicians. This would get the patients out of the middle of these fair-payment/fair contracting rate disputes.

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