More Patients, But 30% LESS Pay: The Health Exchange Paradox

Will physicians make it up in volume?

Under the state health exchange system of the Affordable Care Act (ACA), as many as 20 million new patients are expected to have insurance coverage and, no doubt, will be showing up for hip, knee and other musculoskeletal treatment.

That’s the good news.

The bad news is that the private health plans that will cover these new patients want to slash reimbursement rates for physicians who will be caring for those new patients.

Do orthopedists know about these coming changes? Apparently not.

Slashing Rates

In California, Blue Shield of California sent amendments to its providers asking them to accept rates up to 30% lower for insurance-exchange patients.

In New York, UnitedHealthcare’s amendments offer “less than $40 for a typical office visit and about $20 for reading a mammogram, ” according to a November 26, 2013 article in The Wall Street Journal. The fees for some office visits are less than half of what physicians in the city say they receive for treating people covered by employer-sponsored insurance.

While individual physicians may be unaware of the impact of the state exchange reimbursement rates, their societies are putting up red flags. On November 26, 2013, numerous physicians’ groups told Obama administration officials that they are worried that new insurance plans offer only limited networks of providers and low reimbursement rates for physicians, and that could make it difficult for millions of those enrolled to actually get health care.

But individual physicians will have to decide on their own if he or she will participate.

Uninformed and Unprepared Providers

According to a recent report titled: Understanding Obamacare: Politico’s Guide to the Affordable Care Act a lot of physicians are all over the map in their knowledge of the new law, and some are falling for the same ideological myths as the general public.

“It’s not clear that many of them understand how it’s going to affect them, ” said the report.

“As a group, they are incredibly uninformed about a lot of aspects of the law, ” said Shane Jackson, president and COO of LocumTenens.com, a physician recruiting firm based in Georgia that has conducted surveys to measure doctors’ knowledge of the law.

He said the surveys have found that physicians are “not at all prepared” to walk their patients through the main parts of the law, and that there’s a “real unfamiliarity” with the changes the law could create in their own medical practices.

Physicians don’t even have a clear handle on the changes that will affect them directly—like the payment reforms, which are supposed to pay them for giving better medical care, not just more of it

One survey this past summer found that more than six out of ten physicians said they were “not at all familiar” with issues like what the health exchange plans would cover, what the payment rates would be and how the process would work to get their medical claims paid.

Some physician group leaders are worried that their members don’t seem curious to learn more.

“We’re not hearing a huge amount. That concerns me a bit, ” said Molly Cooke, president of the American College of Physicians.

Perhaps those findings aren’t all that surprising given a recent Mayo Clinic survey of physicians who say controlling health care costs is not their responsibility. They say their job is to treat patients, not populations and fix flawed public policy. That’s the jobs of the lawyers, insurers and regulators.

Get Informed, Dispel Myths

But, warns the Politico Guide, the Affordable Care Act will also set in motion big changes in how physicians are paid and how they deliver care. “There’s not a lot of evidence yet of how well, or how badly, those changes will work—so that leaves lots of room for doctors to fill in the lack of knowledge with their worst fears.”

For example, Aaron Carroll, M.D., a physician and professor at the Indiana University School of Medicine who speaks to physician groups about the law, says the questions he’s hearing suggest that some physicians have been influenced by the talking points used by the law’s opponents.

They ask whether fee-for-service medicine will go away completely, for example, and whether all of their medical decisions will be second guessed.

Getting rid of fee-for-service is not part of the new law. “But those concerns are a clear sign of the anxiety about moving away from the payment system doctors know best—and about where, exactly, the future savings are going to come from, ” continued the Guide.

“Everyone seems to be in favor of less spending, but no one can make less money, ” Carroll said.

To Join or Not to Join

Which brings us back to private insurer attempts to slash reimbursement rates.

The exchange plans are expected to cover more than 20 million people by 2016. Physicians have long been concerned about declining or stagnant rates from government programs such as Medicare and Medicaid, and have looked to the exchanges to bring in more privately insured patients.

But, according to physicians and experts interviewed in the Wall Street Journal article, more physicians may leave the plans as awareness of the new rates spread. Many physicians surveyed in September by the Medical Group Management Association said they weren’t aware of the fees they would be offered for treating patients on the exchanges. Of those that had heard, 37% said the rates offered were lower than Medicare, and 18% said they were lower than Medicaid rates.

In order to keep prices low for exchange plans, many health insurers cobbled together narrow networks of physicians who agreed to lower their fees.

Some insurers have contractual arrangements with physicians that allow them to automatically include doctors in a new plan, unless the physician requests to opt out in writing, according to Mike Scribner, CEO of Strategic Healthcare Partners, a health care consulting firm based in Savannah, Georgia., that represents about 700 physicians and 30 managed care hospitals in the state.

Physicians told Kaiser Health News that the Blue Cross Blue Shield Association plans have generally been more straightforward about the discounted rates—and some doctors who had the opportunity to “opt out” of their exchange plans did so.

UnitedHealthcare’s move in New York, affecting plans designed around broader physician networks, is meant to rein in costs. Some physicians said they learned of the fee cuts while the new consumers starting picking health plans. As a result, consumers may end up selecting physicians who haven’t even agreed to participate in the plans. UnitedHealthcare is giving physicians who don’t want to accept the rates 30 days to opt out.

If few people enroll in coverage, insurers may not need broad networks, but, according to The Wall Street Journal article, if enrollment soars, they may have to return to the negotiating table.

California Docs: “Hell No!”

So far, problems with the federal exchange web site have kept enrollment numbers down on a national level, but some individual state exchanges, like California, are reporting enrollment numbers as expected.

When Blue Shield of California sent physicians contract amendments earlier this year allowing them to opt in to treat exchange patients and accept the 30% lower fees than their normal commercial rates, California’s physicians said, “Hell no!”

“We said, this doesn’t make a whole lot of sense for us, ” said Richard Thorp, M.D., an internist in Paradise, California, and president of the California Medical Association. Too few physicians agreed to the change in some mostly rural areas, so Blue Shield had to agree to continue usual rates for some physicians, said Steve Shivinsky, a spokesman for the insurer.

New York Insurer Reacts

In New York, physicians are also questioning their participation in exchange plans.

“We have heard from a lot of physicians the rates [insurers] are offering them are very low, and physicians are questioning whether they are going to participate, ” said Sam Unterricht, M.D., a Brooklyn ophthalmologist and president of the Medical Society of the State of New York.

That seemed to get UnitedHealthcare’s attention.

“Our goal is to provide exchange members with a robust choice of providers, ” said a statement issued by UnitedHealthcare. The insurer added that it would “offer physicians the choice of participating at rates that are above Medicaid and comparable to historical rates.” Few New Yorkers have historically purchased coverage on the individual market, and doctors say their rates for most employer-sponsored plans are much higher. The company initially notified doctors of new rates in April.

Many doctors say they have not decided if they will participate in the new plans—in some cases, even when an insurer is including them in their provider list.

A survey by the Medical Society of the State of New York found that 40% of more than 400 physicians who had responded so far said they chose not to participate in a health insurer’s exchange plan, and one-third said they did not know whether they were participating or not.

Be Curious, Pay Attention

That means consumers should be wary of information in plan directories and confirm participation with their physicians. And physicians should know if they have been corralled into an exchange run plan.

The California Medical Association is so concerned about errors that it has asked Covered California, the state’s insurance marketplace, to remove a search function that lets buyers plug in the names of physicians and get a list of all the plans that they participate in, said Lisa Folberg, vice president for medical and regulatory policy for the California Medical Association.