Blues, Physicians Locked In A Legal Snarl

September 24, 2004
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LANSING — Litigation by two physician groups against Blue Cross Blue Shield of Michigan boils down to a question of who has the right to set fees and discounts for medical services.

The Michigan State Medical Society and the Michigan Osteopathic Association contend that the Blues unfairly imposed a discounted fee for office visits under a new preferred-provider organization (PPO) health plan created for United Auto Worker union members.

Blue Cross Blue Shield, the state’s largest health insurer, counters that it is merely implementing and administering the terms for health benefits outlined in a labor contract that Ford, GM and Chrysler negotiated last year with the UAW.

“That’s the benefit design that was agreed upon. There’s a lot of leeway for large companies to do that,” Blues spokeswoman Helen Stojic said.

At issue is language in the UAW contract that labels office visits as a “covered benefit,” even though union members are required to pay a 100 percent co-pay or a deductible of $5,000, which the Medical Society and the Osteopathic Association term “so high that no patient can reasonably be expected to meet it.”

The Medical Society and Osteopathic Association contend the Blues has no right to impose the discounted fee for office visits by UAW members enrolled in the new PPO.

Doing so requires direct negotiations with physicians, the groups say.

“The discount fees and the product they’ve sold really don’t apply here,” said Greg Forzley, M.D., a member of the Medical Society’s board of directors and medical director for the physician group Advantage Health in Grand Rapids

“I didn’t sign a contract for this product,” Forzley said.

In their lawsuit, the Medical Society and Osteopathic Association have asked an Ingham County Circuit Court judge for a judgment that physicians are not obligated to accept the fee the Blues offers for office visits by UAW members using the PPO.

The physician groups also want Blue Cross Blue Shield barred from terminating participation in its agreements with physicians who refuse to accept the discounted fee.

The two groups worry that if allowed to stand, the imposition of the discounted fee for office visits by UAW members could set a precedent for what is considered a “covered benefit” in the future and would be subject to discounting without negotiations between physicians and the insurer.

“They just can’t put physicians into those contracts without ever talking to them,” Medical Society spokesman David Fox said.

In response to the lawsuit, Blue Cross Blue Shield said the issue stems from differing interpretations of physicians’ contracts with its PPO.

Designating office visits as a covered benefit — even with the massive deductible — was included in the contract between the UAW and automakers to bring down the out-of-pocket costs for autoworkers when they visit a doctor.

“By including office visits as a covered service, there is an expectation among auto/UAW members that they would pay the same fee for an office visit that the Blues pay for all other Blues patients in the same physician network.

In most cases, this means they would pay a lower fee for the office visit than that charged by the doctor,” the Blues said in a statement.

“You have to also ask yourself, why would you charge a higher rate for an autoworker?” Stojic said.    

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