Spectrum nixes MA PPO contract with BCBSM

February 12, 2011
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Thousands of Medicare Advantage customers in West Michigan are in the middle of a public tiff between Blue Cross Blue Shield of Michigan and Spectrum Health.

BCBSM Vice President and West Michigan Operations President Jeff Connolly went on a speaking tour last week to explain to about 3,200 customers in Grand Rapids, Grand Haven and Holland why they face higher out-of-network charges if they use Spectrum Health or the Spectrum Health Medical Group. The customers have BCBSM’s Medicare Plus Blue PPO policies.

Spectrum Health counters that it hasn’t ever had a contract to participate in BCBSM’s PPO network, spokesman Bruce Rossman said. He said the notion that Spectrum is trying to drive Medicare Advantage PPO business to its own insurance subsidiary, Priority Health, is mistaken.

“No, that is not the primary intention,” Rossman said. “We did a review. We made a business decision. They (BCBSM) still own 70 percent of the health insurance market in this state. We did a review and it was a business decision. This is a comparatively small population compared to all the other types of policies out there that we do cover.”

Medicare Advantage is a product offered by private insurers that replaces traditional Medicare for people age 65 and up. The products package Medicare coverage and services that seniors otherwise would have to pay for separately, such as Part D coverage for prescriptions and wellness services.

Instead of Medicare making payments directly to providers, under Medicare Advantage the payments are forwarded to the insurer, which then must pay the provider.

Starting this year, the federal government is prompting insurers to create networks of hospitals, doctors and other health care providers and move away from fee-for-service plans which cover services from any provider. The change is a way to ensure that everyone who buys a Medicare Advantage plan actually has access to providers.

Spectrum Health is the only health system in the state that has declined to join the BCBSM PPO, Connolly said.

“The seniors on the west side of the state are being put in a very precarious position by Spectrum Health,” Connolly said. “We have 141 hospitals through the state that are contracted, every major system. Spectrum is standing out there alone and it’s a significant issue, given their size, their footprint, their quality and their importance to West Michigan and Grand Rapids.”

BCBSM Medicare Plus Blue PPO customers may either pay the higher out-of-network co-pays to use Spectrum Health or SHMG doctors; use Saint Mary’s Health Care or Metro Health, and choose from the 956 Kent County doctors outside of Spectrum; or opt to revert to traditional Medicare and supplemental policies. The deadline for the last choice is Feb. 14.

Rossman said BCBSM Medicare Plus Blue PPO is being honored at Spectrum’s newest community hospitals, Gerber Memorial in Fremont and Zeeland Community, which had their own contracts with the largest insurer in the state.

“We accept all Medicare payments,” Rossman said. “Now, whether somebody decides to declare that out-of-network or charge a co-pay, is up to the insurers. So if these folks want to come, we’ll take the Medicare payment. We’re not saying we don’t treat you.”

As of last week, Spectrum also has no Medicare Advantage PPO contracts with commercial insurers Humana and Aetna.

Humana is one of the largest Medicare Advantage companies in the country.

“We are currently working productively and collaboratively with Spectrum to establish a contract for our members in Grand Rapids,” Humana spokesman Jeff Blunt said. “We're optimistic that we'll reach an agreement with Spectrum soon.”

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