You ain't nothin' with a blank contract

Health plans often ask physicians to sign contracts that don't tell how much is paid for each procedure. The AMA House of Delegates is calling for state regulators to require that private insurers reveal their fee schedules.

Posted Jan. 3, 2005.

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The legendary songwriters Jerry Leiber and Mike Stoller penned "Jailhouse Rock," "Hound Dog" and other big hits that propelled Elvis Presley to superstardom in the 1950s. What thanks did they get? Presley's manager, Colonel Tom Parker, demanded Leiber and Stoller sign a contract consisting of nothing but a blank piece of paper and lines for their signatures -- if they wanted to keep writing for Elvis.

Physicians surely can relate to Leiber and Stoller's story. Physicians get contracts from health care plans that, though they aren't actually blank, may as well be. Often, these contracts don't state what a managed care company plans to pay for each procedure.

Leiber and Stoller, operating with an explosion of rock and R&B acts at their disposal, declined Parker's contract.

Physicians, faced with a lack of health plans at their disposal as companies consolidate and gain a greater stranglehold in their communities, often feel they must accept a major health plan's contract. That is, unless the practice plans on treating patients on a cash-only basis.

The problem is compounded with the growth of health-plan deductibles and health savings accounts. If patients want to know how much a procedure costs under their plan, they may ask their physicians -- not that they'll know.

Medicare contractors put out their fee schedule every November. But private plans generally never put one out. Not only are the numbers not in the contract, but physicians also can get stonewalled if they ask to see any sort of fee schedule.

To get an idea of how confusing things can get, consider lawsuits filed by the New Jersey chapter of the American College of Cardiology and the Medical Society of New Jersey against Horizon Blue Cross Blue Shield of New Jersey. The plan demanded $15 million in payments to cardiologists be repaid. The plan blamed a computer error for mailing out excessive payments.

Horizon has suspended its recoupment efforts while the cases are going on, but the company says it's in the right because the physicians can't keep money they weren't owed. The physicians responded, how were they supposed to know what was owed, when the numbers weren't in the contract?

Like Winston Churchill's description of Russia, a managed-care contract can be a riddle wrapped in a mystery inside an enigma.

During its 2004 Interim Meeting in Atlanta, the AMA House of Delegates passed a resolution that could help to solve the problem with the typical number-less contract. It called for state insurance regulators to require all private insurers to make available the fee schedules used to determine payment for medical services. Where the fee schedules must be published is not specified, but it doesn't have to be. The point is, whether listed in the contract or available separately, physicians need the opportunity to see that information.

They need it not only for their own negotiating purposes, but also for their own budgeting purposes. After all, how are you supposed to run an office when you don't know exactly how much money is supposed to come your way? And how can you dispute a plan's attempt to recoup an alleged overpayment if you don't know what the payment is supposed to be? One point the American College of Cardiology and the Medical Society of New Jersey make in their lawsuits is, how do we know Horizon never underpaid us?

Fair is fair, and physicians should not have to sign contracts blindly. It doesn't matter if a health plan is bigger than Elvis -- you should not have to put your name down on a contract that is no more revealing than a blank sheet of paper.

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