Emergency physicians in Virginia exit Blues network

A medical group breaks away from the state's largest private health plan, prompting area employers to try to foster a reconciliation.

By Robert Kazel — Posted Jan. 24, 2005

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The decision of a group of emergency physicians to leave a Blue Cross Blue Shield plan in Virginia has spurred so much public interest that the state medical society says it's helped enlighten the local population about the problem of meager insurance reimbursements.

The 17 physicians who constitute Fredericksburg Emergency Medical Alliance, and who practice together under an exclusive contract with Mary Washington Hospital in Fredericksburg, decided to leave the Anthem Blue Cross Blue Shield network Jan. 1 after they couldn't agree with the insurer on reimbursement levels.

The plan is a subsidiary of Indianapolis-based WellPoint Inc., the nation's largest private insurance plan, and is the largest health insurer in Virginia.

Physicians at the medical group felt that the departure from the network was unavoidable because, after more than seven months of negotiation, the reimbursement schedule Anthem offered them was 30% to 40% lower than what other commercial plans in the market were paying, said Drew Garvie, MD, president of the group.

"We were so far apart we felt we could never meet in the middle," he said.

The end of the contract meant that Anthem members are paying more for their emergency care at the hospital, because they will be billed by the physicians for the balance of the doctors' professional fees. Dr. Garvie estimated the average patient will pay $60 out of pocket for a visit to the emergency department, whereas before patients usually only paid a smaller co-payment.

Pressure for agreement

Dr. Garvie said both his group and the hospital have come under "tremendous pressure" to come to an agreement with Anthem from large plan sponsors such as county governments in the region.

Mary Washington is the only hospital within an hour's drive for some Virginians, and employers have argued their workers shouldn't face bigger bills. Fredericksburg is located about halfway between Richmond, Va., and Washington, D.C.

Walt Kiwall, executive vice president and chief operating officer of Medicorp Health System, owner of the hospital, said he was hearing from businesses in the region that wanted the physicians and Anthem back at the bargaining table.

"We're encouraging both parties to continue negotiation," he said. "The employers want it resolved and the community wants it resolved, and they have asked [us] to engage the parties to get it resolved."

Kiwall said, however, that he understands the physicians' desire to get paid reasonable rates from Anthem.

"We want our emergency room physicians to have a competitive agreement -- it's the only way we can recruit and retain high-quality emergency room physicians," he said.

Brooke Taylor, a representative of the Blues plan in Virginia, said the Fredericksburg doctors were asking for about double what Anthem pays other emergency physicians in Virginia, including those that serve in larger hospitals, major trauma centers and tertiary care centers. "We do try to achieve the best agreement we can for our members, who are trying to keep their health care affordable," she said.

Taylor said 94% of physicians in Virginia contract with Anthem and that the plan controls about 35% of the markets where it does business.

Anthem was still interested in negotiating with the doctors, she said, though both sides said in early January that the bargaining process had stopped.

Some of the patients affected by the physicians' decision are the 800 employees of Stafford County, Va., which is adjacent to Fredericksburg, and they've expressed worry, said Anthony J. Romanello, deputy county administrator. "Everybody is concerned," he said. "It's the ER. When you do have an emergency, there's not much choice where you can go."

About 474 employees of Fredericksburg's University of Mary Washington, which is an Anthem customer, also are affected, according to Sherry Morgan, the school's benefits administrator.

The university has distributed to employees a list of urgent care centers in the region and a list of other hospitals within 50 miles, in case they do want to consider alternatives to the local hospital. The university is not affiliated with Mary Washington Hospital.

About 56,000 Anthem patients are located in the area served by the hospital, including about 8,000 public employees.

The case of the Fredericksburg physicians is unusual because of the amount of both local and regional media attention it's received, said Paul Kitchen, executive vice president of the Medical Society of Virginia. That's a good thing, he said, because news about the conflict has helped the public understand why doctors may sometimes have little choice but to reject rock-bottom reimbursement schedules.

"Physicians and their practice managers and their accountants are pointing it out [to the public] that you can't [survive] if your revenues don't exceed your expenses," he said. "If it's not acceptable, it's not acceptable. You don't sell your widget for 90 cents if it costs $1 to make."

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