Unilateral contract changes: Plan gives Michigan physicians the blues

Doctors are fighting in court against contract terms dictated by the state's Blues plan. A judge should see fit to rule in their favor.

Posted March 7, 2005.

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

There is a lot about managed care that drives physicians crazy. But one of physicians' biggest pet peeves is when a plan changes a contract unilaterally.

At the very least, it's a sign of disrespect. Physicians should be informed of any contract changes so they can get a chance to negotiate them and decide whether they will accept them or not. Then physicians can give their patients in the affected plan ample notice if they decide to drop it.

In Michigan, two medical societies are taking the issue on as a legal matter by leading the fight to stop the state's largest health plan from getting away with what doctors charge is a unilateral change in contract terms. The Michigan State Medical Society and the Michigan Osteopathic Assn. in September 2004 sued Blue Cross Blue Shield of Michigan after the plan threatened to terminate any doctor who failed to accept heavily discounted fees for patients affiliated with a plan set up by the United Auto Workers, General Motors, Ford and DaimlerChrysler.

Some background: In 2003, the Big Three automakers and the UAW, in their collective bargaining agreements, set up a new self-insured health plan to replace the existing one. They hired the Michigan Blues to administer it, doing all the things a third-party administrator does: claims processing, enrollment tracking and record-keeping.

The patients themselves were required to pay the entire fee for office visits without reimbursement from the health plan. But patients also were promised a lower fee if they stayed with the network set up by the Blues. It amounted to a 25% to 40% pay cut, physicians estimate. And it was a pay cut that neither the Blues nor anyone else ever negotiated with physicians, according to the lawsuit.

The Michigan State Medical Society met with the Blues and said the plan had no right to promise the reduced rates. The Blues responded by threatening any physician who refused to accept the fee with being kicked out of any and all Blues PPO plans.

The medical society and the osteopathic association, asserting that a plan administrator can't kick physicians out of an unrelated Blues-sponsored plan, responded by suing the Blues.

As well the two groups should have. By its heavy-handed manner, the Michigan Blues is threatening relationships between physicians and nearly 2 million patients.

The plan is not only driving a wedge between physicians and patients, it's also damaging the Blues' own relationship with the patients who count on it for insurance. A curious move by a plan that earlier had publicly pledged to improve its relationship with physicians.

The AMA has come out with vocal support of the Michigan societies, at the same time decrying the Blues' unfair tactics. Physicians must be protected, in the words of AMA President John C. Nelson, MD, MPH, from "capricious terminations."

Already, the societies are making some progress in their lawsuit, which was filed last September. Recently they signed an agreement with the Blues and the Ingham County Circuit Court judge hearing the case that states that the Blues will not, while the court fight goes on, kick out any physician who does not accept the discounted rate. If a physician is then later removed from the PPO, the judge will individually review the termination to see if it was done out of retribution.

Also, the judge should see fit to recognize, in the end, that the type of tactics employed by the Blues aren't just driving physicians crazy -- they're also so unfair and untenable that they are illegal.

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn