Unilateral contract changes: Plan gives Michigan physicians the blues

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.