Higher coding spurs plan to "blend" pay rates

On the one hand, WellPoint Inc.'s Anthem Blue Cross Blue Shield of Ohio division says it's encouraging physicians to adopt electronic medical records by paying doctors a bonus for using EMRs in the plan's pay-for-performance program.

On the other hand, Anthem is cutting reimbursement to some physicians who apparently were too good at using the systems to assist them in coding and billing.

The reimbursement cut comes through the use of something called "blended rates." Starting Nov. 1, Anthem Blue Cross Blue Shield of Ohio began paying CPT level-three and level-four codes for Cincinnati-area doctors at the same rate, rather than having separate reimbursement for each level. The rates for level-three codes were increased, and the rates for level-four codes were dropped.

Anthem instituted the blended rates because it found a 25% jump this year in the number of level-four coding submissions, said Barry C. Malinowski, MD, Anthem's Southern Ohio medical director.

He said the company found no evidence of fraudulent coding. Instead, Anthem's analysis of the increase found "a majority of physicians that were using the higher levels were using EMR." Extra documentation required to use a higher code, such as family history, medical history and social history, is "just a little easier" with an EMR, Dr. Malinowski said.

Under blended rates, Anthem says 75% of physicians should see no change, or a small increase, in reimbursement. But 25% will see less. Dr. Malinowski said, however, that practices might be able to make up any decrease through Anthem's newly expanded pay-for-performance plan, which rewards physicians for EMR usage.

Stephen Cleaves, MD, president of Queen City Physicians in Cincinnati, said that's not necessarily so.

Under the blended rates plan, Dr. Cleaves said, his 30-physician primary care group would lose exactly $76,326.21 in 2006. Under the Anthem pay-for-performance plan, at most it could make an extra $20,000, he said. So the group, which had about $15 million in revenue last year, already knows it's going to be about $56,000 down in 2006, the equivalent of a registered nurse's salary.

Anthem "tries to say you'll lose on one side, but you'll gain on the other," Dr. Cleaves said. "But if you show the data, [Anthem] turns a deaf ear to that."

At this point, officials from Indianapolis-based WellPoint, the nation's largest private-pay health plan, said there are no plans to take the blended-rates program to other regions.

The Ohio State Medical Assn., along with the AMA, is fighting Anthem's blended rates. The groups view them as merely the next generation of bundling and downcoding, two techniques health plans previously used to keep a ceiling on physician reimbursement.

So far, Anthem and Cigna appear to be the only plans to adopt blended rates. Cigna has blended rates for levels three, four and five CPT codes in the New York City area since 2000.

AMA Board Chair Duane Cady, MD, declared the blended-rates plan a violation of AMA CPT coding guidelines. He also said it "conflicts" with Anthem/WellPoint's promise, in its proposed settlement of class-action litigation with physicians, to "abide by most CPT codes, guidelines and conventions."

U.S. District Judge Federico A. Moreno in Miami, who is handling the case, has not yet accepted WellPoint's settlement, nor has anyone filed any objections to the settlement in light of Anthem's blended rates. Dr. Malinowski said his company's legal team had approved the blended-rates plan before it was released.

Doctors don't buy it

Regardless of the legalities, the blended-rates plan doesn't wash with physicians because it goes against the belief that "we should be getting paid for what we do," said Molly Katz, MD, president of OSMA.

"The purpose of codes is to describe the level of service you provide," Dr. Katz said. She added that her ob-gyn practice in Cincinnati stands to lose an undetermined amount of money under blended rates.

Anthem's worries over increasing reimbursements to physicians drove the company to adopt blended rates.

In a letter to OSMA, Dr. Malinowski noted that in the range of codes 99211-99215 for outpatient visits, generally 99213 (level three) would represent 61% of claims, and 99214 (level four) would represent 22%. Anthem found "an increasing" number of groups in which the level-four code was used 60% to 80% of the time, costing the company an additional $1 million in physician reimbursement through September 2005.

WellPoint has not reported similar coding activity in its other regions.

In the letter and in an interview with AMNews, Dr. Malinowski said Cincinnati-area physicians had complained to Anthem that it was "unfair" to reimburse some physicians for level-four visits when they were getting only level-three reimbursement for similar cases. "We're trying to treat all physicians fairly," he said.

The EMR factor

OSMA and other physicians find it odd that Anthem instituted the blended-rates plan around the same time it announced plans to expand its pay-for-performance program in Ohio, a plan that rewards physicians for instituting the same electronic medical records that appear to be the receiving end of Anthem's backlash.

Dr. Malinowski said it is not Anthem's intention to discourage physicians from acquiring an EMR.

The plan doesn't cut physician reimbursement overall, Dr. Malinowski said. Under the blended-rates plan -- not even adding what Anthem's pay-for-performance plan might bring -- the company still would pay out almost $500,000 more to physicians for the same codes in 2006 than it paid in 2005.

Dr. Cleaves at Queen City Physicians said he hoped physicians would not use blended rates as an excuse not to acquire an EMR.

"That would be a short-sighted view," he said. But other physicians said they could see why doctors would think that way.