WellPoint drops blended-rate doctor payment policy in Ohio

Beginning Sept. 1, physicians will be paid separately for level 3 and 4 codes, rather than being paid at the same rate for those levels.

By Jonathan G. Bethely — Posted June 12, 2006

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After months of negotiations with Ohio physicians, WellPoint is putting an end to its so-called "blended rate" payment policy in the Cincinnati area and says it has no plans to institute the policy elsewhere.

WellPoint planned to send a letter to Ohio physicians by June 1 stating that blended rates no longer will be in place as of Sept. 1, nearly one year after the company's Anthem unit in Cincinnati began paying level 3 and 4 CPT codes at the same rate.

That unit instituted blended rates after determining that Cincinnati-area doctors had higher instances of level 4 coding than other doctors through the country. The company claimed that most physicians actually earn higher reimbursements under blended rates. That's because they were at a higher level than level 3 rates before the policy was put into effect.

But physicians argued otherwise, with practices saying they were in effect being punished for using their electronic medical records systems to code more accurately -- at the same time WellPoint said it would offer pay-for-performance reimbursements based in part on use in EMRs.

Ohio State Medical Assn. Immediate Past President Molly Katz, MD, a Cincinnati ob-gyn who said her practice's reimbursements were going down because of blended rates, said she's pleased with the overall outcome for physicians.

"We hope that this commitment is an indication that we can continue to work with Anthem," Dr. Katz said. "We hope that in the future, we will have an opportunity to discuss the implementation of policies that will affect physicians and their patients prior to their implementation."

WellPoint wouldn't give a specific reason as to why it dropped the blended-rates plan. WellPoint spokeswoman Debbie Davis would explain the move in this way: "We value our relationship with physicians in our community, and we've listened to their concerns."

Dr. Katz said the physicians did not have to make any compromises with WellPoint to get the blended-rates policy dropped.

The AMA supported the Ohio State Medical Assn. during negotiations with WellPoint and has come out against the use of blended-rates policies, saying the practice unfairly penalizes physicians. At its Annual Meeting this month, the AMA House of Delegates is expected to consider a resolution that would codify the AMA opposition into policy.

"The use of blended-rate methodology is a violation of CPT guidelines," said AMA Chair Duane M. Cady, MD. "This strategy is inconsistent with the concept of fair payment for appropriately documented medical services, and appears to be economically motivated to impose a disincentive on the provision of detailed and complex medical services required by sicker patients."

Mohit Ghose, spokesman for America's Health Insurance Plans, which represents more than 1,300 insurers, said the group doesn't recommend or set specific policies for member organizations and does not track nationwide instances of blended coding practices. But it appears that blended rates have not spread.

In one other place where they did catch on, negotiations are still under way between the American Academy of Family Physicians, along with several other specialty societies, and Cigna over the plan's use of blended rates in the New York metropolitan area. Since 2000, Cigna has blended rates from levels 3 through 5, although, unlike in Anthem's plan, physicians have the option to negotiate an unblended fee schedule if the physician's practice can prove through an internal audit that it is adversely affected by the blended rate.

Trevor Stone, AAFP private-sector advocacy specialist, said Cigna had responded to a February letter asking that its blended-rate policy be rescinded by scheduling a meeting in June to discuss the policy. Cigna previously said it had no intention of reversing the policy but that it also had no plans to expand blended rates elsewhere.

Stone said he didn't know whether WellPoint's decision to reverse its blended-rate policy would have an impact on Cigna's decision, but it could be used as a bargaining tool.

"We're pleased about the change they [WellPoint] made," Stone said. "It does prove that open and meaningful dialogue can lead to positive change."

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