Highmark won't pay hospital rates for care in physician offices
By Alex Nixon
Published: Wednesday, Feb. 26, 2014, 10:45 p.m.
Health systems across the country are buying out private doctor practices and reclassifying them as hospital-outpatient departments — a move that critics say allows hospitals to bill higher rates without providing more sophisticated care.
The problem has been particularly widespread with oncology practices, according to Highmark Inc., the largest health insurer in Pennsylvania, which on Wednesday fired the first shot in what's expected to be a major battle between insurers and hospitals over the controversial practice.
Starting April 1, Highmark will stop reimbursing health systems at higher hospital-outpatient rates for cancer treatment performed in physician offices. The move may also cause a domino effect in the industry, observers said.
The Blue Cross Blue Shield company said the change won't affect patients' access to treatment and will save them money by reducing out-of-pocket costs. UPMC, which runs the largest network of cancer centers in Western Pennsylvania, called the action “an egregious contract violation.”
What remains unclear, is whether patients will be on the hook for charges that are rejected by the insurer. UPMC spokesman Paul Wood said the hospital network expects to be reimbursed for the full amount. Highmark said patients won't be affected.
Highmark is the first insurer to take a public stand against the common practice that has been denounced for adding unnecessary costs to the health-care system and come under scrutiny by Medicare and Medicaid, said Alwyn Cassil, a health policy expert and consultant with Policy Translation, in Silver Spring, Md.
“This practice has been going for a long time,” Cassil said. “I think what is notable is why has it taken private insurers so long to stand up to the practice.”
Medicare, the federal government's health insurance program for seniors, is paying 80 percent more for a patient visit in a doctor office designated as a hospital's outpatient facility than the program would for the same visit in a freestanding physician office, the Medicare Payment Advisory Commission wrote in a 2012 report.
“This payment difference creates a financial incentive for hospitals to purchase freestanding physicians' offices and convert them to OPDs (outpatient departments) without changing their location or patient mix,” the commission said in its recommendation that Medicare equalize payments between the two settings.
In some cases, Highmark was billed $32,000 for cancer-drug infusions that had previously cost $10,000, Highmark's chief medical officer, Donald Fischer said. And members' cost-sharing for those treatments also more than tripled, from $1,000 to $3,200, he said.
“For this particular type of problem, the biggest hitter is oncology care,” he said. “It's particularly disturbing for patients” to experience those cost increases.
The company expects to reduce its claims by $200 million a year through the change, he said.
Highmark's hospital system, Allegheny Health Network, is already taking steps to reduce added charges, Highmark spokesman Aaron Billger said. The network in January signed a partnership Johns Hopkins in Baltimore for cancer treatment, training and research.
UPMC expects “we will be reimbursed for our services provided per the contractual arrangements until it expires at the end of the year,” Wood said.
Highmark's reimbursement contract with UPMC ends Dec. 31, which will make most UPMC hospitals and doctors out-of-network for the insurer's members.
Several specialty and rural hospitals, along with some unique cancer services, will remain in-network after this year.
Fischer said Highmark is working to end the practice of charging higher fees and rates in doctors offices in all types of treatments and physician practices, not just oncology. That is primarily occurring through adding provisions when it negotiates reimbursement contracts with hospitals, he said.
“I think everyone is watching this,” Fischer said. “I think this is the beginning of more accountability.”
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- More women seize opportunities to start businesses
- Consider carefully details, people involved in financial trust
- Is tech wreck on way?
- ‘Sweet spot’ mid-cap stocks worthy of investor affection
- Record cold facilitates coal’s comeback
- Salad dressing company manages growth
- Squeezed by competition, Chobani to expand offerings
- Retailers tailor store experience to phones
- Meat prices drain barbecue budgets
- Lawsuit challenges Hollywood standard of unpaid internships
- Low pay, commutes among top stressors