Practical considerations to protect against being ‘out of network’
The disengagement of Highmark and UPMC is looming on the horizon; most of the hospital participation agreements between these two competing healthcare systems end on December 31, 2014. There are some hospital agreements that continue, such as those at Children’s and Magee, but the focus of this article is not the review of the various hospital participation agreements.
Instead, the focus of this article is the disengagement impact on physician productivity and compensation, and what, if anything, physicians might do to prepare for that impact.
The potential problem applies equally to the physicians employed by UPMC, physicians employed by Allegheny Health Network, and independent physicians, although from different perspectives, as follows:
- Physicians employed by UPMC are faced with the loss of patient volume from patients with Highmark health insurance plans;
- Physicians employed by Allegheny Health Network have already faced the loss of patients insured by UPMC, which is now out of network. Now they also risk loss of patients whose coverage was provided by Highmark but through employers that might switch from Highmark to Aetna, Cigna or United Healthcare (“Unaffiliated Payors”) as fallout from the hospital participation disengagement (as noted in Bill Toland’s Pittsburgh Post Gazette article on Sunday, February 19, 2014);
- Independent physicians could suffer similar volume decreases if current patients insured by Highmark are covered through employer plans that change affiliations to either UPMC or the Unaffiliated Payors, and could lose Highmark participation if they lack privileges at a Highmark network hospital as required by Highmark’s credentialing requirements.
Physicians employed by either UPMC or AHN, presumably have little control over the participation decisions of the systems. The standard employment contracts of both uniformly require physicians to participate or not participate in the third party plans selected by the employer. Those employed physicians should seek, or should have sought when they negotiated their employment contracts, compensation and productivity provisions in their employment contracts to account for loss of patient volume caused by the disengagement.
- If those employment contracts provide compensation that is unrelated to volume or collections, or is guaranteed in some other way, then the loss of patient volume may not be problematic.
- However, if physician compensation (either base or incentive compensation) is predicated on maintaining or attaining certain volume or collections, measured either by dollars or WRVUs, then protection would require provisions that waive productivity or collection volume requirements when the decreases are caused by these strategic disengagement decisions.
Simply stated, if a system decides not to participate or cannot participate with a certain third party insurer, and the physician is destined to lose 2,000 WRVUs because of that decision, then the physician should seek or should have sought contractual provisions to hold the physician harmless from that decision, by either reducing the productivity requirement, waiving the productivity requirement for a certain period of time, and/or providing for guaranteed compensation until either the physician or the system can replace that lost productivity.
Independent private practice physicians face a different dilemma. Although those practices have the discretion and authority to participate with any third party payor, certain third party payors may decide not to participate with them or the hospitals at which they practice may not be able to participate with all of the third party payors. In addition, volume they previously received from Highmark participation may decrease if, as mentioned in the Toland article, some major employers are shifting their insurance from Highmark to either UPMC or Aetna, Cigna or United Healthcare.
The entry or increased presence of these Unaffiliated Payors is a direct result of the UPMC strategic decision to disengage with Highmark. During the last 10 years or so, Highmark paid UPMC handsomely, or at least handsomely enough to justify or encourage UPMC not to participate with these unaffiliated third party insurers. In the past, these unaffiliated third party insurers faced significant problems trying to penetrate the Western Pennsylvania market, i.e.,
- Without access to the UPMC physicians and hospitals, which was a very large network even 10 years ago, it was difficult for these third party insurers to sell insurance coverage if they were not included in the UPMC network, which is the same problem Highmark could be facing starting in 2015;
- The significant Medicare and Medicaid populations, coupled with the Highmark domination of the commercial market (which was pegged at greater than 60% in prior years by the Post Gazette), left little in the way of available patient base to justify spending significant sums of money to try to participate in Western Pennsylvania, especially without the UPMC network as mentioned above.
Now that these unaffiliated third party insurers have been permitted to participate with UPMC, they will presumably become a larger presence in the market. Private practice physicians must evaluate the benefit of participating with those third party insurers, and compare those fee schedules with the fee schedules of the payros with respect to the potential lost volume.
Independent private practices may find they do not have enough economic leverage to negotiate with the new unaffiliated third party insurers, although some local primary care practices and some specialty practices may have achieved enough leverage to at lest negotiate with the Unaffiliated Payors, and perhaps even Highmark and UPMC at this point.
Practice size has uniformly been seen as the leverage necessary to negotiate with third party insurers. That has always been a problem in Western Pennsylvania because of the commercial domination by Highmark. Very few practices in the past have had the size necessary to negotiate successfully in that context. Perhaps they will have better success with the new insurers seeking to enter the market.
Finally, independent physicians whose practices are heavily concentrated at a hospital that may become “out of network” should obtain privileges at a hospital or hospitals that would be expected to participate in those insurance plans, both to protect their patient volume and to maintain their Highmark participation.