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How important is your Medicare contractor? Hundreds of physicians and hospitals in the Northeast are weighing that question following a decision by one of the region’s largest health insurers to pull the plug on its Medicare fee-for-service contract.
In January, BlueCross BlueShield of Massachusetts announced that as of Sept. 30, it will end its fee-for-service agreement with HCFA.
The company will keep its Medicare risk program. But the decision to stop processing fee-for-service claims will inevitably affect hundreds of providers and some 2.1 million beneficiaries in Maine, Massachusetts, New Hampshire, and Vermont.
What’s happening in Massachusetts may soon occur in other states. After years of racking up huge operating costs related to Medicare, many carriers, including Blues plans nationwide, are said to be carefully assessing their future with HCFA.
Officially, 60-year-old Boston-based BlueCross BlueShield of Massachusetts indicated it was pulling out to concentrate on its growing commercial managed care business. But those in the know say BlueCross badly needs to stanch mounting financial losses related to the Medicare operation. BlueCross won’t attach a price to it, but losses over the past five years are reported to run into the millions.
According to a national BlueCross BlueShield association official, a growing, inflexible bureaucracy in Baltimore and the rise in more lucrative commercial risk plans are rapidly making the federal government a less attractive business partner. (One exception, however, is Medicare managed care, which presently lags in enrollment size compared with fee for service but is growing rapidly, according to HCFA.)
But on the fee-for-service side, "we definitely will see more of what has happened in Massachusetts," says the official, Harvey W. Friedman, vice president of Medicare administration with the national Blue Cross Blue Shield Association in Chicago.
Medicare fee for service "is getting tougher to maintain and is no longer financially viable for many Blues," Friedman adds.
Already, a trend may be taking hold. Last year, Hartford, CT-based Aetna announced it would end its fee-for-service contract with HCFA effective in September 1997. The contract involves some 60 million claims annually. And in the same month, Independence Blue Cross, a Part A fiscal intermediary based in Philadelphia, also will close its doors to Medicare fee for service.
With Massachusetts BlueCross also leaving in September, the departures involve three important regional carriers that HCFA will have to replace.
For providers, these events portend significant changes. Here’s why:
• The learning curve with a new carrier could be rough.
Providers in Massachusetts are trying to put a positive spin on the future. "The only way we can see [the change] making any difference is if the new contractor is more or less efficient than the old one," observes Joseph Heyman, MD. Heyman is an obstetrician at Anna Jacques Hospital in Newbury Port, MA, and president of the Massachusetts Medical Society in Waltham.
But there could be more to it than that, Friedman says. The new contractor may operate quite differently from the old one. Reimbursements might not be affected because HCFA sets the rates. But the new carrier may be difficult to contact by phone and may not be as responsive as the present one in resolving issues involving claims appeals or medical necessity.
The new carrier also might take a hard line on submission protocols. Its billing system may not be compatible with your system, and it might outsource certain functions such as remittance reporting, causing your business office headaches and delays. These issues will take time to resolve, Friedman says.
• Distance may be a factor.
The biggest factor, however, might involve geography. In Massachusetts, "Blue Cross has worked hard to maintain good relations with providers, and it’s paid off with strong customer service. The carrier has been extremely efficient and supportive," says Gary A. Sobelson, MD, a primary care physician with Concord (NH) Family Practice.
That’s quite a compliment, considering the Massachusetts carrier is located in another state from the practice. However, the distance issue could become a problem if the carrier that replaces BlueCross happens to be located even farther away, which can easily be the case, Friedman says.
In Maryland, for example, the Part B carrier that serves the state happens to be Dallas-based Blue Cross and Blue Shield of Texas. With regional carriers opting to leave Medicare, the market opens up for distant carriers to fill the void, Friedman adds. Unless a carrier operates regional offices close to providers, routine customer service can suffer.
• Disillusionment with Medicare fee for service can worsen.
Some providers, such as Sobelson, aren’t surprised by BlueCross of Massachusetts’ decision. "It suggests that whatever they are making per claim isn’t worth the amount of work that goes into it. As a physician, I can identify with that," he says.
The departure of a fee-for-service contractor can only reinforce the medical community’s already deep skepticism regarding fee-based reimbursement, Sobelson suggests. Problems can get worse, especially if Medicare fee for service continues to dominate a particular patient market and the new carrier proves difficult to work with, he adds.
"There is no question that fee for service will continue to be prominent in New Hampshire. I can only presume that HCFA will approve a company that will meet the proper requirements," Sobelson concludes.