Blue Shield claims health system violates anti-trust laws
Tahoe Forest Hospital Administrator Larry Long confirmed that Tahoe Health System recently received a letter from Blue Shield claiming the system might be in violation of anti-trust laws.
Blue Shield alleges the system violates federal legislation because of the way system doctors are dropping out of the Blue Shield preferred provider network.
Many physicians in the North Shore and Truckee area have dropped out of the network, saying that Blue Shield’s reimbursement has fallen to below 40 percent of the billed amount for some medical specialists. Tahoe Health System, a joint venture between the hospital district, Barton Memorial Hospital and the Independent Physicians Association, has been negotiating with Blue Shield and other insurance companies on behalf of the physicians and the hospitals.
“Our attorney feels we are on solid ground,” Long said at the hospital district meeting Tuesday night. “We simply define our market differently than Blue Shield defines our market. We feel confident with how we have structured our system.”
Long said Tahoe Health System’s attorney has extensive experience in structuring independent physicians associations and worked for years on the development of the joint venture.
He said after the meeting the lawyer reviewed the cases cited in Blue Shield’s letter and found they are not relevant to the Tahoe-Truckee area.
“We called our attorney and reviewed the cases,” Long said. “Our lawyer said that the communities are different. You can’t take a community in Oshkosh and
apply its standards to the rest of the country. When you apply anti-trust law to our case, we seem to be in pretty good shape.”
He said the system focus is to figure out how it can participate in managed care plans, which are good for providers, while keeping the doors open for the community.
“Our goals are well-founded and solid,” Long said. “We want to develop access for all.”
Resident Eric Sutton expressed concerns about the possible cost to the public.
“Some of us feel there is risk in forming Tahoe Health System,” Sutton said. “Is there community money at risk and has it been addressed?”
District president John Falk replied, saying the district believes all risks have been addressed. Falk also replied to concerns about the economy of scale for Tahoe Health Systems and the risk of self-insurance, explaining that the health system will be bridged from several district hospitals, but with increased local control for the hospital.
Long said the health system will have some risk for healthcare within the hospital district, but that the best way to reduce the risk is to recruit more members.
“The best way to reduce risk is to get as many people involved in the plan as possible, and to get a good system of re-insurance in place,” Long said. He said the hospital’s own community healthcare plan, which should be in place in about a year, should only serve about 10 to 15 percent of the local community, and other plans will be an essential part of the mix.
Some insurance brokers at the meeting expressed concern for their clients, who feel they are left unprotected by the physicians’ refusal to be a part of the Blue Shield network.
“They’re asking us, ‘Where do we go? Our healthcare provider says they will no longer carry Blue Shield,'” broker Ed Heron said.
Director Rob Eskridge said he and Falk are serving on an ad hoc communication committee, which will inform residents about the community healthcare plans.
“As part of that we should have a public hearing in both Truckee and Tahoe City to cover the whole service area,” Eskridge said.
In an interview Wednesday, insurance broker Richard Votaw said residents will suffer if Blue Shield leaves the area.
“As a broker community, we feel the people are going to lose out,” Votaw said. “Clients who can’t get coverage will have to travel for medical services. Actually, if brokers sold some of these other, more expensive plans, we would make more in commissions, but we strongly feel that there should be a presence by Blue Shield/Blue Cross in this area as in the rest of the state.”
Votaw pointed out that Blue Shield’s reimbursement rates are the same in Truckee-North Tahoe as they are in 44 of California’s 57 counties. He said the exceptions are in the areas of Los Angeles and San Francisco, where insurance premiums are more expensive as well.
“There are a lot of good doctors in the area,” Votaw said. “I wish we could work this out.” He said the IPA needs to recognize the market forces in the state.
Votaw said Blue Shield is the strongest provider in California, and that it is especially good for residents of the Tahoe area because they tend to travel and Blue Shield coverage is accepted across the United States.
Insurance broker Carolyn Minnick of Truckee said the broker community wants to be sure the public understands their options.
“We feel that there is some unnecessary alarm, which is a concern,” Minnick said. “People can still be treated under Blue Shield by local doctors, and they have access to Blue Shield network providers in Reno or Sacramento.”
Minnick said Blue Shield also has provisions in its existing preferred provider contract with its clients, which will allow them to receive normal reimbursement for treatment from some non-network specialists.
“If you cannot access a specific doctor, like a specialist, you can get treated here, and the doctor will receive payment much closer to his billed rate,” Minnick said.
She said the important thing people should remember about insurance is its aid in major medical treatment or medical catastrophes.
“Insurance was designed to cover the bills you cannot afford,” Minnick said.
The next meeting of the Tahoe Forest Hospital District will be a closed session to discuss possible pending litigation by Blue Shield.
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