Doctors-insurers confrontation heats up


Doctors complain of shrinking payments from health insurers, pointing to insurance companies’ fat profits and seven-figure CEO salaries. Insurers say doctors provide uneven care, overtreat patients and push up costs for everyone.

It’s a decades-old confrontation. But it’s gotten more heated recently, as insurers squeeze doctors’ payments as one way to bring down soaring health care costs.

While they’re unhappy about shrinking reimbursements, Texas doctors are angrier still – more than they’ve ever been – with insurers because of the jump in denied claims, says Tim Gorski, an Arlington obstetrician and gynecologist. Dr. Gorski said he doesn’t get paid for 15 percent to 20 percent of the work he does now.

But challenging a denial can be expensive and time-consuming, he said. “You have to make a business decision as to how you fight it,” he said. “They’re the 800-pound gorilla. They have all the power.”

A series of local court battles illustrates the tension. The Federal Trade Commission, acting on complaints from insurers, accused a group of 600 Tarrant County doctors of price-fixing, claiming they conspired to set minimum prices for medical procedures.

The doctors countered that they were only trying to get a fair payment and protect themselves from inconsistent reimbursements as they negotiated with insurers.

Last month, a federal judge sided with the FTC, ordering the doctors, known as the North Texas Specialty Physicians, to stop asking member physicians about the minimum prices they would accept.

The doctors’ group has not said if it will appeal to the U.S. Supreme Court, the next step in the process.

The Texas suit resulted from one of the more than 30 cases the FTC brought against doctors across the country for allegedly conspiring to set prices.

The Texans are the only ones to challenge those complaints in court.

Pointing fingersOne of the arguments between the doctors and the insurance companies that pay for their work is over who is responsible for America’s soaring health care costs, which nearly doubled between 2000 and 2007, according to numbers from the Kaiser Family Foundation, a nonprofit health care research group based in Menlo Park, Calif.

Jose Rodriguez, a Houston orthopedic surgeon who says his practice’s revenue has dwindled from more than $1 million in the mid-1990s to $400,000 last year, blames insurers’ greed. Dr. Rodriguez says he earned only $125,000 last year after office expenses, despite seeing more patients today than he did in the ’90s.

Then he points to the money made by the large insurers. United Health Group reported net income of $4.7 billion in 2007, up 12 percent from the previous year; Aetna Inc. reported $1.8 billion, up 8 percent; Humana Inc. came in at $833 million, up 71 percent. CEOs of those companies had total compensation of $13 million, $23 million and $10 million, respectively, that year.

Doctors say much of those profits came out of the hides of physicians, as insurers refused to pay for medical care.

The gap between what employers and patients pay in insurance premiums and what the insurers pay out for medical services goes toward “administration costs.” That cost – which includes everything from claims processing and marketing to company profits – has become a big issue in the nation’s public policy debate over health care.

In the 10 years from 1996 to 2006, health insurance administration costs jumped 118 percent, from $207 per covered person to $453, according to Kaiser.

Insurance company spokesmen were reluctant to discuss disputes between doctors and insurers in detail, saying reimbursement rates are proprietary information.

Blue Cross Blue Shield of Texas, the state’s largest health care provider network with 40,000 physicians and 400 hospitals, said in a statement: “Most Americans realize that rising health care costs are the result of many factors, not one party.”

“The actual profits have grown as the company has grown,” said Humana’s spokeswoman, Anna Hobbs-Little. “Also of note, in its 2008 pay/performance ranking of U.S. CEOs, Forbes magazine ranked Humana’s CEO among the top 40 best-performing company leaders in the nation,” she said about the CEO’s $10 million in compensation.

A Texas Medical Association survey set for release next month found that 73 percent of the state’s physicians think insurer reimbursement problems have pushed up the cost of running their practice, according to an advance copy of the TMA’s Biennial Physician Survey of 600 physicians acquired by The Dallas Morning News.

Almost half of the survey’s respondents said they are never or rarely successful in negotiating payment contracts with insurers.

Peer reviewsInsurance companies contacted for this story – Aetna, Blue Cross and Blue Shield of Texas and Humana – said they deal with physicians fairly. Aetna says it offers a third-party review system to deal with reimbursement disputes.

Insurers often rely on a peer review procedure to evaluate medical claims before they pay.

Dr. Rodriguez said the problem with insurance company peer reviewers is that they may not be trained in the medical specialty of the doctor they’re investigating, and they often turn down payment for expensive items such as MRIs and some surgeries.

“Why should insurance companies deny treatment that has been authorized by the FDA [the U.S. Food and Drug Administration]?” he asked. “They’re not doctors.”

Dr. Rodriguez cited a recent authorization request for a surgery that was denied. His patient suffers from a spinal infection, with pus inside a disk, he said. The condition could be fatal if left unattended, Dr. Rodriguez said, but an insurance peer reviewer in San Antonio suggested six months of physical therapy instead.

The patient waits as Dr. Rodriguez says he keeps arguing with the insurer for payment.

Susan Strate, a Wichita Falls pathologist and immediate past chair of the Texas Medical Association’s council on social economics, said she was denied payment after diagnosing breast cancer in a man.

The insurance company told her “it was a male patient with a female diagnosis, and our computer says that will always be rejected because it’s a medical situation that does not occur,” she recalled.

The insurance representative on the phone kept insisting that males do not have breast cancer, Dr. Strate said. (The American Cancer Society reported 2,030 cases of breast cancer in men last year.) Finally, the insurer said it would look into the matter, the doctor said.

Expired pactFive years ago, 700,000 physicians and state medical and specialty societies sued the largest insurers, including Cigna, Aetna, United Healthcare, Blue Cross and Blue Shield, and Humana, claiming they “systematically obstruct, reduce, delay and deny payments and reimbursements to health care providers.”

The insurers individually agreed to multimillion-dollar settlements and changes in how claims are processed and reviewed.

The first of 11 insurers to settle, Aetna, marked the expiration of its five-year settlement on June 2.

Doctors say legitimate claims are still being denied or delayed, endangering their livelihoods.

Insurers, meanwhile, say they’re committed to improving their rapport with the state’s 43,000 physicians.

Carl King, Aetna’s general manager of health care delivery, said the company understands it needs good relations with doctors in order to serve patients.

Said Mr. King: “It makes good business sense.”

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