Blue Cross seeks alternative to health fee hikes

Blue Cross Blue Shield is reconsidering a change to its Standard Option plan that substantially increases the fees paid by federal employees who have surgeries performed by out-of-network doctors, a top official with the health carrier said on Wednesday.

Stephen Gammarino, senior vice president of national programs for Blue Cross Blue Shield, told the House Oversight and Government Reform Federal Workforce subcommittee that he is working with the Office of Personnel Management to pursue an alternative to a 2009 policy change that increases a patient's deductible to $7,500 for each procedure or surgery, including maternity care, that uses an out-of-network provider. The change affects the carrier's Standard Option plan, in which 4 million federal employees currently are enrolled.

"This is something I want to change in the short run," Gammarino said. "At a minimum, if the benefit cannot be modified for 2009, then I want to look at all I can do on the administrative front to ease the burden on members who are affected by this change."

Currently, Blue Cross Standard enrollees pay 25 percent of the plan allowance for an out-of-network procedure, plus any difference between the allowance and the billed amount. Under that rule, if a nonparticipating surgeon charged $5,000 for an operation, and the Blue Cross allowance for the surgery was $4,000, an enrollee would have to pay $1,000 (25 percent) plus $1,000 for the difference between the allowance and the billed amount -- a total of $2,000. Under the 2009 policy change, however, enrollees would be responsible for paying the entire $5,000 for the surgery.

In addition, the Standard Option, as a fee-for-service plan, is based on the notion that participants could be treated by physicians of their choice. But by reducing the out-of-network surgical and maternity coverage for 2009, critics say the Standard Option plan essentially is converting to a health maintenance organization by making the out-of-network costs prohibitive for the majority of patients.

"One of the very important reasons consumers pay higher premiums to join [a fee-for-service plan], rather than an HMO, is to be able to use non-network providers without having to pay most or all of the cost," said Walton Francis, author of Consumer's Checkbook Guide to Health Plans for Federal Employees and Annuitants. "This penalty is inconsistent with that role."

Still, Nancy Kichak, associate director for OPM's strategic human resources policy division, testified that the agency initiated the change to alert enrollees to the cost of using out-of-network providers. Under current rules, she said, patients could not predict their out-of-pocket costs when using out-of-network providers until the expenses had been incurred.

"Many members filed disputed claims because the balance owed was a large amount, in most cases larger than the new $7,500 co-payment, due to the difference between the allowed amount and the amount billed," Kichak said.

Gammarino added that the goal of the policy change was to protect members from paying exorbitant balances for surgeries performed by nonparticipating providers. "We reasoned that if we capped the member's out-of-pocket costs we could relieve some of the burden placed on members who choose nonparticipating providers for what is typically the most expensive type of professional service that they receive," he said.

But given the concern over the benefit change, Gammarino pledged to find an alternative that would not result in an increase in premiums. He fell short of explaining what a potential alternative might be, but said he'd like to alter the policy for 2009, or at least modify it during negotiations with OPM over the 2010 plan.

But Kichak noted that an immediate change would be difficult, since the current open season for federal employees to enroll in a health plan ends Dec. 8.

Dr. Peter Petrucci, president of medical staff at Sibley Memorial Hospital in Washington, recommended that OPM extend the open season enrollment period, especially given that most FEHBP participants were not aware of such significant changes to the Blue Cross Standard Option plan in 2009.

But Kichak argued that extending the enrollment period would create extreme challenges, largely because participants who change their health plan will need a new enrollment card and other information from their new provider to begin receiving services in January. She said there will be an opportunity for federal employees to visit their human resources offices between now and Dec. 8 to change their health plan as a result of the increased attention on changes to Blue Cross' Standard Option plan.

Francis added that extending open season likely would not make a difference, mainly because most enrollees still will be unaware of the plan changes. Instead, he recommended that Blue Cross restore the cost of out-of-network surgery to 2008 levels. The insurance carrier also could require that certain out-of-network surgeries are pre-approved. "There are other tools that could be used that aren't so draconian," he said.