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The row could mean more surprise bills for patients. Mid-state hospitals “find themselves between a rock and a hard place.” Balance billing is a tough health care problem to fix.

Photo/Joshua Ness via Unsplash

The statement from BCBST was updated to correct an inaccurate number that was originally provided.

Update, July 31, 2018: If a search brought you to this page, consider reading an update as well.

Anesthesia Medical Group and BlueCross BlueShield of Tennessee are in a contracting standoff that could leave many anesthesiologists around Middle Tennessee out-of-network in September.

Even though hospitals, and the providers employed by them, will be in-network, the anesthesiologists employed by AMG who work in those facilities would not be covered to the same extent. Thus, the patient, who can’t choose the anesthesiologist, could receive a balance, or surprise, bill.

The dynamic could impact patients who are covered under commercial BCBST insurance (not Medicare or Medicaid plans) and need a procedure requiring anesthesia at nearly any hospital in Middle Tennessee.

AMG is one of the largest anesthesia providers in the mid-state. Vanderbilt University Medical Center is, however, not impacted because it does not contract out anesthesiologists.

Physicians come and go out of networks all the time, but what’s striking about this impasse is that it will have a broad impact across the mid-state, said Keith Dennen, a lawyer with Farris Bobango in Nashville.

Contract negotiations often get contentious. The provider, usually a hospital, and the insurer sometimes ratchet up pressure on the other party by reaching out to patients about the potential change. BCBST and VUMC did that three years ago amidst negotiations over Medicare Advantage plans.

“What BlueCross is hoping is all the pressure mounts for AMG to have to say, ‘we have to do this,’ then and accept whatever BlueCross is throwing at them,” said Dennen. “The flip side is (AMG doesn’t) have to and they can hold health care in Middle Tennessee hostage here. You can’t bring in enough anesthesiologists to replace them (in a few months.)”

BirdDog didn’t receive the BCBST document from either AMG, which is owned by Nashville-based PhyMed, or the Chattanooga-based insurer.

Here’s what they said in response to questions about why terms couldn’t be reached and whether a contract can be reached:

AMG: We are currently negotiating a new agreement with BlueCross BlueShield of Tennessee for the services we provide its members. We have been partners with BlueCross for 30 years and expect that to continue. Our goal is to continue to serve as the primary in-network provider of quality anesthesia services in Middle Tennessee, just as we have always done, and to partner with blue cross to make healthcare as affordable as possible. We will keep you updated when there is an announcement to be made about our relationship going forward.

BCBST: We’re open to AMG coming back with another proposal. But after a year of negotiations, we appear to be at an impasse with AMG. Due to this impasse, we have to notify affected members at least 60 days prior to a network change. After a year of negotiating with AMG, we could not agree on a rate that’s both fair to them and affordable for our employer groups and member

‘The hospitals are between a rock and a hard place’

The stalemate accentuates how patients have very little, if any, control over what they pay and how providers and insurers engage with each other.

Most patients don’t realize that some providers they see — and often the ones they can’t choose, such as an anesthesiologist or radiologist — are not employed by the hospital, but staffed by third party companies under a longstanding regulation that determines who can be employed by a hospital.

What results from this dynamic manifests in the form of balance billing — although it’s more frequently known as surprise bills. A patient goes to an in-network facility but gets an unexpected bill from an out-of-network provider.

Issues like this tend to arise with services in which patients don’t make a choice, said Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation.

And disagreements between staffing companies and insurers put hospitals in a tough situation since they may not have much leverage over the staffing companies, Levitt and Dennen said. Hospitals need the services and in many states, including Tennessee, they can’t employ those providers, said Dennen.

If a staffing company, such as AMG, has market saturation then hospitals have little input because they need the on-site provider. Anesthesia can’t be outsourced to physicians in other places (as is sometimes the case with radiologists) and other types of doctors can’t fill in.

“The hospitals are between a rock and a hard place — yeah, they can kick AMG out, but ultimately they’re the ones who won’t be having any surgery going on,” said Dennen.

If insurers and providers cannot reach an agreement then the patients take the brunt of the impasse by losing in-patient fees — meaning they pay more for the service.

If AMG and BCBST don’t reach a compromise then what patients pay will be “based on the nature of the service, i.e., emergent vs. non-emergent, and members’ out-of-pocket costs will be determined according to the rate and their plan benefits,” a BCBST spokeswoman said in response to a question about how the change will apply to patients utilizing the services of newly out-of-network anesthesiologists.

Spokespeople for Saint Thomas Health and TriStar Health, both of which would be impacted, did not respond to inquiries about how broadly this would impact their surgeries or if they would communicate the change to patients.

Meaningful change to protect the patient would mean altering the flow of money

Surprise bills are a product of a complex health care system in which multiple parties must reach separate agreements over work that happens in one facility. Patients get the bill later.

It’s hard to get a handle on how many people receive surprise bills because a lot of the data comes from claims data, but that only points to what the insurer paid and what the consumer paid in cost sharing, said Levitt. It does not give information about what the provider ultimately billed to the patient.

Resolving the dynamic that leads to balance bills isn’t a simple path. State legislators can’t just write a bill prohibiting the practice, said Levitt. Different types of insurance are governed by different entities either at the state or local level. And that would mean legislatures were telling private entities how to do business.

Meanwhile, any meaningful change, even if it comes from within the industry, to how contracts (meaning changing how the money flows) would hurt at least one of the health care entities.

“It is an issue that seems to cry out for regulation. No one can look at a situation where the patient did everything right and went to an in-network hospital and got stuck with a balance bill and think it’s fair,” said Levitt. “The question is, who is going to be held accountable and who is going to suffer the financial consequences from protecting the patient.”

Dennen said if the row between AMG and BCBST goes unresolved it could shove the conflict between market power and consumer protection into the spotlight given AMG’s market dominance and BCBST’s relationships with commercial and various local and state governments.

BCBST covers state employees and a variety of local county employees.

“This is competition at its best. (The flyer) is designed so BCBST is not the bad guy, the anesthesiologist is the bad guy. Who knows who is right and who is wrong,” said Dennen. “What it reveals is a problem in our system: why do people at an in-network facility have to worry about whether the anesthesiologist, lab or radiologist is covered? They don’t get a choice.”•