By: Malcolm Mayhew
Effective as of Jan. 1 of this year, Blue Cross Blue Shield of Texas (BCBSTX) discontinued all PPO plans for individuals and families statewide. Instead, those members were forced into HMO plans, many of whom also experienced the added sting of an increased premium.
In addition to losing physicians they have gone to and trusted for years because those doctors may not accept HMOs or are no longer in their network, policyholders will now need referrals before seeing a specialist.
Why is this happening? BCBSTX claims it paid out $400 million more in claims than it collected in premiums for its PPO product in the first year of open enrollment. In a letter from BCBSTX to insurance companies, it said, “Losses that high are unsustainable, and we have adjusted our offerings – as many insurers have – to be sustainable in the new market reality.”
With millions of new customers receiving subsidies under the Affordable Care Act (ACA), more commonly known as Obamacare, many insurers were not prepared for how expensive it would be to cover this population. Insurers across the nation made notifications of significant premium increases for 2016.
After a 9 percent hike in 2015, BCBSTX would have had to raise premiums by 20 percent in 2016 had it not made the switch.
So why couldn’t BCBSTX continue offering the PPO and just increase the rate for it? Under the Affordable Care Act, individual business is rated using a risk pool, which means all individual plans had to be evaluated together. BCBSTX couldn’t simply look at the pricing of PPO separately. Keeping both the PPO and HMO would have added such drastic cost for every member with an individual plan that it would have been unattainable for most.
On 37 documented instances, President Barack Obama or top administration officials expressed that if Americans liked their plans, they could keep their plans, referring to health insurance changes. It was also promised that citizens would not have to give up their doctors. PolitiFact.com named it the 2013 “Lie of the Year.”
Justin Phipps, managing director of employee benefits at Gus Bates Insurance & Investments, helps clients navigate the cumbersome world of insurance and investments. Gus Bates is a full-service brokerage and consulting firm with the objective of maximizing the options available to businesses, families and individuals. Phipps says, “Most carriers decided to make the same network changes and remove any out-of-network coverage. Blue Cross made the announcement first to discontinue its PPO network, and most other carriers followed suit. However, Humana decided to keep the PPO network available, but to only offer one plan in the DFW area. In previous years there have been five to seven PPO options from which to choose. Once Blue Cross made the decision to discontinue its PPO network, this paved the way for other carriers to do the same. I imagine this will continue until there is a solution to high health costs and expenditures - possibly carriers leaving the market altogether.”
Many get their health insurance through work by participating in employer-sponsored health insurance. These people will still have a diverse range of PPO plans from which to choose.
“These changes have had the largest impact on the individual and small-group (under 50 employees) market. In these areas, we’ve seen an average cost increase of around 35-40 percent. At this point in time, we have limited trend data to share since there has only been one set of renewals on the individual side; but those renewals were not favorable, and significant changes had to be made to keep them as affordable as possible. After the initial large rate changes, we have seen a more normal trend increase on the small group side. We will need a few more years to see whether or not that trend will continue,” Phipps says.
HMO plans use a considerably narrower network, managed by the insurer, of health care professionals willing to work for lower rates. Many doctors are choosing not to accept HMOs.
Ryan Terry is an independent construction professional in Fort Worth and was among those switched over to an HMO in January. For decades Terry has been going to his back specialist and had a surgery date set for February. Because his doctor doesn’t accept HMOs, the surgery has been cancelled, and Terry is forced to pursue a doctor in-network that will accept his HMO plan. “I originally chose my doctor because he came highly recommended. I’ve used him for years because I trust his abilities as a surgeon. Now I have to start all over again. Plus the deductible is so high it discourages you from having anything done. I guess I will just live with the pain until it’s absolutely unbearable or I can’t walk,” Terry says.
Specializing in third-party billing primarily for physical therapy and orthopedics, Ashley Braden says, “As expected, premiums have increased, and benefits have decreased. If you’re not a part of a large employer group, it’s difficult to find decent coverage with a reasonable premium. If you have dependents, health insurance is nearly impossible to afford (if not impossible) if you’re not able to receive any state or federal assistance. Patients are having to refuse services because the out-of-pocket costs are too high. Not to mention that patients are not able to see their trusted providers due to out-of-network status.”
Doctors in larger groups in bigger cities have the luxury to choose whether or not to accept HMOs because there is a greater pool of patients. For physicians in smaller practices with many patients on the new HMO plans, they are forced to accept them and work for less money.
Michael H. Boothby, M.D., is an orthopedic surgeon that specializes in sports medicine at The Orthopedic and Sports Medicine Institute (OSMI). He no longer accepts HMO plans at the clinic. “We have problems getting payment from the insurance companies. It became impossible to keep losing time and money. We have to pay for the staff, supplies, the cost of doing surgeries. If you took your car to the tire store because you needed new tires, they wouldn’t let you keep the tires if you didn’t pay for them,” Boothby says. “It’s unfortunate. The mantra now in insurance is, ‘We are only going to pay if we have to pay.’ If there is any little error on the claim, they won’t pay. Then you have to re-file and fight. It’s just so challenging to get any payment.”
One of the biggest challenges since the insurance models have changed, according to Boothby, is that because of the decreased reimbursement, physicians have to see more patients to make the system work. “Gone are the old days of 25 – 30 patients a day. Now it’s more like 40 – 60 patients. It used to be where we didn’t just get to know about the issues; we got to know the patient. It [insurance changes] has devolved the physician-patient relationship,” Boothby says.
Working alongside Boothby is William Shaw, P.A., who says the ACA limits the number of patients they can see. “Either they are on a plan, which has a high deductible and limits them on their side, or the plan pays less than Medicaid and is therefore a financial burden to the practice…Now we often can’t do what the patient needs but only what the insurance company allows,” Shaw says.
Deshaun Edwards is practice manager of a multi-physician orthopedic practice and insists that the Affordable Care Act has affected patient volume and more importantly patient care. “We are limited as to which patients and plans we can see…This not only narrows the number of patients we can treat but also forces us to treat them in a facility that may not be the best fit for their care.”
The constantly evolving insurance regulations make it difficult for personnel at practices. “We are constantly having to reevaluate and reeducate ourselves because there are new ACA plans with new limitations all the time. It has also become our responsibility to educate the patients on the plans that they are paying for because agents and/or healthcare.gov are not. In short, it has created double the work for those of us working directly with insurance companies,” Edwards says.
Currently there are 5 million people without coverage in Texas, which is 19 percent of the state population. Those who go without coverage in 2016 will owe the IRS a penalty of $695 per individual and $347.50 per child or 2.5 percent of annual household income.
It’s worth pointing out that in 2014 the fee for not having insurance was $95 per adult and $47.50 per child or 1 percent of household income. In 2015 the fee was $325 per adult and $162.50 per child or 2 percent of household income.
Shaw says he doesn’t think we will move to a socialized medicine formula anytime soon: “The drive to be the best doctor and to see the best doctor will keep patients and physicians from conforming to a formula that drives everyone toward being average.”
During the research for this feature, interviews were held with health insurance advisors, physicians, patients, clinic managers and billing professionals. Trying to find an individual with a positive outlook on the changing health insurance market was futile.
Terry says, “Forcing us into a system with rationed care limits our freedom. The health care system is broken. It can’t be fixed until everyone is free to shop for the plan that works best for them and make decisions with their doctors without the government butting in.”
By: Malcolm Mayhew