Beware of Blue Cross privatization

I am a pathologist living and working in the Kalispell area for nearly three years. I want to raise awareness of significant public concerns while providing personal as well as private information regarding what appears to be going on with the non-profit Blue Cross Blue Shield of Montana.

BCBSMT is an insurance giant in Montana where it is responsible for nearly half of the commercial health insurance premiums. It also oversees Medicare and Medicaid in the state.

Recent articles and coverage of Peter Babin's situation, as well as what has happened with the Radiology group in Missoula, have been addressed separately. However, they have not been placed in context of the bigger picture of what appears to be happening with BCBSMT.

Babin's reimbursement as CEO of BCBSMT was publicly considered to be a customer-relations nightmare and was no doubt a significant reason for his dismissal earlier this year. I consider Babin's travails to be a red-herring/misdirection on the part of BCBSMT.

Babin received more than $500,000 in salary in 2003, which he has claimed is comparable to, if not below, the industry average. While this may be true, my concerns and objections regarding BCBSMT pertain to physician and beneficiary treatment, not executive pay.

BCBSMT's treatment of the physicians in the Missoula Radiology group, new requirements for "physician certification" and their swelling monetary reserves are the truly important occurrences in their quiet march to privatization.

For many years BCBSMT has been unquestionably regarded as a "public-benefit" non-profit organization. In 1995, BCBSMT filed documents with the Montana Department of Insurance indicating it was a "public-benefit" organization.

This is now alleged to be a clerical error by BCBSMT. They now consider themselves to be a "mutual-benefit" non-profit organization and have steadfastly refused since 1997 to change their documentation to reflect their earlier designation. A "mutual-benefit" non-profit organization "can take assets (money) that are dedicated to charitable trust purposes and give them to a for-profit entity."

However, a "public-benefit" non-profit organization cannot do this. BCBSMT is fighting tooth-and-nail to obtain a "mutual-benefit" status in a low-key manner in the 2005 legislative session. Tens of millions of dollars are at stake.

For the last several years, BCBSMT spokespersons repeatedly have claimed that BCBSMT has no plans to privatize and is currently not for sale. BCBSMT financial reserves, about $94 million as of June 2004, have no doubt increased if my family's insurance premiums and my pathology groups' reimbursements are any indication.

BCBSMT is required to have minimum financial reserves, but no maximum amount is indicated. Both Montana State and Blue Cross Blue Shield of America require BCBSMT to have money in reserve - approximately $30 million (state) and $45 million (BCBSA). During the last 2 1/2 years, my family's premiums have risen by 55 percent due to standard rate increases.

When my pathology group was formed in 1996, the partners established a fee schedule that would charge less than what BCBSMT would reimburse and joined the BCBSMT provider network. By joining a provider network, a physician agrees to accept: 1) a discounted rate for their services from the insurance company and 2) not to bill the patient for the difference between physician charges and the insurance company reimbursement (this difference is "written-off").

Therefore, a BCBSMT patient would not be charged additional money after BCBSMT had paid its share. By the end of 2003, BCBSMT was paying only about 60 percent of our charges even though we had not changed our fees during this 7-8 year period. While perhaps not as drastic, I am sure that BCBSMT has also reduced payments to all other physicians for their services.

I am sure these practices of reducing payments while increasing premiums have led to the recent marked increase in BCBSMT cash reserves. BCBSMT spokespersons repeatedly have claimed that BCBSMT has no plans to privatize and is currently not for sale. I am sure that this will change if BCBSMT is found to be a "mutual-benefit" organization.

BCBSMT administrators and board members will reap huge financial rewards when privatization occurs. This will occur at the expense of Montana citizens who have paid steadily increasing insurance premiums and Montana physicians who have experienced steadily diminishing reimbursements for their services. BCBSMT will get top dollar if it maintains as large a provider network as is possible and if all of the providers are "certified".

This is why the Missoula Radiology groups' situation is so important to BCBSMT. Until Missoula Radiology refused to accept its rates, BCBSMT had no issue with a single radiology group existing in Missoula. However, once the radiologists opted out of the their provider network, BCBSMT sued them for being a monopoly. This is a thinly disguised attempt to maintain their provider network.

Separately, BCBSMT is now requiring all its providers to be "certified" by June 2005. This "certification" is a bogus, unnecessary paper shuffling that is aimed at making the BCBSMT physician-network appear more attractive to potential buyers/investors.

Physicians are already certified by their professional associations, medical schools, residency training programs, and malpractice insurers, as well as with the medical staff and hospital where they practice medicine. If a physician refuses to comply with their process (with no reimbursement for their hours of paperwork), BCBSMT does not negotiate. They threaten to drop the physician from their provider list and discourage all their insured patients from going to that physician (BCBSMT patients will receive no compensation or application of fees to their deductible).

One physician in Kalispell who has chosen to no longer participate in BCBSMT has seen their patient workload decrease by about 25-30 percent within several months. If physicians were to merely discuss non-participation at a meeting, they could be sued for "price-fixing" and/or collusion. They are obviously frightened of holding any such discussions and are worried about losing a significant amount of their business.

Most physicians come out of medical school with med-school debts of $40,000 to $120,000. They are rightfully afraid of the dire financial threats BCBSMT can make and will usually comply with whatever is demanded of them. Once their quiet march to "mutual-benefit" status is complete, BCBSMT can and undoubtedly will privatize.

If their "certification" requirement holds up and as many physicians as possible are kept in-line (within the provider network), BCBSMT can maximize their profits by having a huge "certified" provider network as well as having large cash reserves. This "package" will appear very attractive to potential buyers whether they are other insurance companies or public shareholders.

Once sold or privatized, BCBSMT has no obligation to use any of the monetary reserves it has gained to provide healthcare for Montana citizens, millions of it can and will go to BCBSMT executives. This scenario has played itself out in several other states, including California and New York. I do not want this to happen in Montana with your or my money.

Make no mistake, BCBSMT is amassing huge cash reserves and positioning itself for privatization. Write (contact) your legislative representatives. Don't let your medical dollars disappear into executive pockets through privatization.

Dr. David Smirnow is a pathologist at Kalispell Regional Medical Center.