|MyHealthGuide Source: Jim Farley, J. P. Farley Corporation, 11/10/2010, www.jpfarley.comUSA Today (10/22/2010) featured a front page article (below) about a small physical therapy firm in Michigan who has successfully sued Blue Cross and Blue Shield of Michigan for tactics that would put the small firm out of business for offering Ford, GM and Chrysler an alternative that would have saved them millions of dollars per year on physical therapy claims. This is the same Blue Cross plan that has had suit filed against it by the U.S. Department of Justice for paying hospitals higher prices in exchange for bigger discounts. (It should be noted, others are being investigated by the feds and states for similar practices.)Basically, the Physical Therapy firm came up with a better and less expensive way to handle physical therapy for the automaker’s self insured plans which were administered by Blue Cross and Blue Shield of Michigan. Blue Cross then refused to administer the therapy claims submitted for reimbursement by the small firm. Blue Cross then appears to have encouraged hospitals to revoke ‘discounts’ on all other services the hospitals rendered to participants of the automaker’s plans. When that did not work, Blue Cross then kicked the small firm out of its provider network in an attempt to deny the small firm customers.What really needs to be asked in this situation is why did this occur?
The payments involved were payments to providers of physical therapy, not payments to Blue Cross. The automaker customers reported that the small firm cut their physical therapy costs by 40%.
Carriers who are constantly push their big discounts say they are trying to save plans money. However, when their customers make moves that actually do save them money, the carriers suddenly step in and threaten to stop the practices put in place to achieve plan savings. The network discounts will save a plan money as long as the measurement used to determine savings is limited to the discount. If you consider costs, what a plan actually spends in health claim costs, the savings quickly disappear.
Which is more important to you, the amount of the discount or the total cost of the plan? If it’s the latter, network discounts are not the answer.
About J.P. Farley Corporation
J.P. Farley Corporation founded in 1979 by Jim Farley, current President and CEO, is a privately-held third-party administration and consultation firm. The company was founded to deliver added value to employee benefit Plans that are self-funded for medical, prescription, dental, vision, short-term and long-term disability benefits. Flexible Spending Accounts (FSA), Health Reimbursement Accounts (HRA), and Health Savings Accounts (HSA) administration are also part of the portfolio of service offerings. Visit www.jpfarley.com.