July 26, 2012 — Physicians and other healthcare professionals are being hit with a rate reduction from Regence BlueCross BlueShield on October 1, while the insurer is asking the InsuranceDivision to approve a 9.6 percent increase for roughly 53,000 people who buy their own coverage. A public hearing on that rate request will be held next Monday at 3 p.m. in Salem.

There’s a bit of a disconnect between reducing provider reimbursement and asking for a premium increase, said Vern Saboe, a chiropractor in Albany who lobbies on behalf of the Oregon Chiropractic Association.

“It’s not a logical question; you also need to look at what Regence is paying its executives,” said Saboe who participated in the health transformation team to improve the healthcare system for people on the Oregon Health Plan.

In late June, chiropractors learned their fees would decrease by 25 percent while the rates paid to psychologists for their hourly therapeutic visits are going down by 6.7 percent.

Other medical professionals impacted by similar reductions include physical, occupational and speech therapists, and physicians such as radiologists, ophthalmologists, anesthesiologists and surgeons.

“We’re gnashing our teeth, and it’s hard to understand what’s going on,” said Julie Nelligan, PhD, president of the Oregon Psychological Association. “If we resign from the Regence panel, it puts our patients in a bind. It’s pretty difficult for me to screen people beforehand and ask them what insurance they have. Whenever our patients have a new
plan year, their deductibles, premiums and co-pays go up and now BlueCross is reducing what they pay us. One rumor we’re hearing is that BlueCross is trying to get out of the individual market.”

Psychologists are concerned that Regence is trying to force them off the panel and limit access to mental health services thereby reducing demand.

Regence has acknowledged that it projects losing 11,000 members in the individual market by 2013, a figure that represents 20 percent of its market share.

“That, in itself, raises serious questions about the ongoing stability of Regence’s risk pool and its ability to insure customers in the future because the likelihood is that people who stay with Regence will be those with pre-existing conditions who can’t readily switch to another health plan,” said Jesse Ellis O’Brien, healthcare advocate for the OSPIRG Foundation, which has been analyzing Regence’s rate request.

“We’re hoping Regence will give us more information about where that 11,000 projection came from and which segment of the population is likely to switch or drop coverage and also how much of that loss of membership will be due to increased premium costs and other factors such as network changes,” he added.

Regence spokesman Scott Burton defended the company’s decision to reduce rates, telling The Lund Report, “Regence is committed to addressing rising medical costs that lead to more expensive premiums for our members. Reimbursement rates are a key factor in this equation as the cost of care continues to rise across the country and here in Oregon.”

There’s no question that medical costs have gone up over the past several years. But, taking a look at the growth of administrative expenses, Regence increased the commissions paid toinsurance brokers by 84 percent between 2010 and 2011, while the salaries paid to Regence employees jumped by 38 percent during the same time period.

“It appears that Regence is not engaging in a lot of cost containment and quality improvement strategies that we feel are important for the long term,” O’Brien said.

Regence has told the Insurance Division that intends to help reduce costs and improve care by introducing multi-year medical home pilot programs and integrated disease management programs.

These changes should save consumers .6 percentage points, according to Regence, but there’s no detail about how that figure was derived, said O’Brien. “We’d love to hear more information about what Regence is doing and their projections on how much money their customers will be saving because of work in this area.”

O’Brien criticized Regence for not having other initiatives to hold down costs such as quality pricing which rewards providers to use best practices. There’s also no mention of value-based pricing options or ways to reduce medical errors or hospital-acquired infections.

“We will discuss our Oregon individual rate filing at next week’s public hearing requested by the Oregon Insurance Commission,” said Burton representing Regence.


Regence has also been making substantial investments in for-profit companies. Click here to read more about this issue.