Conway Doctors, Blue Cross Continue Contract Standoff: 30,000 Patients Face Higher Copayments.

FOUR ISSUES KEPT Arkansas Blue Cross and Blue Shield and the Conway Regional Physician Hospital Organization from signing a new contract at the end of October.

Now, BCBS is beginning to accept the Possibility that its Health Advantage and USAble Corp. networks won't have a presence in Faulkner County after their current contract ends Dec. 31.

Each side accused the other of rejecting the contract, which will leave approximately 30,000 patients without network coverage in Faulkner County beginning Jan. 1. Those patients will have to pay higher out-of-network fees if they want to see their old doctors in 2002.

BCBS, which owns USAble and shares ownership of Health Advantage with Baptist Health, is holding Out hope that the 110 members of the PHO, including Conway Regional Medical Center, sign individual contracts with the health insurance company by the end of this month.

The PHO said it hopes it can continue talking with the BCBS and USAble.

But it looks as if the talks have been permanently shelved.

As of last week, none of the members has signed, BCBS spokesman Max Heuer said.

close-knit community, and there may be some peer pressure for the doctors not to sign the contract.

"The physicians don't seem to be informed about what's really in that contract," she said.

Heuer said she doesn't know what the financial impact will be on the company if the members don't sign. In 2000, HMO Partners Inc., which does business as Health Advantage, had $280 million worth of premiums in the state with a net income of $6.3 million.

Surgery Centers Rejected

The standoff started with two new surgery centers in Conway, the Arkansas Eye Center and Conway Endoscopy Center, which are owned by local physicians. Both wanted to become a part of the Health Advantage and USAble Corp.'s FirstSource PPO networks in May.

But the networks wouldn't allow them in, Heuer said.

"We didn't see the need for the addition of those two ambulatory surgery centers," Heuer said. "Obviously, as physicians build facilities that take business away from hospitals, the hospitals lose revenue."

The loss of patients is usually replaced with higher prices, she said.

Upon learning that the centers weren't going to be added, the shocked PHO leapt into action.

"Previously every ambulatory surgery center ... had been admitted if they met our credential criteria," said Dr. Alan Lucas, the president of the PHO. "This was the first time Blue Cross and Blue Shield, or any insurance company, denied them access to the network.

"At that point, we met as a group [and decided] we wanted to be advocates for the physicians," Lucas said. "Other insurance companies had admitted theses same two surgery centers to their networks."

The PHO asked that the two centers be admitted to the networks and had a meeting with Health Advantage and USAble on Sept. 4 to iron out their differences.

At that meeting, the attorney for the PHO reminded BCBS that it contracted with the PHO to provide a network of services for the people of Faulkner County, Lucas said. And the PHO said it thought the residents of Faulkner county needed those services.

"[The networks'] comments were: 'We have to have total control of this network,'" Lucas said.

The networks wanted their control to extend to what services Conway Regional Medical Center could add, Lucas said. The networks also wanted control over physicians, Lucas said.

"If I, as an individual physician, wanted to add a partner for growth, they wanted to be able to say whether that partner could be a participant in their program," he said. "That has never happened before."

Heuer said managing the networks doesn't mean telling the doctors how to practice medicine.

"It means making sure you don't have an overabundance of services, which will drive up the cost in the market," she said.

The networks also added that if the PHO didn't agree to its terms, its existing contract would be canceled effective Jan. 1, Lucas said.

Lucas said BCBS also dropped an other bombshell at the meeting: It wanted the PHO to sign a new contract.

Heuer said revising a contract is not unusual in the health care industry, especially considering all the regulatory and federal rules that have gone into effect since its last contract was signed in 1995.

Besides, she said, the networks and the PHO were already doing everything in the contract.

Lucas said he was told if the PHO didn't sign the agreement right then, the contract would be withdrawn.

He said the PHO had never seen the contract and wouldn't sign it.

The networks then told the PHO to take the contract and review it, which it did, Lucas said.

For the next two months, the PHO and the networks huddled around drafts of the contract. Numerous phone calls and meetings would result in new versions of the contract.

"What we found was that sometimes the contract language did not mirror the verbal intent," Lucas said. "Furthermore, on further legal review, each time they had changed three or four additional items that were only detected upon very, very intense review of the contract.

"Some of these were significant additions," he said. "That was very frustrating."

The discussions started winding down in the middle of October.

On Oct. 18, Bobby Riggs, executive director of the PHO, sent Mark White, chief financial officer for USAble Corp., about seven sticking points in the contract.

"I believe that most of the issues included in the following list are ones that we have verbally agreed on, but the interpretation of the language could still use some work," Riggs wrote.

In White's response, he warned Riggs and the PHO that time was running out.

"[Riggs'] letter is the latest in a series of exchanges in which, despite repeated face-to-face meetings and assurances from you that just a few more changes would be sufficient to win CRPHO approval of the contract, we nevertheless continue to get long lists of demands for more and more changes," White said. "I am sure you understand that there must be an end to this process somewhere."

He said if they were going to continue a contract relationship with Health Advantage and USAble Corp., there needed to be some trust between the two. White also said if his company's performance didn't merit trust, then the PHO could always terminate the contract.

With White's letter, he sent Health Advantage's best and final offer and gave the PHO a deadline of noon on Oct. 26. And if Health Advantage didn't receive a signed contract, it would have to proceed without one and inform its members and customers.

"This is not a matter of an arbitrary deadline, as we really are long past the time at which some of our major customers have requested final work on the status of the network for the coming year," White said. "We must give them an answer, and so we must have one from you."

Sixty-five minutes before time ran out on the offer, Riggs sent White an e-mail message saying the PHO board would recommend that its members accept the contract.

He asked for an extension to gather the signatures from the members.

Less than 20 minutes later, White agreed to extend the deadline to 5 p.m. on Oct. 30.

"Failing receipt of a signed contract by the amended deadline, all offers will be withdrawn as previously communicated," White wrote in his email to Riggs.

Heuer said the networks extended the deadline because the PHO needed to get the 110 signatures of its members.

"The PHO does not have authority to sign on behalf of the membership," she said. "They have to go get the signatures of the members."

On Oct. 30, Lucas sent White a letter saying that the PHO's attorney was providing it with a signed Health Advantage contract. But there were four provisions that needed to be resolved.

* The PHO reinserted anesthesia rates that were eliminated from the previous contract.

* The PHO was concerned that a physician could be terminated for an out-of-network referral. The PHO wanted it to say if the physician's out-of network referrals are "habitual and repeated" he can be terminated.

* The PHO also said it didn't know what "network participation standards" meant and asked that the phrase be eliminated.

* The PHO wanted to modify a vague section regarding "insufficiency" in the marketplace. The network could bring its own physicians into the marketplace if it determined the group was insufficient, Lucas said, but how an insufficiency would be determined wasn't spelled out.

"This has never been an issue in at least the last eight years of our past contract," Lucas said.

Lucas said those four points represented the PHO's final position and "to illustrate our intent, I am enclosing the new signed contract," he wrote.

That's when the negotiations crumbled.

"We received the contract with no signatures and more requested changes," Heuer said.

BCBS was faced with deadlines for informing employer groups and state employees that there wouldn't be a contract in January.

"They rejected the contract, and I really can't say why," Heuer said. "They were going to recommend it."

But the PHO said it was the networks that rejected the contract.

"It was a disappointment," Lucas said. "After you've been through four months of talks and numbers of meetings, if it comes down to four points ... then I thought that they would sign the contract and we would move forward to take care of patients."