Confusion reigns over expired Stanford-Blue Cross contracts
Clients should beware of hidden costs while the hospitals and insurer negotiate, Palo Alto broker says
How patients' medical services will be paid for during a stalemate in contract negotiations between Stanford and Lucile Packard hospitals and Anthem Blue Cross and Blue Shield is confusing both patients and insurance agents. And at least one local broker is warning the public to get the facts straight before having procedures done — despite assurances from the hospitals that they'll charge rates as if they were still considered "in network."
When a contract between the insurance giant and Stanford Hospitals & Clinics and Lucile Packard Children's Hospital expired Sept. 1 and negotiations over a new contract failed, the hospitals terminated their agreement.
Anthem then sent out a letter informing patients they could be at risk for thousands of dollars in out-of-network costs if they were to receive treatment at the hospitals or clinics. But the Stanford officials countered, saying that hospital patients won't be charged more than they would have if the contract were still in place.
"Our message to our patients is this: The hospitals will honor your in-network rates so that your out-of-pocket costs are no higher than they normally would be. Patients can continue to be treated at our hospitals regardless of their insurance benefit, procedure or authorization status," hospitals spokesman Gary Migdol said in an email.
"Patients will simply not pay more than they normally would if the hospitals were in-network. This applies to every patient, in all cases no matter what the procedure is or authorization status," he said.
So what will the financial impact be on Stanford?
"We believe that the revenue impact (to Stanford) will be minimal, as most people still have out-of-network coverage for medical expenses," Migdol said. "If the patient's PPO has an out-of-network provision in their policy, they would have coverage. But if they don't, we would honor our commitment that they will only be financially responsible for the amount they would've paid at an in-network facility."
Tawnya Lancaster, a bone-marrow transplant recipient from San Jose who receives regular transfusions and has follow-up visits at Stanford, is one patient recently confused by the severed relationship between Anthem and the hospitals.
She didn't hear about the cancelled contract and only found out when she called Anthem regarding a statement she had received. The Anthem representative told her notice of the canceled contract with Stanford was only sent to Anthem members within a 15-mile radius of the hospitals, a fact confirmed by Anthem spokesman Darrel Ng.
In addition, she said, "I was not told when I was at Stanford on Sept. 7 of the changes to coverage. I went into my appointment assuming I had the same coverage I had always had," she said.
Lancaster said she learned through a follow-up call to Stanford that she would not have to pay the bill, since the hospital was adhering to her policy at the same levels as for in-network.
Lancaster expressed concern for patients such as herself who fell through the communication cracks.
"If it's caused me this much stress, I can't imagine what it's like for patients who are going through treatments," she said.
There are three levels of contracts between insurers and medical providers: contracted provider, participating provider and non-contract provider, Henderson Strategic Financial Insurance Services broker Rob Henderson said. Generally speaking, patients pay a copay and/or deductible with policies where a contracted provider has an agreement with Anthem to charge the insurer only a certain amount for services. Participating providers haven't committed to only charge a certain rate to the insurer, so patients who use those providers pay an "out of network" rate that can be sizeable, depending on the policy. Non-contracting hospitals receive no reimbursement on some plans, which could place all costs on the patient, Henderson said.
Stanford is now considered "non-contract," Migdol confirmed.
The hospitals haven't said what percentage of their patients are Anthem members, but Henderson said about 40 percent of his clients are.
Henderson said if the hospitals are only charging patients copays and deductibles, the hospitals are footing a large bill.
As an example, a low-end hip replacement costs about $75,000. If a patient on the small-group Solutions 2500 plan (the most popular Anthem plan, according to Henderson) pays a maximum of $5,000, then Stanford might be responsible for up to $70,000.
There are other hidden implications that are out of the hospitals' control. Patients still have their contracts with Anthem, and when they use an out-of-network provider (now Stanford and Packard), their copayments and deductibles might not be applied toward the annual maximum copayment or deductible limit, according to Anthem's PPO Solutions plan for 2009.
Anthem and the hospitals defended their communications to patients.
Ng said Anthem notified admitting physicians before and after the termination.
Migdol said the hospitals have been aggressively getting out the word about the coverage changes and of the hospitals' plans to cover in-network rates. The hospitals have notified patients through its 24/7 call center, information on hospital websites, ads in local newspapers and online, radio spots on local stations, letters sent to patients and distributed flyers throughout both hospitals.
Henderson said the bottom line to patients is to check with Anthem.
"This whole issue would be moot if Stanford and Anthem would agree to continue the existing contract while they are negotiating," he said.
Staff Writer Sue Dremann can be emailed at email@example.com.