Blended Codes in Ohio to End in September

In an abrupt about-face, Anthem Blue Cross Blue Shield of Ohio has announced it will discontinue its controversial blended-rate policy in southern Ohio. The announcement came just weeks after AAFP News Now reported that Anthem wouldn't budge on an issue that had the AAFP and other medical organizations crying foul.

Anthem will notify its contracted physicians by June 1 of its decision to revert back to a rate differential for Level 3 and Level 4 evaluation and management codes. The new rates take effect Sept. 1, after a required 90-day physician notification period.

Anthem's decision was confirmed in a May 19 letter to Molly Katz, M.D., president of the Ohio State Medical Association, or OSMA, a lead player in the effort to overturn Anthem's earlier policy decision to blend payment rates. "We value our relationships with physicians and want to be responsive to the concerns you expressed," said Paul Beckman, vice president of Anthem's southern Ohio health service area, in the letter.

In a May 25 interview, Beckman said Anthem implemented the blended-rate process "in fairness to all of our physicians, because we had discovered a wide variation in coding for equivalent services in southern Ohio." He said Anthem had not seen the variation in other areas and took the action to eliminate any discrepancies between providers.

"Anthem began blending rates for office visit Levels 3 and 4 on November 1, 2005. Under the blended rates, we actually paid out more in reimbursement to our network physicians in Cincinnati and Dayton, an increase of approximately $500,000, and the vast majority of the physicians saw an equivalent or an increase in reimbursement," said Beckman.

Katz said OSMA considers Anthem's position change a positive step that might, in the future, lead the health plan to consult physician groups before enacting payment policy changes. "When insurers see changes in the marketplace like the increased percentage of one code over another, before reacting, perhaps all members of the health care industry need to decide on an appropriate way to react. This was not an appropriate way to react," said Katz.

Anthem "reiterated time and time again that they thought it (blending rates) was fair, but I guess maybe they should have asked the rest of us," she added.

Essentially, the AAFP, Ohio AFP, OSMA and other medical organizations that banded together to challenge Anthem's blended-rate policy were fighting for the integrity of the coding system.

"The coding system is too complex and has been worked on too long to just throw it out" in favor of some new arbitrary system, said Katz.

Ann Spicer, EVP of the Ohio AFP, agreed, saying that while some physicians may, in fact, have benefited from the blended payment rate -- particularly physicians without electronic health records -- physicians should get paid the right amount for coding correctly.

While it's not clear what role, if any, EHRs played in the Ohio coding dispute, EHRs can lead to a higher level of coding. According to an article in the May 5 Medical Economics, "Blending: the New Downcoding," EHRs enable physicians to document a higher level of work more easily and thus lead to higher-level codes. This spring, the Academy alerted health plans across the country to expect an uptick in high-level E/M codes and cited EHRs as one of the reasons for the trend.

Jubilation over Anthem's decision -- and the united effort put forth by organized medicine -- is tempered by a looming unanswered question about the differential payments for Level 3 and Level 4 visits that Anthem has yet to reveal. "We have a temporary truce, I guess, until we find out," said Spicer.

Lisa Righter, M.D., of Beavercreek, president of the Ohio AFP, said she looks forward to a new fee schedule that values the work of family physicians. "As an Academy, we'll be paying attention to that from an advocacy standpoint to ensure that Anthem is appropriately paying family physicians."

Righter said she's ecstatic that Anthem changed its policy but prefers to steer clear of any reference to a victory. "Anthem is a big insurance company, and I would rather be working with them in a collegial way than in an adversarial way," she said.

Beckman said Anthem would continue to "explore our options with respect to those physicians we believe have been inappropriately billing Level 4 codes." Anthem plans to take appropriate action with respect to those physicians and "will work with external consultants to assist us in reviewing those records," he said.