Health Insurance Giant Changes Physician Payment Rules

AAFP, Others Slam UnitedHealthcare's Decision

By News Staff
4/9/2009

On April 1, UnitedHealthcare, or UHC, one of the nation's largest health insurance plans, implemented a new fee schedule methodology for its physician contracts that bases physician payment on Medicare's 2008 resource-based relative value units, or RVUs. The move has sparked protest from the AAFP and four other medical specialty groups.

Essentially, UHC's action locked in the lower 2008 RVUs, a money-saving move for the insurer that creates a pay freeze for 70,000 physicians, including nearly 14,000 family physicians who hold UHC contracts.

If UHC refuses to reverse its decision, family physicians face a decrease in the payment rate for CPT code 99213 of almost 8 percent from what it would have been if UHC had used Medicare's 2009 RVUs. Code 99213 is the most common service code used by family physicians.

In a December 2008 letter explaining the change to a family physician -- who made the letter available to AAFP News Now -- UHC claimed that the fee schedule change would have no effect on that physician's current payment from UHC. "You will see no difference with this new fee schedule and your current reimbursement," said the letter.

UHC claimed it was making the change to "simplify fee schedule administration and increase the reliability and predictability of physician payment."

In response to physicians' concerns, the Academy and four other medical specialty organizations urged UHC to reconsider its decision.

In a March 31 letter to UHC Senior VP Reed Tuckson, M.D., the AAFP, American College of Physicians, American Academy of Neurology, American Osteopathic Association and Infectious Diseases Society of America highlighted UHC's actions and noted that the insurer is

taking advantage of the budget-neutrality adjusted work RVUs previously used by Medicare and ignoring the RVU gains in the 2009 Medicare physician fee schedule;
taking advantage of these Medicare-adjusted work RVUs, even though UHC is not bound by the same budget-neutrality requirements as Medicare;
freezing its payment rates at 2008 levels for 2009 and beyond unless physicians renegotiate their UHC contracts;
refusing to reveal the percentage of physicians who successfully renegotiate their contracts;
ignoring physicians' increasing practice costs; and
neglecting to say whether the company also froze customers' insurance premiums.

The physician groups told UHC that without corresponding increases for general inflation, UHC's physician fee schedules were "reducing physicians' salaries in relative terms."

The five organizations also took issue with UHC's oft-repeated statement that physicians can renegotiate their UHC contracts, saying the health insurer's claim contradicts what the organizations hear from their members.

"Namely, while UHC may enter into discussions, UHC is unwilling to change contractual terms," said the specialty organizations, which collectively represent more than 200,000 physicians and medical students.

The medical associations urged immediate action from UHC. Specifically, they asked UHC to

produce statistics regarding the number of physicians who had successfully renegotiated their UHC contracts,
explain how UHC's actions benefit physicians whose practice costs are rising,
confirm if benefit plan premiums also were frozen and
consider including a cost-of-living adjustment in physician fee schedules to account for inflation.

On April 6, AAFP Board Chair Jim King, M.D., of Selmer, Tenn., fired off his own letter to UnitedHealth Group President and CEO Stephen Hemsley.

If UHC intends to stand behind its promise to support primary care and family physicians, the company should use the 2009 CMS RVUs in its physician fee schedule methodology, said King.

"We all agree that the health care financing system needs to pay physicians based on value and not volume of patient services delivered. Until this shift occurs, it is essential that there is fairness in how physician fees are determined," he said.

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