The challenge to the Blues consolidation:

Why we sue

By Robert Sklaroff, M.D.

President

Pennsylvania Society of Internal Medicine

 

• PSIM legal brief

• React to this article in the Discussion Forum.

You want your group to do what you and your colleagues can’t do individually.

By all these measures, our challenge to the merger of the Blues should be among the highest priorities of your societies. Insurance Commissioner Linda Kaiser testified that the Blues control 76% of the state-wide health insurance market, and they write about 85% of the non-Medicare business in western PA. This is a "monopoly" of public purchasing power, and it’s a "monopsony" when doctors (and hospitals and paraprofessionals) depend upon contracts with the Blues for their livelihood. All the lamentations in letters-to-the-editor are for naught if the Blues drive healthcare finances, if there’s no other game in town, and if those upon whom the public depends to regulate them continue to remain silent.

As Deep Throat advised Watergate investigators: Follow the Money.

The Social Mission

When Blue Shield was chartered—a half-century ago—by a group of physicians, it was charged with maintaining a Social Mission, one which would train its focus upon the patient even if doctors had to accept reimbursement discounts. So it was acceptable—a quarter century ago—when Insurance Commissioner Herb Denenberg prompted the Shield to adopt a 50% elected provider-governance model, but it was unacceptable last year when the Insurance Commissioner allowed the merged company (Highmark) to adopt a 25% appointed provider governance model.

So we sued and prevailed when Commonwealth Court rejected the combined efforts of Insurance Commissioner Linda Kaiser and the Blues to deny physicians have "standing" to represent our patients’ interests. And the Blues failed to quash our right to review the record which had served as the basis for her decision.

Why did Judge Bonnie Brigance Leadbetter grant us the chance to challenge her adjudication? Having provider-contracts was irrelevant, as was our status as members of the public. Ignored was whether the petitioner and/or his society was a Blues insured. She validated the status of serving as a Corporate Member of the former (and future!) PA Blue Shield laboring to protect patient rights. Arguing Social-Mission over Self-Interest seemed ultimately to have triumphed!

We won, and we filed a brief on April 23rd, preparatory for presenting oral arguments on June 4th before the entire ("en bac") court in Pittsburgh. We are finally dealing with major issues-the merits of the case-in the court which is just one notch below the Supreme Court. And the documents (which now can be publicly quoted) confirm our concerns. We seek to establish precedent: to ask the Insurance Department to halt consolidation of mega-health insurers until it has the legal power to do so, after having held public hearings to study such issues as how the underserved will receive care and whether the Commonwealth should permit such a concentration of power in one health insurer. Indeed, for the first time in America, we want to derail the merger/acquisition juggernaut. Simply put, we aspire to rescue our patients from corporate medical practice.

We do not apologize for altruism, but we would ask others who oppose our suit to explain just as candidly why they’d permit this threshold event to occur. And whether they have any ideas regarding any other way to oppose the merger.

The Political History

If the Blues are forced to compete, it will be better for patients and doctors. If they can’t merge, physician influence on health policy won’t be smothered. If the Shield must remain independent, indemnity-type insurance won’t die. These are both lofty and specific goals, certainly understandable by us all, and absolutely consistent with opposition to corrupting the Shield’s "culture."

Seeking to keep the 50-50 balance of physician/lay input was the key position adopted by the PA Medical Society, both by the 1995 House of Delegates and by the (August) 1996 Board of Trustees. We were to challenge the merger...that is, until it had been approved. The PMS Board then reversed this decision (on December 4, 1996) and reaffirmed this repudiation of the explicitly-stated will of the House (on April 10, 1997), despite the unanimous declaration of the Interspecialty Section (leaders of all of the state’s specialty societies) that the litigation be supported financially. And this occurred after the Trustees well knew that we had shocked the naysayers by winning in state-court.

All the PMS Trustees were called before their vote to tell them we needed only $10,000 to keep the suit going, and that control over the litigation could be ceded to the PMS to justify this relatively minor expenditure from such a large organization. They claimed insufficient funds, despite their having squandered far greater monies on another failed Leadership Conference, on redecorating the PMS Headquarters, and on rehabbing its subsidiary PMSCO. (This last item may yield expenditure of $1.25 million to find out why the first $1.25 million was lost.) A recent solicitation for a newly-created legal fund postures the PMS as a potential litigator in major cases, but it eschewed involvement in this "ripe" effort because of the allegedly boundless resources of the Blues. Being reminded the Blues has recently lost in other states fell on deaf ears.

The counter-assault, ironically, has been led by people elected to trusted positions. They prompted the Philadelphia County Medical Society and its President, Raymond J Lodise, MD, to withdraw from this effort. They forced me to call two meetings of the PSIM Officers to unanimously reaffirm our stance. Blues lobbyists monitored our every action, even knowing the language of the PCMS resolution (to seek a settlement) two days before it was to be introduced!

Thus, the environment among organized medicine’s leadership has turned ugly. My essay on the structure of our societies (published in the April issue of Philadelphia Medicine) was entitled "Whither Organized Medicine" because I fear once-distinguished entities will "wither" into social-shells. Critics ignore this pun, arguing we must temper our activism with pragmatism, but all they can show for adopting such a posture is declining membership, clout, and spirit.

The help of individuals and organizations has been manifest as endorsement, but rarely as funding. Lip-service, if you will. Hypocritically, they would subsume our Hippocratic history within loyalty to the network. Thus has the battle for support become visible to those who would categorize us as co-equal with other providers and manifest our traditional patient advocacy role totally through institutions (read: hospitals and insurers).

Such as the Blues. Three years ago, the leader of Independence Blue Cross (G Fred DiBona) declared the PCMS was "impotent"—a quote uttered directly to our Board!—when his plan to link with Graduate Hospital was challenged. Wouldn’t it be nice if we were to reverse the Insurance Department’s ability to legitimize such practices as exclusive contracting and most-favored-nation contracting (allowing the Blues to match the lowest reimbursement level which a hospital accepts from any other insurer): amazingly, the Commissioner’s "Decision and Order" portends unfettered conversion to for-profit status.

The "Blues Papers"

We continue to discover the impact of our suit. On April 2, the Senate Banking and Insurance Committee held hearings on a bill (SB-875) which was submitted because of passage of the Kennedy-Kassebaum "insurance portability" measure. The Ridge Administration would sustain in statute Pennsylvania’s two-tier system of health insurance. Recognizing that she has little power to regulate the Blues, our Insurance Commissioner would nevertheless allow them to tighten their grip over the delivery of health care to the under-insured population.

A number of senators called for a level playing-field, one that would satisfy the intent of the federal law. In every state except our state and Michigan, the excess-cost of portable health insurance is to be borne by all companies, according to preliminary data. Thus would the Blues be granted special powers to insure those who change jobs, a relatively healthy population subset. Thus would government be helping them tighten their grip on the marketplace.

These are the stakes.