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Maine.gov > PFR Home > Insurance Regulation> Administrative & Enforcement Actions > Document 644 : INS 99-14 : Hearing Decision
THE STATE OF MAINE
DEPARTMENT OF PROFESSIONAL & FINANCIAL REGULATION
BUREAU OF INSURANCE
NOW COMES Intervenor, Maine Medical Association ("MMA"), through its undersigned counsel, and submits this prefiled testimony of Thomas D. Hayward, M.D. consistent with the terms of the Superintendents Procedural Order of November 4, 2000.
Q: For the record, please identify yourself and your current employment.
A:Thomas D. Hayward, M.D. I am employed by Sunbury Primary Care, a seventeen-physician medical group practice of which I am the President. I am board certified in family practice.
Q: Where is your practice located?
A:In East Corinth, Maine, a rural area approximately 20 miles west of Bangor, Maine.
Q: Would you please describe your education and training in your present field?
A:I graduated from Bowdoin College in 1978 and went to the University of Vermont School of Medicine in Burlington. I completed my three-year family practice residence at Eastern Maine Medical center in Bangor, Maine.
Q: Would you be able to provide us with a curriculum vitae?
A:Yes. A copy is attached to this written testimony. MMA Exhibit 2.
Q. Through your professional career, have you been involved with the Maine Medical Association (MMA) or other medical organizations?
A:Yes, I currently serve as President of MMA and have previously served as President-elect, Chairman of the Executive Committee and as a member of the Executive Committee. I have served in the past on the Executive Committee of the Maine Academy of Family Physicians.
Q: Have you been involved with health insurance or HMOs in Maine?
A:Yes, I have been a regional medical director of Blue Cross Blue Shield of Maine and continue in that role. I have also served as regional medical director for HPHC in Maine, chaired the Clinicians Advisory Committee (CAC) for Tufts HP of Maine, and was a local medical director for Healthsource prior to its sale to Cigna.
Q: Dr. Hayward, what is the role of a regional medical director within the BCBSME system?
A:The role is regional within HMO Maine. If regional issues emerge, the regional director is expected to deal with them, such as evaluating credentials of physicians and other providers in our region. The regional director is also asked occasionally to authorize out-of-network services.
The regional medical director on occasion is expected to assist in recruiting non-participating physicians. We also vote on new medical policies and procedures at the monthly meeting. The group is chaired by the Senior Medical Officer for the company.
The system has been in place since the creation of HMO Maine and I began as a regional medical director about 10 years ago.
I attend a monthly meeting of the regional directors of whom there are between six and ten. The positions are compensated on an independent contractor basis.
Q: Did you find that the company was open to medical input from the regional medical directors?
A:Very much so.
Q: Through your testimony are you representing the Maine Medical Association?
A:Yes, I am.
Q. And how many members belong to MMA?
A:Somewhat over 2,000, although some of these members are medical students, residents, and retirees.
Q: So how many MMA members are in active practice, having completed their training?
A:Approximately 1,600 physicians.
Q: Does MMA include both MDs and osteopathic physicians (DOs)?
A:Yes, we have many osteopathic members as well as MDs.
Q: And does MMA have a position on the proposed sale of BCBSME to Anthem?
A:Yes, the Association is strongly opposed to the proposed sale.
Q: And what kind of process did MMA follow in reaching its decision?
A:We invited representatives of both companies to speak to our House of Delegates, our Executive Committee and the Annual Meeting last September. Representatives did attend and speak at both meetings. We continued to meet with representatives of both companies, intervened in this proceeding and then in January of this year the Executive Committee voted to hold a special House of Delegates meeting dedicated to this issue. On February 2, the House of Delegates voted nearly unanimously to oppose the concept of such a sale and asked the Executive Committee to continue to intervene and to seek all information available. The House also authorized the Executive Committee to take a position on the sale once enough information was available. On March 8, the 27 member Executive Committee voted unanimously to oppose the sale, believing that the proposed transaction was not in the best interests of members of the MMA or the states citizens.
Q: Why are MMA members concerned about the proposed sale.
A:Well, briefly stated, we are opposed because despite our intensive evaluation, we dont really know or understand Anthems management style. Also, the patients and providers of Maine have virtually no information on Anthems policies and programs, despite the fact that we have diligently sought such information since last fall. We also question the need to sell BCBSME now that the company has weathered the vigorous competition of the last two to three years.
We feel strongly that the company can operate profitably in the current health insurance market place, just as the Blue Cross Plans are doing in Rhode Island, Massachusetts and many other states.
We also strongly believe that the state needs a state-based locally operated, non-profit health plan with a mission to make affordable health insurance products available to Maine citizens. Such a company would be responsive to the unique needs of Maines citizens.
Q: And what are some of the unique needs that you speak of?
A:Maine is a largely rural and economically disadvantaged state. I believe we are still about 37th in per capita income when ranked nationally. Yet, we have the fourth highest health insurance premiums in the country. These statistics really speak to the fragile nature of both the health care financing and health care delivery systems in Maine.
Geography and climate both play a role in our health care in Maine and we do not believe that a large national company which seeks standardization of its products and services can provide the kind of products and services that are unique to Maine.
We also have good data which indicates that, as a whole, Maines citizens are more overweight, use more tobacco products and are more sedentary than the average person nationally. All these factors, of course, make it more costly to provide health care. In our view, Maine will never be an attractive market for health insurers. We fear that regional or national companies will simply exit the state when they conclude that there are no profits to be made here. We have had that experience with medical malpractice insurance in the late 70s, with workers compensation insurance in the early 90s and with Tufts Health Plan of New England late last year. The Tufts parent company pulled out of the market because it did not want to make any more capital contributions. We are concerned that the same thing might happen with Anthem.
Q: What has been the relationship between BCBSME and Maine physicians?
A: Maine physicians joined with Maine hospitals to organize the original plan 60 years ago. The Blue Shield portion came about 10 years later.
Since its creation, BCBSME has insured the majority of Maines commercially insured patients. The vast majority of Maine physicians have participated as providers and have agreed not to balance-bill patients insured under its products.
Until 1979, MMA nominated or appointed physician-representatives to its Board. For the last twenty years, the policies of the national Blue Cross Blue Shield Association and antitrust issues have prevented MMA from continuing to participate directly in the management of BCBSME. But Maine physicians continue to participate in large numbers as providers of health care services.
While BCBSME has at times unilaterally modified its payment methodologies and reduced fees paid to providers, by and large the company has communicated well with the its provider network. It has always had a medical director based in Maine and, obviously, its medical decision making has been local. While we have not always agreed on certain coverage or payment policies, we have never questioned the companys motives or intentions. It has at least attempted to fulfill its original charitable role.
Q: What do you anticipate will be different if the sale goes through?
A: Well, first of all, Anthem is not a nonprofit company. While it is currently structured as a mutual company, we anticipate that it will convert to a for-profit, stock-based company. A for-profit company is accountable first and foremost to its shareholders. Its first mission is to make profits and pay dividends. On the other hand, the mission of BCBSME is charitable. Its role is to utilize earnings to provide lower cost health insurance policies to the states citizens. These two roles could not be more distinct from one another.
Now, in addition to being oriented towards profits, Anthem has also made clear its
goal to acquire additional companies. It intends to standardize its products, at least regionally. Based upon past performance, large companies are not willing to make changes to accommodate small or individual group, employer or provider needs.
Q: How does this situation differ from any other new HMO coming into the state?
A: Frankly, the difference is enormous. With the start-up of a new HMO, the new HMO must identify its policies and programs in its license application. The new HMO must be responsive to patient and physician interests and concerns in order to enroll patients, develop a provider network and build its business.
With the transfer of control of an existing, mature HMO, the circumstances and
stakes are quite different. The new owner has substantial leverage over patients and providers. That leverage will be provided to Anthem with the sale of BCBSME, even though we do not know what will be the Anthem policies and procedures. Anthem management has refused to provide information about those policies and programs requested by MMA and other provider and consumer groups. We cant even get a copy of the basic attachments provider manuals referenced in their existing provider contracts. I can only assume the company has something to hide, otherwise what would be the harm of us knowing their provider policies and procedures.
A new and developing HMO would have to furnish meaningful information, with real specificity, in order to get licensed. Anthem apparently does not need to be so accommodating because it is buying up an existing plan.
In summary on this point, if the transaction is approved, the state will have authorized the transfer of our largest health plan (our only Maine-based nonprofit plan) and control over the delivery of health care services to more than 300,000 Maine citizens to a management group based out of state, that we do not know, that is very strong willed and strong financially, and that has aggressively refused to provide requested information about its policies and practices. We think it would not be in the best interest of Maines citizens to approve the sale under these circumstances.
Q: Are you familiar with the risk-sharing methodologies utilized by managed care companies?
A: Yes, generally.
Q: What is your opinion as to what features a successful risk-sharing venture must have?
A: The most important thing is for the risk-bearing entity to have adequate information to allow it to properly manage the risk. There needs to be good timely feedback of utilization and cost data from the insurer to the physician practice. Otherwise, the transfer of risk "downstream" is simply a way for an insurer to transfer its insurance obligations, reduce its risk and increase its profits.
Shifting risk in any substantial way to providers, without providing adequate systems and support to help manage that risk is against public policy.
Q: Why is that?
A: The state imposes capital requirements and substantial regulation on insurance companies that undertake the risk of covering damages and costs. Unlike insurance companies, hospitals and physicians are not organized, capitalized, licensed or regulated regarding that risk. Therefore, shifting risk to physicians without providing systems and support to allow providers to adequately and appropriately manage that risk is against public policy. To understand why, it is only necessary to review the public press reports indicating that a large number of California physician and medical groups are in bankruptcy because they undertook similar risks without support.
Q: Do MMA members have concern about transfer of risk by Anthem?
A: Yes. In the Provider Intervenors First Discovery Requests, No. 2, we asked Anthem to provide copies of any and all Anthem executive or management policies, procedures, standards, directives, or other determinations concerning the provisions, terms, and conditions of provider agreements to be entered into by Anthem or any Anthem subsidiaries or affiliates with physician, hospital, or other providers. MMA Exhibit 3.
Anthem responded to this request by stating that "there are no general corporate mandates or directives concerning the provisions, terms, or conditions of all provider agreements entered into by Anthem subsidiaries." MMA Exhibit 3. Anthem also stated that it would "continue to honor the provider agreements executed by BCBSME for the duration of the respective contracts," but that "[w]hen the terms of the agreement expire Anthems regional management will evaluate the substance of the agreements." MMA Exhibit 3. Anthem also noted that the East Region integration team would likely develop certain, "as yet, unidentified, consistent standards for regional provider contracts." MMA Exhibit 3. We are concerned about the kinds of contractual provisions Anthem will likely try to impose upon providers after the expiration of the existing contracts.
Although Anthem has refused to identify contract negotiation policies and programs it will use when it undertakes to negotiate with providers, in the Form A filing, Anthem refers to "broad risk-sharing with physician groups." From this, we understand that Anthems business plan is to transfer substantial risk to
providers, and we fear that the company will push that risk onto providers but will not provide adequate information and management support to enable physicians to properly manage that risk.
Q: What evidence do you have that Anthem will not provide adequate information and management support to enable physicians to properly manage the risk?
A: Good data requires good information management systems. The integration of management systems is a costly and difficult task. The best example of this locally is the failure of Harvard Community Health Plan to integrate its systems with that of Pilgrim Health Plan when the plans merged. In examining the various non-confidential responses to MMAs discovery requests I have seen, nothing suggests to me that Anthem will bring to Maine an integrated information system which is capable of giving physicians the kind of information required to manage risk. We asked Anthem, in the Provider Intervenors First Discovery Request No. 8 to "please provide and describe in detail and with specificity the management information systems support made available by Anthem and delivered to providers sharing or assuming any downstream risk, including reports and data made available to providers." MMA Exhibit 3. No information has been made available to me that would enable me to determine what kind of management information and management personnel support that will allow us to manage the "broad risk" that will be transferred to us.
Q: Are you familiar with the issue of "all-products" clauses in provider contracts?
A: Yes. An "all-products" clause generally requires a provider to participate in all of the products an insurance company offers now or in the future if he desires to participate in any product offered by the insurer.
Q: Do you know of the practices of Anthem in regard to "all-products" clauses?
A: I understand that the clauses are being utilized in Anthem in other states and I
understand that the company has testified against proposed legislation abolishing the use of such clauses in Kentucky and Indiana.
Q: Would the uses of such clauses in Maine by a dominant insurer cause difficulties?
A: It certainly could. In a market as fragile as ours, a provider could be caught between jeopardizing the financial condition of his practice and his wish to participate in those plans that his patients are in. In other words, to stay as a provider in one product, he or she may risk financial loss by agreeing to participate in all of the products offered by the company, even those products not yet designed which may be offered in the future. This choice seems unfair and at least one insurance superintendent has declared the use of such clauses to be an unfair trade practice.
Q: Does this conclude your testimony?
A: Yes, and I welcome the opportunity to respond to questions the Superintendent and other parties may have regarding my testimony.
CERTIFICATE OF SERVICE
The undersigned hereby certifies that on March 28, 2000 a copy of the Prefiled Testimony of Thomas D. Hayward, M.D.. was served via United States mail, first class postage prepaid, on each of the persons listed below.
Last Updated: January 22, 2014
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