Blue Cross/Blue Shield Insurance Update 10/25/04

October 25, 2004 

Dear Families at Pediatric Associates: 

Many of you have written to Blue Cross Blue Shield ("BCBS") on behalf of and in support of Pediatric Associates of Austin.  Thank you.  We deeply appreciate your time and efforts and any future letters you may write.

BCBS recently responded with two letters.  Blue Cross Response Letter One  Blue Cross Response Letter Two

At this time, we would like to address some of the assertions made therein and elsewhere:

First, BCBS implies that the fees charged by Pediatric Associates are unreasonably high.  In fact, all other major carriers reimburse Pediatric Associates at rates comparable to what BCBS has paid us for the last six years.  In addition, many other pediatricians charge similar fees.  While it is true we do not know exactly what other practices charge, because of strict antitrust laws, we do know that at least 23 pediatricians are affected by the proposed severe rate reduction.   This constitutes over a quarter of local pediatricians.  In addition, more than 60 doctors overall are affected.  Thus, Pediatric Associates is hardly unique in the fee schedule it maintains. 

Second, BCBS asserts that Pediatric Associates should take the same level of fees as everyone else.  BCBS states that their goal is to "standardize reimbursements for our contracted physicians by paying physicians in the same geographic area, who offer the same services, in the same specialty, the same reimbursement."  Salaries in other businesses are not standardized, nor do employees who offer more to a company receive the same pay as everyone else.  Nonetheless, BCBS evidently believes all doctors are the same.    

We feel Pediatric Associates offers more.  We do not believe our services are the same as every other pediatrician's in town.  For illustration, we proudly offer, in contrast to many other Austin area practices:

•     Same Day Appointments for your sick child

•     Doctors, not nurse practitioners

•     Lab and X-rays done on-site, with immediate results

•     Urgent care available Saturday and Sunday mornings

•     After-hours telephone calls returned promptly by our own registered nurses, with a back-up physician always available twenty-four hours a day

•     Professional and caring staff always available to address your questions and concerns

•     All Doctors Board Certified in Pediatrics

•     All Nurses Certified R.N. 's with pediatric expertise 

In addition, our doctors were voted to be among the best in Austin, by their peers, for two years running, as published in Austin Monthly magazine.

Third, BCBS maintains that it wishes to treat all physicians fairly.  In fact, the rate reduction they are proposing would put them 28 percent below other major carriers.  Therefore, the fee reimbursement offered would be unfair and represents a very large reduction in the fee schedule we negotiated with BCBS previously.  At that time, despite initially proposing a dramatic reduction in fees, similar to the proposal being set forth today, BCBS ultimately negotiated with us, thanks in large part, to our patients' involvement.  Yes, six years have passed without any increases in our fee reimbursements. (In fact, these reimbursements have actually declined somewhat.)  Meanwhile, our costs have continued to rise, while our quality of care has not suffered, due to our stringent efforts to maintain the highest level of patient care that you have come to expect from us. 

Other carriers are willing to negotiate.  Instead, BCBS states that they will not do so.  Now that BCBS has an extremely large market share, both in Texas and in the Austin area, they are betting that we will capitulate to their demands.  Their hope is that doctors will give in to fears that if they don't accept the dramatically lower rates, they will go out of business.   This is a very real concern.    However, accepting such reduced rates will create other problems.  To break even, doctors must see many, many more patients in a day; quality of care must be sacrificed in favor of higher volume.  Appointments must by necessity be shortened, and/or "physician extenders," like nurse practitioners, must be employed.  To be more specific, as other carriers follow suit, it will become harder and harder, and ultimately impossible, for Pediatric Associates to maintain the high quality of care we have worked so hard, and so long, to achieve. 

Fourth, BCBS states that it must slash our reimbursements to remain competitive and consistent.   BCBS has billions of dollars in cash reserves.  (This is a matter of public record.)  Moreover, there has never been anything standard or consistent about pricing.  Physicians in different specialties are paid different rates for similar services and pricing varies by geographic location.  In addition, BCBS admits that only two percent of Austin physicians are "out of line."  It is hard to imagine that bringing the final two percent of Austin physicians "in line" will do much to BCBS's bottom line.  

Unfortunately, up to this point, BCBS has not attempted to negotiate.  Once again, we thank you for the many letters you have already written to voice your concerns.  Here is just a portion of one of the many letters already sent to Blue Cross by our patients:

..."The fact that I got a standardized answer written by your PR Department just reinforces the fact that BCBS is all about the 31.9 billion in reserves and not the individualized attention and care its customers should be getting. 

I will not be contacting your customer service department unless they can help me find other insurance.  I will not be looking at other options for obtaining care in my area.  However, I will be looking for a new Insurance company.  We, as parents, are very loyal to our pediatricians, but, honestly don't give a flip about our insurance as long as we have some—any insurance will do.

The insurance companies aren't the ones that answer the phones at two in the morning when my child has a fever of 105.  The insurance companies aren't the ones who administer the medicine that keep my child’s throat from closing when he has croup.  The insurance companies don't even have a face or a name-except bully! 

I look forward to changing insurance companies in the near future.

You, as our valued patient, have to make the choice.  We want to continue to offer our patients the time and attention they deserve.  Forcing doctors to increase patient loads is not the answer.  So, here we are, with patients who feel they cannot see their doctor of choice because they may not be able to afford out of network rates, and doctors who cannot afford to work for Medicare rates. 

Thank you for your thoughts.  We appreciate your support and feedback.

Laurie Serafine, Practice Administrator

Pediatric Associates of Austin, P.A.