August 23, 2011 – Early this month, the Florida Psychological Association (FPA) and the APA Practice Organization (APAPO) learned that Blue Cross Blue Shield of Florida (BCBS FL) and its new behavioral health subcontractor were planning a 30 to 60 percent reduction in psychologists’ reimbursement rates. The considerable payment reductions were part of a new provider contract from the behavioral health carve-out company that included some troubling provisions. Psychologists seemingly were given just 15 days to decide whether to accept the new contract.

In a prompt response (PDF, 57KB) to an Aug. 10, 2011 letter (PDF, 579KB) from FPA, the Florida Office of Insurance Regulation (FLOIR), assured the associations that psychologists will have more time to decide. The letter further indicated that FLOIR is working with BCBS FL to correct problematic language in the provider contract.

However, the crucial issues raised with FLOIR regarding the adequacy of reimbursement rates and the impact on patient access to mental health services remain to be resolved.

Changes announced by BCBS FL and its subcontractor

BCBS FL announced in July that New Directions, LLC would soon begin acting as the behavioral health carve-out company. The company is headquartered in the Kansas City, KS area and is owned by a BCBS entity. New Directions will begin managing the PPO business on December 1, 2011 and the HMO business on January 1, 2012.

BCBS FL announced its intention to terminate the company’s contracts with psychologists and other mental health providers and indicated that New Directions would be contracting directly with these providers.

In early August, Florida psychologists began receiving large contract packages from New Directions. The cover letter asked the psychologists to return the 20-page contract and other enrollment materials within 15 days. The letter did not clarify whether or not the 15 days was a deadline, but FPA was concerned that members could read the letter as giving them only until August 15 to accept the New Directions contract or be barred from working with the state’s largest health insurer.

New Directions’ rate schedules showed a 30 to 60 percent cut in psychologists’ reimbursement rates. New Directions and BCBS FL representatives have told some FPA members that they believe that the going rates for master’s level practitioners are appropriate for psychologists.

FPA was also troubled by some unusual provisions in the New Directions provider contract:

  1. Psychologists would be prohibited from referring patients to a non-network provider. FPA was concerned that this raised ethical and “restraint of trade” issues.

  2. Any psychologist who terminated his or her contract would agree not to see any BCBS FL insureds, even when the patients want to pay out of pocket. This provision also raised restraint of trade and ethical concerns, as well as the public policy concern that the prohibition could create a large pool of psychologists contractually forbidden to see Florida’s largest group of insured patients.

  3. The contract was to be governed by Missouri law instead of Florida law.

Action by FPA and APAPO

FPA’s Executive Director Connie Galietti promptly contacted APAPO staff lawyers. FPA and the attorneys determined that with a possible August 15 deadline just a few days away, FPA should immediately reach out to state regulators for help.

Within a day of the first conference call between FPA and APAPO, representatives of the two organizations prepared a letter from FPA to the Florida Office of Insurance Regulation and Department of Financial Services. Given the immediacy of the apparent contract deadline, the letter’s main focus was to urge the regulators to give psychologists more time to decide about the New Directions contract. The letter noted FPA’s and APAPO’s concerns about the time pressure placed on psychologists in light of major concerns raised by the contract:

  • The large rate cut – one of the largest seen by the attorneys in many years – and its potential impact on access to mental health services in the state

  • The contractual provisions discussed above concerning referrals out of network, forbidding terminating psychologists from seeing any BCBS FL subscribers, and applying Missouri law to the contract

Response by the Florida Office of Insurance Regulation and outstanding issues

Within a week, on August 17, FLOIR responded and resolved most of FPA’s and LRA’s concerns – including the most immediate issue. FLOIR agreed that New Directions’ letter was unclear about timing. The agency stated that New Directions will send out a clarification to providers that the company would not enforce the 15-day deadline in the letter and that providers have more time to respond to the proposed contract.

FLOIR explained that BCBS FL was working with New Directions to change contract provisions: clarifying that patients can see out-of-network providers; stating that New Directions cannot dictate a provider’s scope of practice; and applying Florida law to the contract.

The only major issue that FLOIR had not asked BCBS FL to rectify was the rate cut and its impact on patient care. The FLOIR representative reported that she raised the adequacy of reimbursement and network issues with BCBSFL. “The company assures me that . . . [it] has robust standards to ensure that network rates and numbers of participating providers will be adequate,” she said.

FPA and APAPO will continue working with FLOIR to address their grave concerns about adequate access to quality mental health care for Florida residents.

FPA Executive Director Connie Galietti said, “We greatly appreciate the prompt response of the Office of Insurance Regulation that addressed almost all of the issues in our letter, especially the urgent issue of the 15-day deadline for accepting the New Directions contract. We look forward to working with FLOIR on the remaining big issue of patient access to care.” Ms. Galetti also credited APAPO for “invaluable” collaboration with FPA.

Unfortunately, the problem now appears to transcend Florida. APAPO just learned in mid-August that BCBS of Kansas City, which also has New Directions as its behavioral health subcontractor, is reducing psychologists’ rates. That rate cut appears to be somewhat smaller than in Florida, but is still about 35 percent for at least one code commonly billed by psychologists. The provider contract in this case, however, is different than the one in Florida, so it not yet clear whether there are similar issues with contractual terms.

We will report significant developments in future issues of this PracticeUpdate e-newsletter.

Note: This article is not intended to provide legal advice. In addition, members are reminded that they must make their own decisions whether or not to participate with particular insurance or managed care companies.