Issued and entered December 19, 2002 by Frank M. Fitzgerald, Commissioner

ORDER

I
PROCEDURAL BACKGROUND

On June 11, 2002 the Petitioner, XXXXXXX, filed a request for external review with the Commissioner of Financial and Insurance Services (Commissioner) under the Patient’s Right to Independent Review Act, MCL 550.1901 to MCL 550.1929. After a review of the material submitted, the Commissioner accepted the request. The case included medical issues so it was first assigned an independent review organization (IRO). The IRO provided its recommendation to the Commissioner on July 2, 2002.

II
FACTUAL BACKGROUND

On September 26, 2001 Petitioner’s daughter, XXXXXXXXXXXX, underwent foot surgery. A non-panel provider, Dr. XXXXXXXXXXXX, billed procedure code 28296 (bunion correction) and procedure code 20900 (grafts) for the surgical service. Dr. XXXXXX charged a total of $1,571.00 for the bunion correction. Blue Cross and Blue Shield of Michigan (BCBSM) approved $823.49 for this service and paid $468.52 after subtracting co-pays and deductibles. The surgeon also charged $704.00 for the graft. BCBSM approved one half of its maximum amount or $198.36 for this care and paid $138.36 after deducting co-pays.

BCBSM later approved the full $704.00 for anesthesia services related to the surgery. It paid a total of $633.42 after applying a10% co-pay.
The Petitioner believes that BCBSM is required to pay substantially more for her daughter’s surgery.

III
ISSUE

Is BCBSM required to pay any additional amount for the Petitioner’s daughter’s surgery?

IV
ANALYSIS

Petitioner’s Argument

Petitioner argues that the out-of-network deductible and co-pays should not apply to this care because a BCBSM network provider referred the Petitioner’s daughter to a non-network provider for the foot surgery. In addition, Petitioner says the network provider told her that there were no BCBSM participating orthopedic surgeons in the XXXXXXXXX area. Therefore, Petitioner believes BCBSM is required to pay the balance for her daughter surgery after she has paid the $2,000.00 stop loss indicated in her Certificate.

BCBSM’s Argument

BCBSM argues it approved the full amount of $823.49 for procedure code (PC) 28296 provided the Petitioner’s daughter. After subtracting the $154.18 for an out-of network deductible and $200.79 in co-payments, it paid the Petitioner $468.52. For PC 20900, it approved one half of the maximum amount or $198.36 since it was a secondary procedure. After deducting $59.50 in co-payments it paid $138.86 to the Petitioner. For the anesthesia services, BCBSM approved the full amount charged of $704.00 and paid $633.42 after subtracting a 10% co-payment.

BCBSM further argues that there were participating orthopedic surgeons in XXXXXXXXXX, which is within 52 miles of the Petitioner’s home in XXXXXXXXX. BCBSM believes Petitioner had adequate opportunity to use the services of a participating surgeon. BCBSM recognizes that her network doctor referred the Petitioner’s daughter to Dr. XXXXXXX. However, the Petitioner signed an agreement to be responsible for any remaining balances not covered by BCBSM. This makes her responsible for these amounts.

BCBSM argues that it has paid the proper amount under the Certificate and is not required to pay any additional amount.

IRO Recommendation

The IRO recommended and concluded:

1. The Petitioner’s daughter’s procedure was not an emergency and if there were concerns about charges prior to the surgery this should have been discussed and resolved with the surgeon.
2. The Petitioner was aware her daughter’s surgeon was out of network and she did sign an agreement to be responsible for any balance.
3. There were BCBSM participating panel providers available in the Petitioner’s area.
4. The IRO concluded that further reimbursement for the September 26, 2001 surgery is not warranted.

Commissioner’s Review

Petitioner has coverage through XXXXXXXXXXXXXXXXXXXXX, an experienced rated group. The Community Blue Group Benefit Certificate governs her coverage. Rider RAPS (Reimbursement Arrangement for Professional Services) also applies.

Under the certificate, participating doctors agree to accept BCBSM’s approved amount as payment in full for a covered service. A participating doctor cannot charge the patient the remaining balance even if the BCBSM payment is lower than the amount the doctor normally charges. If the member selects a non-participating doctor, BCBSM will pay the same approved amount it pays to a participating doctor. The non-participating doctor, however, is not bound to accept the BCBSM amount as payment in full. The doctor therefore may balance-bill the patient.

The Certificate also provides that if more than one procedure is provided in a surgery BCBSM will pay its full-approved amount for the primary procedure and one half of the approved amount for any secondary procedures.

BCBSM determines the payment level for each service by applying a Resource Based Relative Value Scale (RBRVS). This reflects the resources required to perform each service. It includes physician time, specialty training, malpractice premiums, practice expenses and overhead. BCBSM regularly reviews the payment level to address the effects of changing technology, training, and medical practice.
The Certificate of coverage controls the analysis of this matter. It defines the term “Non-participating Provider” as:

Any provider who has not signed a participation agreement with BCBSM to accept the approved amount as payment in full. However, nonparticipating providers may agree to accept the approved amount on a per claim basis.

This language places a subscriber on notice that BCBSM pays an “approved amount” and that a non-participant is not bound to accept it as payment in full.

Moreover, Section 2 of the RAPS Rider informs a member he may be affected when a non-participating provider is used. It states:

When you receive services from a non-participating provider, you should expect to pay charges to a non-participating provider at the time you receive the care. It is then your responsibility to submit a claim to us. If we approve the claim, we will send the payment directly to you. Because non-participating providers may charge more than our approved amount, our payment to you may be less than the amount charged by the provider… [emphasis added]

The highlighted portion above is a clear warning that using a non-participating provider may lead to a reimbursement lower than the charged amount. This provision may be invalid if no participating providers were available within a reasonable distance. However, in this case, there were suitable participating surgeons in XXXXXXXXXXXX.

In this case, Dr. XXXXXXXX is not a participating provider with BCBSM. He is not bound to accept the BCBSM approved amount and is free to charge a reasonable and competitive amount. There is no proof his charges were unreasonable or excessive.

The Certificate indicates that if a network provider refers the member to a non-panel provider the out-of network deductibles and co-payment should not be applied. BCBSM recognized that a network provider referred the Petitioner’s daughter was to Dr. XXXXXXXX. Therefore the out-of network deductible and 20% out-of-network co-payment should not have been applied. The 10% general co-payment applied to the surgeon’s services and anesthesia charges is appropriate.

As a result, the Commissioner finds that BCBSM is required to pay its full-approved amount ($823.49) for the bunion correction and one half of the approved amount ($198.36) for the grafts surgery minus only the general 10% co-payment. BCBSM is required to reimburse the Petitioner for the out of network deductible and co-payments it applied to the surgery in error.

V
ORDER

The April 29, 2002 final adverse determination of BCBSM is partially reversed. BCBSM is required to pay to the Petitioner the $154.18 out-of network deductible and the $133.86 and $39.67 out-of-network co-payments it applied to the September 26, 2001 surgery. BCBSM shall pay this total of $327.71 within 60 days and shall provide the Commissioner proof of payment no later that seven days of the date of payment.

This is a final decision of an administrative agency. Under MCL 550.1915, MCL 600.631, MCR 7.101 and MCR 7.104, any person aggrieved by this order may seek judicial review no later than sixty days from the date of this order in the circuit court for the county where the covered person resides or in the Circuit Court of Ingham County. A copy of the petition for judicial review should be sent to the Commissioner of the Office of Financial and Insurance Services, Health Plans Division, Post Office Box 30220, Lansing, MI 48909-7720.