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

ORDER

I
PROCEDURAL BACKGROUND

On June 14, 2002 the Petitioner, XXXXXXXX, 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, et seq. After a review of the material submitted, the Commissioner accepted the request. Initially, the case appeared to include medical issues and was assigned an independent review organization (IRO). On July 12, 2002, the IRO provided its recommendation to the Commissioner that the adverse determination be upheld. The IRO’s recommendation was based on its analysis of contractual issues. It did not find any medical issues pertinent to this matter.

II
FACTUAL BACKGROUND

On January 29, 2002 the Petitioner’s wife, XXXXXX, underwent a vaginal hysterectomy and anterior and posterior repair with insertion of suprapubic catheter. The surgery was performed by XXXXXXXX, M.D. Dr. XXXXXX is not a BCBSM participating provider. Dr. XXXXXX’s bill was $4,200.00 -- $2,200.00 for the vaginal hysterectomy, $1,400.00 for anterior and posterior repair and $600.00 to incise and drain the bladder. BCBSM paid $1641.90. This payment represented BCBSM’s full maximum amount ($995.14) for the hysterectomy and one half of its maximum amounts ($422.34 and $224.42, respectively) for the remaining procedures.

III
ARGUMENTS OF THE PARTIES

Petitioner’s Position

The Petitioner was dissatisfied with BCBSM’s payment for his wife’s surgery and pursued BCBSM’s internal grievance process. On May 16, 2002 a managerial conference was scheduled to take place between the Petitioner and BCBSM. On that date the Petitioner received a call from a BCBSM representative offering to settle the claim for $3,500.00. The reason for this offer, apparently, was that BCBSM had been told by Dr. XXXXXX’s office that Mrs. XXXX had not signed an agreement to be responsible for any difference between the amount billed by the doctor and the amount paid by BCBSM. The Petitioner says he accepted this offer.

In late May, Petitioner received a letter from BCBSM stating that Dr. XXXXX’s office had now provided the form in which Mrs. XXXX had agreed to be responsible for any of Dr. XXXXXX’s charges not paid by her insurer. Based on this information, BCBSM informed Petitioner that he was responsible for any balances owed Dr. XXXXX* The Petitioner argues that his wife did not sign any BCBSM form. Petitioner asserts that “[t]his ‘understanding’ with the doctor does not conform to any contractual agreements whatsoever and is void ab initio.”

Respondent’s Position

BCBSM argues it approved and paid the full amount it is obligated to pay under the XXXXXX coverage and its applicable reimbursement formulas. Regarding the settlement offer, BCBSM states that the offer was made under the erroneous assumption that Mrs. XXXX had not signed the financial responsibility agreement. Once the agreement was discovered, BCBSM withdrew the offer.

IV
ANALYSIS

Petitioner has BCBSM small group coverage through Petitioner’s business. The coverage is described in BCBSM’s “Professional Services Group Benefit Certificate” and a related rider, “Reimbursement Arrangement for Professional Services”.

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.

Section 2 of the rider describes responsibility for payment to non-participating providers:

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]

Dr. XXXXXX is not a participating provider with BCBSM. She is not bound to accept the BCBSM-approved amount and is free to charge a reasonable and competitive amount. There is no indication that her charges were unreasonable or excessive.

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. When multiple procedures are performed on the same day by the same physician, BCBSM pays the full maximum amount for the primary procedure and one-half of the maximum amount for any secondary procedures. BCBSM followed these guidelines in determining it payment in this case.

BCBSM at one point agreed to pay an additional amount for the surgery because it was told by the surgeon’s office that Ms. XXXX had not signed an agreement to be responsible for the balance. It is BCBSM’s policy to pay the balance when such a document has not been signed. Later, it was determined that she had signed a financial responsibility form provided by the provider’s office prior to her surgery.
Petitioner has asserted that his conversation with the BCBSM representative has created a binding agreement between himself and BCBSM which requires BCBSM to pay the cost of his wife’s surgery beyond the benefits already paid. Even if Petitioner is correct that a private agreement was reached when he accepted the initial offer of BCBSM (and there is reason to be skeptical that such an agreement was created), it constitutes a private agreement which is beyond the authority of this administrative agency to enforce. As set forth in the analysis above, BCBSM has already paid benefits in accordance with the obligations of its insurance agreement.

V
ORDER

The May 23, 2002 final adverse determination of BCBSM is upheld. BCBSM is not required to pay an additional amount to the Petitioner’s wife’s January 29, 2002 surgery.

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.