Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 11, 1990 TAG: 9004110186
SECTION: VIRGINIA PAGE: B3 EDITION: METRO
SOURCE: CHARLES HITE MEDICAL WRITER
DATELINE: LENGTH: Long
The move means that Roanoke Memorial and other hospitals in the Carilion system will no longer be exclusive providers of health care to consumers who join KeyCare, an insurance program launched in Western Virginia seven months ago by Blue Cross.
Officials of Lewis-Gale Hospital in Salem, who sued Blue Cross last year when the KeyCare program was announced, praised the agreement as a victory for patients who want "freedom of choice" in selecting a hospital. Lewis-Gale was joined in the suit by Montgomery Regional and Pulaski Community hospitals.
Carilion President Thomas Robertson said Tuesday he was "very disappointed" in the settlement. The decision to open KeyCare to Lewis-Gale is a "disservice" to consumers, Robertson said, because it lessens the incentive for hospitals to lower prices.
KeyCare is a preferred provider organization or PPO. Under this type of health insurance, hospitals and doctors cut prices to businesses that encourage employees to use their services. In return, hospitals and doctors expect to get more patients. Patients in a PPO are allowed to go to other hospitals or doctors but pay more when they do.
With more hospitals in KeyCare, there is less likelihood they will get the increased volume of patients they want, Robertson said. "How can hospitals discount prices if they can't be assured increased volume?" he asked.
Community Hospital of the Roanoke Valley, which has agreed to merge with the Carilion system, was not selected as a KeyCare hospital when the program was announced last year. But Community was offered the chance to join KeyCare on Tuesday.
"We're definitely interested in being a participant" in KeyCare, especially because Community is expected to begin merging some services with Roanoke Memorial by the end of the year, said Karl Vandegriff, a vice president at Community.
Community has until the end of the month to review a proposed KeyCare contract, but negotiations could go on longer, he said.
Blue Cross officials said the agreement should lift a cloud of uncertainty that settled over the KeyCare program when the lawsuit was filed four months ago.
Many doctors and businesses cited the lawsuit as a reason for not joining KeyCare, said Edward C. Peple, Keycare programs director.
In the Roanoke Valley, Keycare has been struggling to attract enough doctors to make it appealing to businesses. Only "two or three" accounts representing fewer than 100 customers have joined KeyCare in Roanoke, Peple said.
In the New River Valley, many businesses were reluctant to join KeyCare until they saw whether Montgomery Regional and Pulaski Community were successful in their lawsuit. The only KeyCare providers in New River are Radford Community and Giles Memorial, hospitals in the Carilion system.
Other Carilion hospitals in KeyCare are Franklin Memorial, Bedford Community and Wythe County Community.
An ambiguous state law regulating PPOs made it impossible for Blue Cross to exclude other hospitals from KeyCare if they meet certain terms and conditions, Peple said. The law says PPOs may not "unreasonably" discriminate against hospitals or doctors, Peple said.
In their lawsuit, Lewis-Gale, Montgomery Regional and Pulaski Community said they feared that physicians at their facilities might switch to hospitals included in the KeyCare program. They also worried that patients would be forced to go to hospitals in other communities in order to participate in KeyCare.
Peple acknowledged the "negative incentive" of losing patients is one reason hospitals don't want to see exclusive providers in a PPO.
"Everything has its tradeoffs," Peple said of the settlement. The agreement with the three hospitals means that KeyCare will be available to more people, he said.
"The other side of that is the price breaks and discounts that come with more selective programs are going to be substantially less," Peple said. "The additional savings for Roanoke accounts will be less than realized."
Roanoke is not the only area of the state where hospitals are not excluded from KeyCare, said Lewis-Gale spokesman David Middag. He noted that all the hospitals in Richmond are KeyCare members.
Carilion's Robertson was skeptical that any savings could be realized from KeyCare. "What's going to be different about this product than what Blue Cross has been offering in the past?" He said the settlement "ultimately was based on legal considerations, not quality and cost issues."
KeyCare still will be able to offer patients a "better level of benefits" than traditional programs, Peple said. It also will help cut health care costs because it can determine which physicians give "inappropriate" care.
Studies have shown that only a small percentage of physicians account for most unnecessary care, Peple said. By educating these physicians or by eliminating them from the program, KeyCare will be able to save on costs, he said.
The addition of three hospitals in Western Virginia should make KeyCare more attractive to large businesses and corporations that have employees throughout the state, Peple said. These large groups want employees in all parts of the state to have the option of joining KeyCare, he said.
Blue Cross is the health insurer for 105,000 state employees for the next three years. Included will be employees of Virginia Tech and Radford University. Beginning in July, Virginia teachers and local government employee groups will have the option to join the group.
The KeyCare network includes about 70 hospitals and nearly 6,000 doctors statewide.
Last year, a regional business coalition began a PPO with Community and Lewis-Gale hospitals. About eight of 30 companies in the coalition are participating in the PPO, but no physicians have been signed.
by CNB