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Tuesday, December 21, 1999 - Page updated at 12:00 AM

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Surgeons Dropping Regence; Patients Are Casualty In Fray With State's Largest Insurer

Seattle Times Staff Reporter

Surgeons, long tangled in the red tape of insurance rules, are canceling their contracts with Regence BlueShield, the state's largest health plan.

Regence covers about one in five people in Washington.

The surgeons canceling contracts say that for certain procedures, they are not being reimbursed enough by Regence.

While doctors have been battling insurance companies for several years, this is the first time Washington physicians have rejected their contracts in significant numbers.

Almost half of the orthopedic surgeons in the region rejected the company's new contract. So did the area's largest group of general surgeons, and one of the area's major groups of neurosurgeons. Overall, these specialists are among the highest paid in medicine.

Patients will be the major casualty in the latest round of the long-standing battle between Regence and doctors. People insured through Regence either will have to switch surgeons or pay up to all of the cost of surgery if they need it after the contracts run out, mostly in January.

The exact number of those affected by the change will depend on the number of surgeries scheduled through the year.

"They should be able to come to an understanding on this, because we're all getting hurt by this," said patient Janet Isaksen, who has belonged to Regence for three years. "It could be a matter of life and death for some people."

Isaksen, of Marysville, was diagnosed with breast cancer in October, after a mammogram and a biopsy. She sought two opinions and was urged to have a mastectomy. Last week, she had Dr. Robert Howisey, a Seattle surgeon, perform the operation because of a special lymph node test he does to determine whether the cancer has spread.

If Isaksen's cancer had been discovered a few months later, she would not have had the same choice: On Jan. 19, Howisey will no longer belong to the Regence network.

Regence officials say they're following guidelines set by the federal government. And they note that, overall, they are paying out more money to doctors next year.

Surgery specialists are asking for special treatment, Regence said.

"Whatever you do, it's got to be defensible and fair," said John Holtermann, the vice president of provider-network management at Regence.

Regence contracts with about 15,000 doctors statewide. Of those, 157 surgeons are canceling their contracts, including 116 of the 266 orthopedic surgeons in King, Pierce and Snohomish counties.

The surgeons say their rates of reimbursement from Regence are being slashed by up to 35 percent for certain procedures next year.

The surgeons argue the reimbursements aren't adequate to pay their staffs and keep up with paperwork required by the insurer. They say Regence officials have refused to negotiate rates of pay.

"We're really unhappy and disheartened that we have to make this decision," said Howisey, president of the Surgical Associates of Washington, a group of 29 general surgeons who operate at nine regional hospitals. "But we feel like we've been bludgeoned by the giant of the health-insurance industry."

Threats to cancel carried out

This is a symptom of a larger disease.

Many of the nation's 700,000 doctors are fighting back against insurers and the limits of managed care. Doctors are joining unions at a higher rate than they are joining medical societies. They are lobbying for legislation like the patient's bill of rights.

Some are filing for bankruptcy.

In states such as Oregon and California, doctors' groups have canceled contracts with insurers in past years.

Last year, the Washington State Medical Association and Insurance Commissioner Deborah Senn publicly battled Regence over its contract. But this is the first time doctors have carried through on threats to walk away from insurance companies in large groups.

Orthopedic Consultants of Washington is canceling contracts not only with Regence but also with Aetna. In October, Medical Partners Northwest of Everett ended its contract with Premera Blue Cross' Medicare health-maintenance organization.

In Spokane, nearly three-quarters of the orthopedic surgeons canceled their contract with Premera, the largest insurer in Eastern Washington.

The specialists have decided the only leverage they have with insurers is to terminate contracts, said Dr. William Mahood, a gastroenterologist outside Philadelphia and a member of the board of trustees of the American Medical Association.

"If they don't, the rates will be lower next year," he said. "That's the game that's being played right now."

Regence is rejiggering its rates to reflect national calculations used by Medicare. Overall, the company will pay doctors $333 million next year - a 5 percent increase over current rates.

But payment for surgeries will go down.

So family doctors will probably get more money than they have in the past. And an orthopedic surgeon likely will receive more money for an office procedure - but less for a surgery.

For example, Regence will pay 21 percent less next year for a hip replacement.

"The surgery is the hard part," said Dr. Robert Winquist, the vice president of Orthopedic Consultants of Washington, a group of 72 surgeons that canceled its contract. "That's what keeps us up at night and worries us on the weekends."

Salary comparison

Despite recent cuts in insurance reimbursements, doctors have had a hard time convincing the public they are underpaid.

The trade magazine Medical Economics reported in September that the average neurosurgeon made a net salary of $290,200 in 1998 - an increase of only 0.5 percent from the year before. On average, an orthopedic surgeon made a net salary of $273,150 - an increase of 7.5 percent.

"I'm not crying poor," said Dr. Steve Klein, a member of the Neurosurgical Consultants of Washington, which canceled its contract with Regence. "But if it (reimbursement) keeps going down, the administrative burden gets in the way of health care. It makes me do too much work to get to the actual care of patients."

A recent Medical Economics study indicates that Western states rank the lowest in net median income for surgeons.

The public also has shown little sympathy for insurance companies, which are making significant increases in policy rates without cutting into executive salaries.

For example, the chief executive officer of Regence, Rich Nelson, pulled in $587,949 in salary and bonuses in 1998, according to the insurance commissioner's office. That's 20 percent higher than the year before.

Kim Barker's phone message number is 206-464-2255. Her e-mail address is kbarker@seattletimes.co.

Copyright (c) 1999 Seattle Times Company, All Rights Reserved.

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