Legislation takes aim at Anthem

Anthem Blue
Cross and Blue Shield’s growing market dominance in Indiana is sparking a backlash from doctors.

They plan to push a bill this year in the Indiana General Assembly that would ban so-called "open access" clauses
Anthem includes
in its contracts. These clauses forbid doctors from capping the number of Anthem-insured patients they see if they still are
accepting new patients covered by other health insurers.

Other health insurers insist on similar agreements, but only Anthem’s have teeth in Indiana, because the company covers three
times more patients than its nearest competitor.

Anthem’s market share has grown even larger recently, which doctors say has forced them to derive too much of their business
from one source and cost them money because Anthem’s size allows it to negotiate lower payment rates than its competitors.

"Anthem offers the lowest reimbursement of any of the commercial payers and that, obviously, is harmful to the practices,"
said Dr. Ben Park, CEO of American Health Network, which includes about 160 physicians in Indiana. "No business should
be
dependent on a single customer."

But officials from Anthem, a subsidiary of Indianapolis-based WellPoint Inc., say the bill is discriminatory and will drive
up the cost of care.

"It’s certainly not in the patient’s interest," said Tony Felts, an Anthem spokesman. "Ultimately," he
added, "it’s an opportunity
for providers then to demand larger reimbursements from insurance companies."

Felts gave his comments after reviewing draft language of the bill, which had yet to be filed at IBJ’s deadline. A doctors’
trade group, the Indiana State Medical Association, has helped write the bill. Rep. Peggy Welch, D-Bloomington, has agreed
to sponsor it in the Legislature.

Mike Rinebold, a lobbyist for the medical association, said the idea was proposed in September by doctors from Kokomo who
are part of American Health Network.

Those same doctors—along with others in Russiaville—tried to stop accepting Anthem patients in November 2007, citing Anthem’s
low payments and increasing market share. American Health Network reached a new agreement with Anthem in July, but the bill
appears to resurrect the dispute in a new form.

Anthem claims 34 percent of all commercially insured customers in Indiana, according to 2008 data from HealthLeaders-InterStudy,
a market research firm in Nashville, Tenn. The number of customers Anthem reported to an IBJ survey grew 28 percent from 2006
to 2008.

Commercial insurance is the key source of profits for doctors because government programs, such as Medicare, typically reimburse
doctors at or below cost.

Park complains that Anthem has become a virtual monopoly in some markets, claiming as much as 60 percent of some physicians’
patients. Anthem’s market share surged in the last year after Anthem paid at least $15 million for M-Plan’s recommendation
that its customers join Anthem after the HMO decided to fold.

WellPoint officials estimated the deal with M-Plan would net it 75,000 new customers. But Rick Byrne, a Midwest market analyst
at HealthLeaders-InterStudy, figures Anthem picked up more than 100,000 customers from M-Plan.

If Byrne is correct, Anthem’s market share in the Indianapolis area, for example, would have jumped from 34 percent to more
than 40 percent.

Kokomo had a high concentration of M-Plan because the HMO served the major auto companies there, Chrysler and Delphi.

The shift to Anthem was a big deal to doctors because M-Plan paid doctors fairly generously, Park said. Some doctors’ groups
say Anthem pays about 5 percent to 10 percent less than other insurers, but other doctors say the difference is less than
that.

Park said Anthem’s insistence on sharp discounts is helping to limit the number of family doctors in communities around Indiana.
Higher reimbursements would attract more doctors, increasing competition, improving quality and lowering costs, Park maintains.

But Felts said American Health Network’s short-lived ban on new Anthem patients concerned employers in those markets, who
wanted to make sure their employees could get care.

"This bill would allow for arbitrary caps to be set that would deny access to an insured individual," he said. "If
a provider
determines it’s not in their best interest to enter into a [health insurer’s] network, they are free to choose that. This
legislation would allow a practice to have it both ways. It’s just not at all fair."

American Health Network is not the only doctors’ practice favoring the bill. The idea received robust support from the medical
association’s meeting of delegates in September, Rinebold said. And at least three other practices have signed on to support
the legislative effort.

It’s not clear if other groups will join Anthem in opposing it.

Mike Ripley, a health care lobbyist for the Indiana Chamber of Commerce, said he and his members need to study the bill before
forming a position on it.

Representatives of other health insurers declined to comment publicly. Privately, they say the bill offers short-term benefits
but potential long-term problems for their businesses. Also, while the bill might help these insurers in Indiana, similar
legislation could hurt them in other states.

Rinebold said Welch’s bill is modeled on a recent California law banning "open access" clauses. He said related
laws have
been proposed but not passed in Illinois, Rhode Island and Texas.

Byrne, the market analyst, said Anthem’s fights with doctors are unlikely to cost it market share unless the insurer makes
mistakes that alienate patients and employers.

It made such a mistake last year, he said, when it allowed computer problems to create long delays on claims payments for
some employers’ workers, which led to a doubling of complaints against Anthem.

"They’re going to be up in arms," Byrne said of such situations. "Anthem presents a big target, especially
in Indiana, because
they are the home state company."