Doctors ready to fight Blues' pay-cut plan

January 08, 1995|By John Fairhall | John Fairhall,Sun Staff Writer

When Dr. John B. DeHoff began practicing medicine in 1947 in Baltimore, doctors set their own fees and patients paid them directly. The average charge for an office visit was $2 to $4, a rate that would rise sharply over the years as physicians became one of the highest-paid groups in America.

But doctors' freedom to determine prices is going the way of the house call. These days most patients' bills are paid by insurance companies and the government, which increasingly are using their clout to dictate fees. Many doctors, particularly specialists, are being forced to swallow reductions.

In one of the latest and biggest examples of the trend, Blue Cross and Blue Shield of Maryland is proposing to slash the fees of thousands of specialists by as much as 25 percent, which company officials say would save Blue Cross and its customers $39 million. Angry doctors will challenge the proposal at a public hearing scheduled tomorrow by state Insurance Commissioner Dwight K. Bartlett III. It's "unjust, unfair and inequitable," charged Dr. Howard Siegel, a pathologist who is helping prepare the state medical society's response to the proposal.

In deciding whether to approve the proposal, the commissioner must weigh a key question: How will it affect consumers? The state's largest health insurer and doctors clash over the answer.

Officials of Blue Cross say the fee cuts are part of a broad cost-reduction program intended to keep down rates of so-called indemnity insurance, policies that give patients freedom to choose doctors and hospitals. About one million of the company's 1.4 million subscribers have some form of indemnity plan; the remainder are in health maintenance organizations.

Lower rates would benefit consumers and employers, while bringing the company's insurance prices down to the level competitors charge, Blue Cross says. "In order for us to compete, we must reduce our costs and ultimately bring our prices more in line with customer expectation and the competition," Blue Cross President and Chief Executive William L. Jews said in a Dec. 23 letter to physicians.

Company officials say the fee reductions are needed to help pay for a rate decrease of 7 percent to 15 percent announced in October. A $40 million cut in administrative expenses, which the company has completed in the past few months by eliminating 350 positions, also is paying for the rate decrease, Blue Cross says.

Despite the October decrease, the company's rates remain higher than some competitors for some insurance products. For small groups, for example, the company's price for indemnity family coverage averaged $518 a month as of September, according to a state price list. That was higher than the rates of five competitors, but lower than 12 others.

But even if insurance premiums are lower, doctors warn that patients could face higher out-of-pocket charges for medical care or be forced to change physicians if their physicians cancel their Blue Cross contracts rather than accept lower fees.

Doctors say fee cuts also could undermine their ability and incentive to keep up investments in new technology. Some physicians say their colleagues may react by increasing the number of patients they see, generating income to offset the lower fees but reducing the amount of time spent with each patient.

The fee proposal would affect many of the state's 15,000 physicians. Blue Cross officials say they have indemnity contracts with about 11,000 medical and mental health professionals, most of them doctors. But that number also includes psychologists, psychiatric social workers and others.

The fee proposal does not apply to the separate payment system used to compensate doctors who treat patients at Blue Cross' five health maintenance organizations. HMO fees to doctors have already been reduced, or have remained the same for some time, company officials say. Nor would the proposal affect dentists.

Not all fees would be cut. In contrast with cardiologists, surgeons and other specialists, many primary care doctors, such as family practitioners, pediatricians and internists, would see at least some rise in income, Blue Cross officials say.

"I think the increase in fees for the person who is the primary care person is a good thing," said Dr. DeHoff, who at 81 no longer practices medicine but is on the state Board of Physician Quality Assurance, a regulatory agency.

But many primary care doctors remain suspicious. Based on his calculations, Dr. Joseph Zebley, a family physician in Baltimore, said the supposed gains are "nowhere near what's promised."

For some services he provides, rates could be as much as 10 percent to 12 percent higher, he says, but they'd be offset by decreases for other procedures he performs.

But most doctors say they don't have enough information from Blue Cross to compare what they're currently paid with what they would be paid if the fee proposal is approved.

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