Doctors attack Blues' fee cut plan

January 10, 1995|By John Fairhall | John Fairhall,Sun Staff Writer

Harshly criticizing Blue Cross and Blue Shield of Maryland, doctors charged yesterday that the company's plan to slash their fees up to 25 percent could lead "to assembly-line medicine," fewer services and higher expenses for consumers.

The doctors' grim predictions were intended to blunt Blue Cross assertions that the state's largest health insurer pays specialists too much and must cut their annual fees by $39 million in order to offer lower insurance rates to consumers and employers.

Leaders of both sides spoke at a packed public hearing on the plan held by state Insurance Commissioner Dwight K. Bartlett III at his Baltimore office. Mr. Bartlett ordered the hearing continued until today because time ran out on many of the two dozen people who signed up to testify.

After Blue Cross officials laid out their case without criticizing the doctors, representatives of the state medical society impugned the company's motives, claiming that Blue Cross' real goal in cutting fees is to make up for past mismanagement and to fatten itself financially "in order to attract investors." The nonprofit company recently proposed creating a for-profit business that would sell stock to the public.

Blue Cross "squandered millions of subscriber dollars on grossly inflated management salaries and management perks," declared Dr. Howard L. Siegel, a Towson pathologist, referring to problems in the late 1980s and early 1990s that were the subject of hearings in the U.S. Senate and led to the resignation of former Chairman and Chief Executive Carl Sardegna. He said consumers should ask themselves what the company is now doing with their money.

Company officials relied heavily on an analysis by Donna M. Barrick, a partner in the Baltimore office of the Arthur Andersen & Co. consulting firm, who said "Blue Cross physician fees need to be reduced in the aggregate to be competitive."

She also said the new methodology the company would use to calculate fees, similar to the system used in the Medicare program for the elderly, is fast becoming predominant in the insurance industry. Her analysis, paid for by Blue Cross, supported statements by Blue Cross President and Chief Executive William L. Jews. "In order to continue to provide our employer groups and subscribers with the most competitive rates, we must examine medical costs and bring them into line with current trends," he said.

The doctors, trying to save themselves from what they termed an "unjust, unfair" pay cut, don't have much hope of blocking the Blue Cross plan unless they can demonstrate that it would harm Blue Cross' 1.4 million subscribers.

Mr. Bartlett said he will make a decision on the basis of the plan's effects on subscribers, not "whether doctors could or should receive larger fees." But the doctors said that the law does require Mr. Bartlett to consider the impact on physicians.

The doctors said the new fees would drive some physicians to cancel their Blue Cross contracts, retire or move out of state -- forcing patients to find new doctors or pay a financial penalty for seeing a doctor who is not under contract with Blue Cross.

Dr. Siegel warned that if Blue Cross' network of contract doctors shrinks, the workload of each remaining doctor will increase, which "could result in assembly-line medicine" and fewer available services.

The president of the society, Dr. Donald H. Dembo, a Baltimore cardiologist, said the fee plan "encourages misrepresentations" because consumers sign up for Blue Cross believing that their doctors belong to the company's networks. Knowing that some doctors may quit rather than accept lower fees, Dr. Dembo and other physicians say Blue Cross should inform consumers of this possibility before selling them policies. But company officials insisted they don't expect many doctors would cancel their contracts.

Despite Blue Cross' assertions that its fees have been too high for some time, the insurance commissioner disclosed yesterday that the company had in fact proposed a small fee increase last August for a limited number of medical procedures. The company later withdrew the proposal, eventually substituting its current plan, which is far broader in scope and would affect contracts the company has with 11,000 doctors, therapists, psychologists, psychiatric social workers and other professionals. The proposed fee cuts range up to 25 percent, for cardiologists, and average 10 percent across all specialties, according to the company. Nonspecialists like family doctors would see increases, company officials say, reflecting the increasing role insurers are assigning to primary-care physicians.

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