Blues defend plan to cut doctors' fees

January 11, 1995|By John Fairhall | John Fairhall,Sun Staff Writer

Blue Cross and Blue Shield of Maryland struck back yesterday at its physician critics, charging that their opposition to a fee-cutting plan is motivated by self-interest rather than concern for patients.

"It comes down to the income of physicians," Blue Cross general counsel John A. Picciotto said at the end of a hearing on the company's plan to slash specialists' fees up to 25 percent.

He also accused the state medical society of hypocrisy, alleging that an ulterior motive for opposing the plan is to undermine Blue Cross while the doctors create their own competing insurance company -- which the society denies.

But Mr. Picciotto did not get the last word at the hearing, held Monday and yesterday by State Insurance Commissioner Dwight K. Bartlett III. Mr. Bartlett and chief actuary Donald P. Brandenberg chided Blue Cross for not presenting enough information for the commissioner to act on the fee plan.

The two regulators requested additional data, providing a victory of sorts for the state medical society, the Medical and Chirurgical Faculty. Society leaders and a parade of other physician witnesses complained that Blue Cross' decision to withhold information about its payment methodology made it impossible to judge the plan's possible effects on subscribers.

The doctors and their attorneys raised numerous questions challenging Blue Cross' basic contention: that the company pays doctors more than other insurers and needs to cut costs to remain competitive.

Doctors also sought to cast doubt on Blue Cross' calculations of the effects of the plan on their income. The company says no specialty will be cut more than 25 percent, but its figures are averages for each category of doctor. Individual physicians could be affected more, or less, than the average, depending on what kinds of procedures they perform.

Fees paid for some procedures are being cut much more than 25 percent, according to testimony. Dr. Edward C. Watters III, an ophthalmologist in Woodlawn, said that for cataract surgery, the company's fee would drop from $2,280 to $1,373, a 40 percent decrease.

For one type of laser eye surgery, the fee would decrease 61 percent, from $1,340 to $523, he said.

Doctors also provided many examples of procedures for which Blue Cross' fees would fall below those of Medicare, the government program for the elderly that historically pays less than private insurers. Blue Cross officials insisted, however, that the company will not pay less than Medicare, which apparently would require Blue Cross to raise some proposed fees.

A company spokesman, Mike Streissguth, conceded that it may pay less for some procedures than other insurers, but that on average it pays more. "There may be some examples where in fact we are lower," he said. "But there will be instances where our reimbursements are higher."

After the last doctors had testified yesterday, Mr. Picciotto and David D. Wolf, Blue Cross' chief financial officer, rebutted what they said were misleading statements. Allegations that the company is cutting fees to pay the costs of past mismanagement are untrue, Mr. Picciotto said.

He said the losses occurred in the late 1980s and early 1990s and today the company has a surplus of more than $150 million.

Mr. Picciotto accused the medical society of a conflict of interest because it recently formed a nonprofit company to explore the possibility of creating for-profit subsidiaries such as an insurance company.

The society "does not want Blue Cross to be competitive," Mr. Picciotto charged. He said sarcastically, "I would like to be invited" to the hearing the insurance commissioner might have to hold on the doctor's insurance company, to "see what they're paying their physicians."

But a spokeswoman for the society, Ruth Seaby, denied that it is ready to form an insurance company. "It takes a great deal of capital to do something like that," she said, but the new nonprofit company has "nowhere near the capital" required.

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