Blues' payments to providers don't need regulation, official says Insurance commissioner agrees with company

February 28, 1996|By M. William Salganik | M. William Salganik,SUN STAFF

The state insurance commissioner told a House of Delegates committee yesterday that he wouldn't mind giving up regulatory control over the rates Blue Cross and Blue Shield pay doctors and other health care providers -- a change the Blues says it needs to compete with private, for-profit insurers.

But providers, whose reimbursement rates were cut an average 15 percent by the Blues last year, said state oversight is still needed and should be extended to other companies' reimbursement levels as well.

Insurance Commissioner Dwight K. Bartlett III told the House Economic Matters Committee that his regulatory authority stemmed from the 1930s, when doctors controlled Blue Shield and "there was concern that the providers would line their own pockets and drive up premiums."

Now, he said, providers do not control the Blues, and the necessity to keep premiums competitive assures they will not overpay providers.

William L. Jews, president and chief executive officer of Blue Cross and Blue Shield of Maryland, testified that the change was part of an overall strategy necessary for the insurer's survival.

While the Blues seeks broad long-term changes -- it has temporarily shelved plans to create a for-profit subsidiary -- Mr. Jews said freedom to change provider rates quickly is the only change the company seeks this year.

The legislation, which is considered likely to pass, was prompted by the Blues' efforts last year to cut provider rates. It filed the rate request in December 1994, and the insurance commissioner approved it, but not until April 1995. The delay cost the company $5 million, Mr. Jews said.

"BCBSM has been successful over the short term, but our long-term viability is questionable," Mr. Jews told the committee.

Del. Robert L. Frank, D-11th, Baltimore County said: "On the one hand, you're telling us you're doing great. On the other hand, you're telling us the sky is going to fall if you don't get this bill."

Representatives of a number of provider groups -- including psychologists, nurse practitioners, radiologists, urologists and pathologists -- argued that the pendulum had swung too far in the insurers' favor.

"Providers are getting squeezed to death," said Joel R. Kruh, representing the Maryland Chiropractic Association. The insurance commissioner, he said, is "the last safety net."

The provider groups said Blue Cross could achieve the "level playing field" it seeks if other insurers also had their reimbursement rates regulated by the insurance commissioner.

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