Blue Cross to set rates Insurer to determine how much it pays to health care providers

State bill gives OK

Regulating panel supports ending its oversight of fee levels

April 04, 1996|By M. William Salganik | M. William Salganik,SUN STAFF

Blue Cross and Blue Shield of Maryland yesterday won the right to set the rates it pays doctors and other health care providers.

The state Senate unanimously passed a bill, already approved by the House of Delegates, that frees Blue Cross from oversight from the state insurance commissioner over provider rates.

Some providers had opposed the legislation, but the insurance commissioner, Dwight K. Bartlett III, told legislators that reviews of fees by his office -- a regulatory mechanism dating from the 1930s -- are no longer needed in the current health marketplace.

"We're pleased that the legislature understood that we think the market should prevail in the setting of fees for our providers," said Jeffery Valentine, director of public relations for the Blue Cross.

For-profit insurers already are free to set their own provider rates. But when Blue Cross, the state's only not-for-profit insurer, sought to cut provider rates in December 1994, allowing it to lower premiums, it took until April 1995 to get approval from Mr. Bartlett. The delay cost $5 million, Blue Cross complained.

The provider fees bill was the major legislative goal of Blue Cross in this year's General Assembly session. Earlier, Blue Cross had sought sweeping changes in its charter, including creation of a for-profit subsidiary to run its health maintenance organization business.

Under tough questioning from legislators, Blue Cross decided to shelve that plan in this session and seek a much smaller reform step instead.

Mr. Valentine said Blue Cross still feels it needs three things to remain competitive -- regulatory relief to allow it to compete with for-profit insurers, growth beyond its current service area, and "access to capital."

As for regulatory relief, he said the legislation on provider fees is "a step in the right direction."

Blue Cross also has taken a step toward geographic expansion, winning approval from Mr. Bartlett to offer policies -- not under the Blue Cross name -- in Montgomery and Prince George's counties.

Mr. Valentine said Blue Cross has not yet decided whether to try again to create a for-profit entity that could issue stock or to pursue an alternate plan, such as "partnerships and alliances."

Pub Date: 4/04/96

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