Doctors ask state probe of cuts in pay by CareFirst

`Monopolistic pricing' feared in new reimbursement rates

May 11, 2006|By M. WILLIAM SALGANIK | M. WILLIAM SALGANIK,SUN REPORTER

Angered by a new round of reimbursement cuts by CareFirst BlueCross BlueShield, MedChi, the state medical society, called yesterday for a state probe of Maryland's largest health insurer and its major competitors for what it called possible "monopolistic pricing practices."

The insurers appear to "have a common strategy and a common goal of reducing payment to physicians and other providers, with the result of forcing independent physician practices out of business and requiring hospitals to support them," MedChi said in a letter to Attorney General J. Joseph Curran Jr.

CareFirst said it was cutting some rates it pays health care providers - particularly for labs, radiology and other "ancillary services" - after losing some clients because competitors were paying less, enabling them to hold down premium costs for customers.

"We don't think we should pay providers higher fees than other insurers are paying," Jeffery W. Valentine, a CareFirst spokesman, said yesterday.

"The money will not go to our bottom line," Valentine said, but into moderating premiums and charges to self-insured employers.

T. Michael Preston, executive director of MedChi, said, "We're not making a conclusion about whether there's anything illegal going on. But there's a common strategy among giant insurers to reduce reimbursements, and they all wind up in the same low place."

Pressure on reimbursement, coupled with costs of malpractice insurance, are making Maryland an unattractive place to practice medicine, he said. Although the number of doctors licensed to practice in the state has not declined, Preston said that was not a good measure of availability of physicians, particularly because many doctors in Maryland are engaged in research rather than patient care. "We hear anecdotally that there are problems in terms of recruitment and retention," he said.

As for insurers trying to hold down costs for consumers, Preston said the past few years have seen flat or lower payments to doctors and double-digit annual increases in health insurance premiums, accompanied by record profits for insurers.

The attorney general's office received MedChi's letter at midday yesterday, and will evaluate it, said Kevin Enright, a spokesman. He said the office does not, as a matter of policy, confirm whether investigations are under way.

The full extent of the reimbursement cuts, which will take effect July 1, is unclear. Valentine said that in general there would be no reductions in routine exam fees for primary care doctors or in payments to obstetricians for delivering babies. An exception to the overall pattern, he said, would be some downward "adjustments" in rural areas, where doctors are scarce and have been paid more than in urban and suburban sections of the state.

Valentine said he didn't have projections for the impact of the reductions on the cost of care or on premiums.

Preston said that, based on letters sent to doctors this month, and on conversations he had with CareFirst, that he wasn't sure of the impact, either. Letters to doctors, he said, were "very vague," listing only reimbursement for the most common 20 procedure codes for each physician.

Both CareFirst and UnitedHealthcare of the Mid-Atlantic, another large insurer, denied any collusion over the rates they pay to doctors and labs. "We don't discuss reimbursement with anyone except the people we're negotiating with," said Steven Matthews, a UnitedHealthcare spokesman.

Although technically a negotiation, large insurers typically offer doctors a schedule of rates for different procedures. Doctors can sign a contract accepting the rates or choose not to be in the insurer's network, potentially meaning a loss of patients. Some insurance plans don't pay at all for "out-of-network" care; others impose additional co-payments on the patient for care given by doctors who don't agree to accept network rates.

If large numbers of doctors reject a proposed rate, the patient may have trouble finding care. Valentine said he was not aware of any doctors so far who have rejected CareFirst's new rates. He said about 25,000 letters were sent May 1, and fewer than 200 doctors had called to object or to ask questions.

The Maryland Hospital Association echoed MedChi's concerns. Hospitals in Maryland don't have to negotiate rates with insurers; the rates are set by a state commission. "Our big concern is in the broader community access sense," said Calvin Pierson, president of the hospital association. "Hospitals are having difficulty attracting primary care and specialist doctors into Maryland."

In general, hospitals don't employ doctors directly. Increasingly, Pierson said, hospitals have been subsidizing or acquiring physician practices to make sure there are enough doctors who use the hospital.

MedChi and the hospital association said UnitedHealthcare cut rates several months ago, then CareFirst followed.

Valentine said CareFirst became concerned about its reimbursement rates last year, when it lost the Frederick County public employee and Montgomery County school system contracts. He said a consultant had confirmed that CareFirst was paying above-market reimbursements for some services.

The Maryland Health Care Commission reported recently that rates paid to doctors and other providers increased 1 percent to 2 percent between 2003 and 2004, the most recent years for which it has analyzed data. However, the commission said, private insurer payments in Maryland are close to Medicare reimbursement rates, while insurers nationally pay 23 percent above Medicare rates.

bill.salganik@baltsun.com

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