In an unprecedented move by the state's largest insurer, Blue Cross and Blue Shield of Maryland plans to slash fees it pays most physician specialists by as much as 25 percent, enraging doctors and raising questions about the impact on consumers.
"What the physicians are being asked to do is pay for the mismanagement" at Blue Cross, charged Dr. John D. Reeder, president of the Maryland Radiological Society, referring to the company's severe financial problems in the late 1980s and early 1990s.
"It does have far-reaching implications," the Baltimore radiologist said yesterday of the plan. "When you start cutting back on reimbursement rates, that decreases the likelihood that you're going to invest in new technology."
Company officials filed the fee plan with the Maryland insurance commissioner Tuesday without a public announcement, and apparently hoped to have it approved quickly, state regulators said. But the commissioner scheduled a public hearing Jan. 9 and 10 to gauge the plan's impact on the company and its 1.4 million subscribers, according to a letter the state sent yesterday to Blue Cross.
Blue Cross has been meeting with doctors' groups recently to brief them privately on the plan, but that effort has mainly generated growing anger in the medical community. The state medical society, representing more than 6,000 doctors, sent a letter to the insurance commissioner Wednesday demanding more details about the plan.
Blue Cross Vice President Debbie Holloway said the fee cuts scheduled to take effect in January would average 10 percent across all medical specialties and help the company pay for already announced premium reductions, which she said would benefit consumers and make Blue Cross more competitive.
But Ms. Holloway acknowledged that as many as 10 percent to 12 percent of the doctors who have contracts with Blue Cross may cancel them in protest, which could leave their patients facing higher out-of-pocket costs. That can happen because doctors who sign contracts agree to accept the Blue Cross rate, and their patients are not billed; doctors who don't sign contracts can charge the difference between their fee and what the insurer pays.
In addition, patients' insurance contracts may make them responsible for 20 percent of the doctor's bill if they use a non-Blue Cross doctor.
But even if 12 percent of doctors quit the network, enough will remain in the network for consumers to choose from, Ms. Holloway said.
"Maryland has an abundance of doctors," she said, "so we do have excess capacity in the system, a lot of excess capacity. Were we to lose some doctors, we don't believe it would hurt service to our subscribers."
Ms. Holloway said if doctors do stampede out of the network, the company immediately will publish updated directories of participating doctors and make them available to consumers who are considering enrolling in a Blue Cross plan.
Blue Cross has contracts with about 20,000 practitioners, including doctors, social workers and others, all of whom would be affected. While fees for most specialties would be sharply reduced, primary care doctors such as family physicians and internists would receive increases averaging as much as 13 percent.
The proposed Blue Cross changes include the fees paid by the company's five HMOs, although specialists' fees will not be cut as much -- about 5 percent to 7 percent.
About 1 million of Blue Cross' subscribers are not in HMOs. They have policies that allow them to see any doctor in the Blue Cross network and, at added cost, doctors outside the network. These so-called "indemnity" plans are more expensive than HMOs because the patients largely determine when they'll see a specialist or have an expensive test.
Company officials warned doctors at a meeting last month that indemnity plans -- which doctors prefer because they give patients freedom to pick practitioners -- could disappear if premiums aren't kept down. Specialists who are angered by the company's fee-cutting plan complain that Blue Cross hasn't given them a raise in many years, in some cases since 1985.
Some also assert that Blue Cross pays them less than other insurers, which Ms. Holloway strongly disputes.
Dr. Howard Siegel, president of the Maryland Society of Pathologists, said Blue Cross currently pays $72 to pathologists in his practice for doing a biopsy of a breast of a hospitalized woman. Under the proposed Blue Cross price guidelines, the fee for that procedure, which is done to determine whether tissue is malignant, would drop to $54, he said.
By comparison, competing HMOs -- which typically pay much less than indemnity plans -- pay $85 to $90, Dr. Siegel said.
Like several other doctors, Dr. Siegel accused Blue Cross of trying to recover the costs of its mismanagement.
"Blue Shield has demonstrated poor business practices in the 1980s and 1990s, which has led them in 1994 to be noncompetitive in the marketplace," Dr. Siegel said, "but it has nothing to do with an overpayment to physicians. In fact, physicians have been in many instances grossly underpaid, especially in some specialties."
Ms. Holloway responded that the specialists in fact are paid less by competing HMO companies than by Blue Cross. Moreover, some specialists are in effect overpaid, she suggested, because their fees are based on procedures that new technology has made easier and faster.
IMPACT ON FEES
Percentage change in doctors' fees in proposed new Blue Cross and Blue Shield schedule:
FIELD OF PRACTICE ... ... ... ... % CHG
Cardiology ... ... ... .. ... ... -24.5
Dermatology .. ... ... .. ... ... +2.7
Emergency medicine ... .. ... ... -11.9
Family practice .. ... .. ... ... +13.3
Gastroenterology ... .. ... .. .. -23.3
General surgery ... ... ... .. .. -16.3
Internal medicine .. ... .. .. .. +3.5
Obstetrics-gynecology .. .. .. .. -11.6
Ophthalmology ... ... .. .. .. .. -8.8
Orthopedic surgery .. .. .. .. .. -15.1
Otology, laryngology ... .. .. .. -15.3
Pediatrics ... ... ... ... ... .. +15.5
Physical therapy ... .. .. ... .. -7.8
Radiology ... ... ... .. .. .. .. -22.2
Source: The Medical and Chirurgical Faculty of Maryland