Both Sides Forget Public Feelings On Doctor Fees


The battle between Blue Cross and Blue Shield of Maryland and the state medical society over a physician fee cut is a microcosm of the fundamental changes taking place in American health care.

Last week, state Insurance Commissioner Dwight K. Bartlett III infuriated many doctors by approving the insurer's plan, which slashes specialists' fees as much as 24 percent. Fees paid to primary care doctors will increase, but the specialists' cuts are so deep that Blue Cross and its customers are expected to net $45.6 million a year in savings under the new payment system.

Blue Cross, the state's largest health insurer, says it will use the savings to pay for subscriber premium decreases that the company put into effect in anticipation of a favorable decision by Mr. Bartlett. But Dr. Howard Siegel of the state medical society maintains that Blue Cross will go for higher profits -- not health care.

This fight was a mere skirmish in a nationwide battle between doctors and insurers over an ever-shrinking health care pie. But the consumer seems to have been forgotten in this battle over money, power and control of the nation's multibillion-dollar health care industry.

For example, neither the Blues nor the physicians embarked on public relations campaigns aimed at winning Marylanders' hearts and minds. Thus, they both missed the opportunity to educate and win over the very people they are supposed to be serving.

The Blues have had significant managerial problems over the past decade. While it appears that the corporate ship is being righted, the company's recent actions raise important questions. The Blues' plan to sell stock was rejected by the state insurance commissioner two months ago. Now the insurer is trying to persuade state legislative leaders to push a bill allowing it to operate as a for-profit company. Simultaneously, the Blues contend they can improve their competitive position vs. other managed care plans by substantially cutting the fees paid to many physicians.

The Blues have yet to demonstrate how the savings and capital will improve the quality of medical care for consumers, other than to make vague references to new kinds of insurance products and more competitive managed care plans. The Blues owe their subscribers more detailed plans and models to show how new funds will improve or expand consumer services, including covering individuals who cannot be insured elsewhere. Lawmakers, taxpayers and subscribers must be assured that the Blues' ventures will not again lead to poorly planned, unprofitable businesses that are unrelated to the company's core mission of health insurance.

Opposite the Blues we see the state medical society wringing its hands -- and in its fantasies, Blue Cross' corporate neck -- over the fee cut. The physicians presented data and analysis to the insurance commissioner to complain about the effect of the fee cut on their incomes and, in passing, to claim that the fee cut might harm consumers. They even went so far as to claim that the fee cut will force physicians to leave the Blues -- or even the state.

And just where will the doctors go? Competing health plans are not going to be much more generous, and the environment for physicians is not much friendlier elsewhere in the country. It is doubtful that Maryland physicians will flee to places where managed care is dominant, like California, Minnesota and Massachusetts. The power of insurers to dictate the rules of medicine is widespread, and managed care is prevalent. The Blues' fee cut is much less likely to frustrate Maryland physicians than is their growing political isolation and the growth of managed care plans.

Physicians' error

Aggressive managed care companies -- many of which are exactly the kind of for-profit entity that the Maryland Blues long to be -- are inexorably changing market dynamics and controlling the way physicians practice medicine. Unfortunately, physicians are mishandling their public policy battle with insurers. By casting the debate in terms of lost income and diminished job opportunities, rather than positioning themselves as the chief advocates for consumers who could be hurt by unthinking corporate medicine, physicians are losing their leadership position. They are, in effect, ceding power to nonclinical managers who will write the rules and dictate terms.

Neither physicians nor the Blues understand that consumers are angry at them both and trust neither. Physicians, in particular, seem incapable of building alliances with consumer groups that also are anxious about the growing power of insurers. In a health care system as complicated as ours, consumers need to believe that their physician is their advocate and is concerned, first and foremost, that the consumer get compassionate, appropriate, cost-effective health care.

Physicians -- still among the highest-paid professionals -- can expect little support for their incomes from a recession-weary population. Senior citizens and displaced factory workers will not care much about specialists who make $150,000 rather than $200,000 next year. This is especially so if the physicians cannot say how they will change medical practice in ways that help their patients and save money over the long haul.

Maryland's physicians need to take three steps to recast this debate. First, they need to work with major insurers to control growth in the costs of physicians' services and educate physicians to change the way they practice. This means examining practice patterns and clinical outcomes in Maryland to find unproductive care that we simply should not pay for. This will take time, but it will solve our problems in the long term.

Making markets work

We also need to move to a reimbursement system that rewards good clinical practice and punishes bad practice by not paying for it. This is uncomfortable and will put some physicians out of business, but markets work by culling out products and services that are undesirable or lack value. Systematically assessing health care use, and making rational decisions about what we should pay for, is the only way we will control health care costs. This is, in fact, the fatal flaw in the Blues' proposed fee cut. It isn't based on a systematic, data-driven analysis of what care is productive and what isn't. Rather, it blindly imposes a large-scale fee cut and assumes that if a physician is a specialist, he or she must be too expensive or too inefficient and thus must bear the greatest cut.

Second, physicians need to create long-term alliances and productive dialogue with key consumer and employer groups throughout the state. At present, these groups do not believe that the doctors care about anyone but doctors. There is no clearer evidence of this than the recent hearing in Annapolis at which organized labor and the business community both testified against the state medical society's slate of bills dealing with managed care plans. The best way to attack bureaucratic, arbitrary limits on health care is for physicians, who understand clinical data, to join forces with consumers and employers, who want value for their insurance dollar.

Consumers and employers are willing to accept reasonable utilization restrictions if they result from broad community participation, have a scientific and ethical basis, and reflect the current state of knowledge in the medical community. Right now we have no mechanism for creating this policy platform. Maryland physicians should seize this initiative, and not leave it to insurers or government.

Finally, physicians must stop complaining about job and income losses. Physicians face economic changes that will be painful. But they must face the reality that some physicians should be out of medicine because of limited skills and reluctance to adapt practices to changing clinical norms. Maryland's physicians need to reshape the way they think about the health care market of the future. Then they can help consumers cope with the changes in a way that retains consumers' confidence in their judgment and their motives. It also is the best way of assuring that they will continue to be a well-rewarded and admired profession.

Vikram Khanna, former director of the Health Education and Advocacy Unit of the state attorney general's office, writes from Columbia.

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