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Blue Cross cuts causing pain

Doctors object to lower reimbursements. The insurer says new rates will pay physicians at `sustainable levels.'

July 23, 2007|Lisa Girion | Times Staff Writer

Blue Cross of California's latest antidote to rising healthcare costs isn't going down very well with physicians.

The state's largest for-profit health plan is set to roll back its payments for about half the services and procedures provided by physicians next month.

And many of the 53,408 physicians in Blue Cross' preferred provider organization (PPO) networks say that's a prescription for disaster.

Doctors say the health plan imposed the new rates unilaterally. In most cases, they say, Blue Cross will get its way because it controls the lion's share of their patient base.

But other physicians say they've had it with Blue Cross. More than 300 of them have sent notices threatening to dump the insurer if the rates take effect as scheduled Aug. 6. Some say the new rates won't even cover the cost of supplies.

"I don't know how anybody can afford to stay in practice and accept Blue Cross rates," said Dr. Charles Fishman, a San Luis Obispo dermatologist who sent a letter telling Blue Cross he would drop its contract if his rates were not improved.

A spokeswoman for the insurer described the level of complaints over the new rates as routine, and she said the number of termination notices from physicians over the issue was negligible -- less than 1% of the doctors in its PPO networks.

"We continue to have the largest physician network of all our competitors," said Shannon Troughton, a spokeswoman for Blue Cross' parent company, Indianapolis-based WellPoint Inc.

The rate dispute is the latest skirmish between physicians and Blue Cross since the insurer was purchased by the Indianapolis company formerly named Anthem nearly three years ago.

It is one of many complaints expected to be aired at a public hearing on Blue Cross set for Aug. 7 in Los Angeles.

Cindy Ehnes, director of the California Department of Managed Health Care, called the session to hear whether the insurer was living up to promises it made to win approval for the November 2004 deal that transformed the Indiana company into one of the nation's largest providers of health benefits.

Troughton said WellPoint had been a good corporate citizen since it took over California's Blue Cross. She said its growing enrollment was evidence that it was providing a service consumers valued.

She said the new reimbursement rates were intended to pay physicians at "sustainable levels." The insurer does not intend to pay physicians' less than their costs, but determining what those costs are is difficult, she said.

So, she said, the rates were largely based on cost and reimbursement data from other payers, particularly Medicare, the government's health insurance program for seniors.

Because of its unparalleled patient base and because of federal budget constraints, Medicare traditionally has paid far less than commercial insurers. Now, for many procedures, Blue Cross will pay less than Medicare, physicians say.

Troughton said the new rates include almost as many increases as decreases. Primary care physicians will tend to fare better than specialists under the new rates, she said.

This reflects an industrywide effort to counter an emerging shortage of primary care physicians by raising the pay for these general and preventive care practitioners relative to specialists.

But even some primary care physicians say their practices will suffer under the new rates.

"If we make 10 or 15 cents on a vaccine, that's good ... and that's not counting our staff" time, said Dr. Ken Diamond, a Beverly Hills pediatrician. "I don't want to make a huge markup on vaccines because they are so important, but I have to be able to pay our nurses."

Diamond's partner, Dr. Ron Nagel, said he knows many people will find it difficult to sympathize with physicians who have traditionally been well compensated.

But, he said, the cuts were economically devastating, particularly for physicians who begin their careers with more than $100,000 in educational loans to repay and whose overhead is constantly rising.

Like other physicians, Nagel said the rates for many of his services will be cut by a third or half. He is particularly outraged by what Blue Cross says it will pay him for a newborn hospital checkup.

The visit, which includes discussing lactation and other issues with the mother, is set to be reduced from $51 to $28.

"That is insulting," Nagel said.

But the pediatricians said they can't walk away from Blue Cross because it covers more than half their patients, and, in Beverly Hills, they figure there are plenty of other pediatricians willing to step in.

Blue Cross "won't renegotiate," Nagel said. "They will say, 'You take it or leave it.' "

In San Luis Obispo, Fishman said he was prepared to drop his Blue Cross contract if a better deal was not forthcoming from the insurer. But he said he would not turn away loyal patients.

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