HEALTHCARE - Blue Cross cuts causing pain - Doctors object to lower reimbursements. The insurer says new rates will pay physicians at `sustainable levels.'

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.