Reimbursement cuts said threat to doctors

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A slate of reimbursement cuts going into effect today for CareFirst BlueCross BlueShield providers has some Washington-area doctors threatening to limit new patients or drop out of the network.

The cuts also have prompted the Maryland State Medical Society (MedChi) to ask Attorney General J. Joseph Curran Jr. to investigate "monopolistic pricing practices" between the state's largest health insurer and its major rival, UnitedHealth Group, which together control 94 percent of the state health insurance market, according to R. Steven Orr, Maryland insurance commissioner.

In a letter dated May 1, CareFirst told providers it had lost several large accounts to competitors who reimbursed physicians at lower rates and therefore were able to offer lower premiums.

"We believe CareFirst or CareFirst BlueChoice members should not have to pay providers higher fees than those paid by members of other commercial health plans," wrote M. Bruce Edwards, a senior vice president for CareFirst.

The company is adjusting the fees it pays doctors for various "ancillary services" such as lab work and radiology, spokesman Jeff Valentine said. The changes range from a 12 percent increase in several areas to a 20 percent cut in others.

Dr. Stephen Rockower, a Rockville orthopedist and president of the Montgomery County Medical Society, decided on Thursday to drop out of the CareFirst network.

"I'm trying to run a business here. My rents go up, my employees demand salaries, my gas prices go up, my malpractice rates go up, but my reimbursement rates go down -- that's no way to run a business," he said. "If I'm losing money on each visit, seeing more patients doesn't help me."

Dr. Rockower, who has practiced medicine for 25 years and is in business with another doctor, said he lost two partners because of rising practice costs and flat or lower reimbursements. One relocated to another state while the other took early retirement.

"Ultimately, patients are going to be harmed when they can't find doctors or doctors leave the state or retire or go bankrupt," he said, adding that he has spoken with several colleagues who are considering leaving the network.

According to CareFirst spokesman Mike Sullivan, of 12,500 providers in the network, the number of doctors who have dropped out is in "the low single digits."

Kevin Enright, a spokesman for the attorney general's office, said the office has requested more information from both MedChi and CareFirst.

As a policy, the office does not confirm or deny whether an investigation is taking place, he said.

Both CareFirst and UnitedHealthcare have denied any collusion over physician payment rates. Mr. Valentine said CareFirst was not aware that UnitedHealthcare, which owns Rockville insurer Mid-Atlantic Medical Services Inc., had cut its rates until learning about it from MedChi.

"Any savings that are derived from these adjustments will go to benefit our members, either in the form of more moderate premiums or lower care costs and will not go to CareFirst's bottom line," he said.

But T. Michael Preston, executive director of MedChi, called the strategy of controlling health care costs by reducing physician payments a "dead end."

"There may be a certain business logic from [the insurance companies'] standpoint, but they're driving our delivery system into a ditch and the proof of that was announced last week," he said.

He referred to a National Academy of Sciences' Institute of Medicine report that said the nation's emergency departments do not have the necessary medical staff and equipment to meet demand.

Also in a report last week, the Center for Studying Health System Change, a Washington research group that studies health care trends, found that physician incomes fell an average of $13,000 -- after adjusting for inflation -- between 1995 and 2003 as a result of payment cuts by Medicare and private insurance providers. Meanwhile, overhead costs have climbed.

"If you're not making some profit on the services, you can't stay in the business," Mr. Preston said.