By now most Los Angeles County Medical Association members should be aware of the controversy regarding Blue Cross of California's business practices.

In June, the company released a new fee schedule impacting contracted physicians in multiple ways. First, a variety of services saw minor increases or decreases. However, a large group of physician services, particularly procedural services performed by both primary care physicians and surgical specialists, have received cuts of up to 30 percent or more.

In addition, the state of California has charged that Blue Cross has channeled funds to its parent corporation in Indiana in vast amounts not permitted in the WellPoint-Anthem merger agreement. As a result, a special hearing in Los Angeles was scheduled for July 19, at which the California Medical Association and LACMA intended to testify. However, the hearing was delayed until this month.

Even so, LACMA physician leaders have been communicating with Blue Cross individually to express our anger and dismay at the extent of the fee schedule changes and the lack of input contracted physicians had about these changes. No methodology for determining these cuts has been communicated. The capricious actions appear to be an effort to increase Blue Cross profit margins.

Due to the antitrust restrictions on the freedom with which physicians can negotiate with insurance companies and the discussions that we can have with each other, LACMA cannot and will not urge physicians to take any concerted action as a group with respect to the latest fee schedule alterations. However, every physician must be cognizant of his practice overhead and margin to ensure practice survival while making a reasonable income given the long years of training, steep education loans, and return on investment of time and energy. Physicians must individually decide at what point contracting ceases to make financial or ethical sense to their practices and patients. Too often I hear physicians voice the worry that if they drop bad contracts, they will go out of business or suffer substantial drops in income.

Interestingly, experience has taught physicians otherwise. I personally know an increasing number of colleagues who have dropped contracts that they believe provide inadequate compensation. None has seen more than a transitory drop in income. These same physicians are happy with their choices and the knowledge that their patients are choosing to see them because of their reputations, relationships and skill--not because they found their name in a book and gave a discount. Further, the success of concierge practices also means that patients are choosing to ignore insurance contracts and pay a substantial amount of money for the privilege of more personal, more time-intensive care.

Dropping contracts is not simple. It is a difficult business decision. In some partnerships, the busier physicians may seek to drop unsatisfactory contracts while the less busy physicians object to such a strategy since they fear loss of overflow from the busy physicians or loss of continuity of care with patients. In other situations, physicians are not educated about what their contracts contain, how to cancel a contract or even whether it is possible to negotiate a contract.

In all circumstances, it behooves each of us to express our displeasure individually to Blue Cross and other insurance companies that arbitrarily impose contract changes. Additionally, all physicians should communicate their concerns to the California Department of Managed Health Care and their elected representatives.

Our patients are our most potent allies. On a daily basis, I discuss with my patients where their healthcare premium is going. The patients are told that their insurance rates are going up due to increased healthcare costs. As we know, those costs are NOT due to increased physician reimbursement--and I make that very clear. I tell them about the large percentage of the premium dollar that goes to corporate profits. I tell them about the outlandish retirement packages and buyouts of health insurance executives. And I explain that physician reimbursement is falling. Then, I ask my patients to communicate their concerns to their state and federal elected officials.

We must get the message out that physicians can no longer bear cuts when the cost of everything from labor to rent and supplies is increasing. At some point, each of us must individually object to the insurance monopoly and turn our back on unacceptable contractual relationships.

By publishing this article, neither LACMA nor the author are in any way suggesting that physicians terminate their managed care contracts or passing on a recommendation as to whether a contract is good or bad. Because of antitrust laws, independently competing physicians should not collectively decide whether to join or remain with a plan. Such an activity would be considered a group boycott in violation of antitrust laws.