Blue Cross of California's critics and supporters alike stepped up to the podium at an Aug. 7 California Department of Managed Health Care hearing in Los Angeles. Doctors from the Los Angeles County Medical Association and representatives from the California Medical Association took the opportunity to sharply criticize the massive insurer's practices, especially the projected effect that the company's new fee schedule will have on patient care and physicians' practice viability.

"We're hearing a significant outcry from our member physicians--that they have to reconsider their choice to participate in the Blue Cross network because of rather draconian decreases in [its] fee schedule," LACMA President David Aizuss, MD, told the three DMHC officials and a crowd of about 200 citizens and interested parties. "The average premium increase for Blue Cross has been between 10 percent and 20 percent a year, and the company is continuing to decrease physician reimbursement. One has to wonder--where is the healthcare dollar going?"

Blue Cross' $950 million dividend transfer to out-of-state corporate parent WellPoint Inc. drove the DMHC's decision to hold the hearing, said Cindy Ehnes, the agency's director, in a telephone interview. Also contributing were the 4,149 complaints from healthcare providers and consumers that the department received since it approved the 2004 acquisition of WellPoint Health Networks by Indianapolis-based Anthem Inc. "It wasn't so much the number of complaints as it was their content," Ehnes said.

DMHC's introductory segment of the hearing addressed the acquisition's effect on the quality of insurance products, customers' access to care, physician reimbursement and physician network enrollment.

Anthem agreed to limit the transfer of funds out of California as a precondition to DMHC's approval of its purchase of WellPoint Health Networks, which resulted in the combined company WellPoint Inc.

At the hearing, Blue Cross President Brian Sassi defended the insurer's Aug. 30 fee schedule changes, arguing that they resulted from competitive pressure and the company's plan to shift resources toward primary care and away from specialist care. "Our analysis has indicated that the addition of changes to the fee schedule results in rates that are competitive and in line with six of the major health plans in California," he said. The changes follow Medicare trends and do not impact 70 percent of the network's healthcare professionals, Sassi said.

Dr. Aizuss dismissed the comparison with Medicare trends, noting that the public insurer lets physicians join the fee-setting process.

Discussing the quality of Blue Cross' insurance products, Sassi concentrated on the company's growth and comparisons with competitors. Enrollment has grown by 17 percent since 2001, and the total amount Blue Cross paid to doctors and other providers grew from $2.1 billion in 2001 to $3.9 billion in 2006, with a greater increase in hospital payments over the same period, he said. Displaying a chart comparing premiums paid to Blue Cross and competitors for a generic 43-year-old Los Angeles insurance customer, Sassi concluded that the company's rates were competitive.

Despite the company's big-picture view of rates and reimbursements, there was no shortage of contrary anecdotes. Blue Cross "increases office medical insurance policies to my employees by 20 percent, but at the same time, it reduces pediatric reimbursements," LACMA member Ron Nagel, MD, told the DMHC panel. "Perhaps Blue Cross is not aware that overhead in pediatric offices is presently more than 60 percent, due to increases in rent, payroll and vaccines."

At press time, the DMHC actions in response to the testimony are unknown. It is within the DMHC's power to levy fines, conduct audits or revoke licenses to operate in the state.

BREAKING NEWS
At press time, Blue Cross decided to leave some Prudent Buyer fee schedule items untouched that were slated for changes as part of the company's Aug. 30 revisions, according to the California Medical Association. The CPT codes that will remain unchanged fall into four categories: biopsy; breast mammography; colonoscopy; and newborn care. Blue Cross will contact affected physicians, the CMA says. Blue Cross' decision to leave these codes untouched was based on feedback it received from doctors in its network and was not related to the Department of Managed Health Care hearing, says Nick Garcia, a Blue Cross spokesman.