Doctors, hospitals livid over fee cuts

Hospital association, MedChi denounce pricing by CareFirst and United HealthCare as unfair

Friday, May 12, 2006

Click here to enlarge this photo Preston State is ‘blackout zone’ for doctors

CareFirst of Maryland Inc. and United HealthCare⁄MAMSI ‘‘are acting like the 800-pound gorillas,” George Bone, a Landover internist and president of MedChi, said in a statement this week.

‘‘They are arbitrarily throwing their weight around with no regard for the havoc they are causing to Maryland’s health-care delivery system, especially in primary care,” Bone said.

Kevin Enright, a spokesman for Attorney General J. Joseph Curran Jr., said Curran told MedChi executive director T. Michael Preston that he would ‘‘look into” MedChi’s allegations that fee cuts by CareFirst, the region’s largest health insurer, are part of ‘‘monopolistic pricing” by collusion by the two companies.

Officials with CareFirst and United have agreed to meet with the Maryland Hospital Association after the association, like the medical society, denounced the cuts as unfair and threatening. No meeting date has been sent.

In Maryland, the two companies control 94 percent of a health-care industry group designated as small-market employers, those with from two to 50 employers, Preston said.

‘‘That group is where most of the actually insured businesses are,” he said.

‘‘Maryland is literally a blackout zone for recruitment” of doctors because of the lack of cooperation by the two insurers with doctors and hospitals, Preston said.

Another hospital association concern is that the fee cuts may be CareFirst’s reaction to a new Maryland law to help correct contractual flaws in how fees are paid, said Nancy Fiedler, the association’s senior vice president for communications.

‘‘We worked with insurers and the legislators during this year’s session to say there is imbalance in the way the fees are decided,” Fiedler said. ‘‘The companies say, ‘This is the way we are doing business, take it or leave it.’” But CareFirst says the hospital association has ‘‘overstated” any impact of the fee cuts, according to Jeffery Valentine, the insurer’s associate vice president of corporate communications. ‘‘For the vast majority of the service codes, there is no impact.”

The fee reductions are for radiation and laboratory service codes only, he said, but would not say by how much.

Fiedler also said her association is not sure what codes and amounts are being cut.

‘‘That is part of what we need to understand,” she said. ‘‘We do not know how broad the intent is. It is hard to determine what the impact of the cuts is.”

CareFirst determined to cut fees, starting July 1, Valentine said, following a year and a half of pricing research.

‘‘Many substantial employer accounts came to us to say that CareFirst fees were higher than other health care providers,” he said. The inquiries were confirmed, he said, by an independent consultant, whom he declined to name.

Contrary to charges by the Maryland medical groups, reimbursement fees for primary physician office visits will not be cut, Valentine said.

Preston strongly disagreed: ‘‘That is not the case.”

Although much of the work done in a typical primary doctor’s office visit — covered under the insurer’s ‘‘evaluation and management codes” — may not be affected by CareFirst’s fee cuts, ancillary services, such as radiation and laboratory work — which physicians increasingly provide to help boost their bottom line — will be, Preston said.

‘‘The primary care guys tell us these cuts are going after where they can still make a profit,” Preston said.

He also said that neither CareFirst nor United, which has made its cuts gradually as it completed its merger with MAMSI, consulted with physicians or physician groups.

‘‘These plans control huge numbers of patients,” Preston said. ‘‘This cut was not negotiated, just announced. We encourage doctors in their groups to try to negotiate, but what we hear from [insurers], by and large, it is take-it-or leave-it relations.”

Maryland already ranks in the bottom 25 percent of all states for commercial insurance reimbursement of physicians, Fiedler said. Consequently, Maryland hospitals are then forced to subsidize physician practices to keep surgical and other services afloat, she said.

‘‘It is just not fair at this time,” Fiedler said.

‘‘At the end of the day, it is also damaging our system,” Preston said. ‘‘The doctors are mobile and they can choose where they go. Physician practices are experiencing real problems in recruiting and retaining talent.”

United officials are pleased to have a chance to meet with the hospital association, said company spokesman Steve Matthews, ‘‘to explain our position and discuss their issues.”

As to whether United has been cutting fees routinely as it finalizes its merger with MAMSI, Matthews said, ‘‘Yes, we have been merging the two companies and all that means.”