Blue Cross A Leader In Profits, Not Patient Care

August 9, 2007 – 7:41 pm | posted in Primary Care

The California Medical Association will ask the Department of Managed Health Care to take action against Blue Cross of California for jeopardizing the physician-patient relationship and reducing patient access to care by engaging in unlawful business practices that make Blue Cross a leader in profits at the expense of patient care.

The CMA will testify today at a public hearing in Los Angeles that Blue Cross has violated the promises it made to California patients when it merged with Anthem Health Care in 2004. Since that merger, Blue Cross - long the poster child for insurance company bad behavior - has consistently reduced the amount of money it spends on patient care while increasing premiums, and is now in danger of failing to provide an adequate supply of available physicians for its networks.

“With the consolidation of the health plan industry, both nationally and in this state, competition among the insurance companies has been severely diminished, if not eliminated, much to the detriment of the very individuals these plans promise to serve - patients and their treating physicians,” CMA says in written testimony submitted for today’s hearing.

“The turmoil created by Blue Cross has taken its toll on everyone… It must be remembered that it is physicians who provide medical care to patients, not health plans.” CMA Counsel Astrid Meghrigian will testify at the hearing, 320 W. 4th Street, Junipero Serra Building, Carmel Room Auditorium. The hearing begins at 10 a.m. Doctors and other providers, as well as consumers, are scheduled to speak. CMA testimony is available here.

The DMHC called the hearing to review commitments made by Blue Cross when it merged with Anthem three years ago. The DMHC has initiated 18 enforcement actions — which included multiple fines — against Blue Cross so far in 2007, a significant increase from previous years.

CMA contends that among a vast collection of misdeeds, Blue Cross has:

– Reimbursed physicians at unconscionably low levels - at times below the actual cost of care;
– Increased premiums charged to consumers - amounting to a nearly 10 % average increase between 2004 and 2005 alone, which is a greater increase than any other major health insurer;
– Refused to pay for patient care after pre-authorizing the care;
– Reduced reimbursement levels without appropriate notice, and in some cases no notice, in violation of state law; and
– Rescinded patients’ health plans retroactively.

CMA testified similarly in a DMHC hearing in 2004, when the statewide physician organization said “undertakings” drafted at that time, outlining commitments Blue Cross must make to Californians, were insufficient. CMA says Blue Cross has failed to comply with many of the undertakings, including commitments to not increase premiums; to provide adequate networks of physicians; and maintain organizational administrative capacity, among others.

For at least a decade, Blue Cross has consistently spent less on medical care for Californians than the law requires while increasing premiums charged to consumers and increasing profits. Current law mandates that health insurance plans spend 85% of their health care dollars on taking care of patients. Blue Cross consistently has spent less than 80% on health care.

While Blue Cross seems averse to paying physicians fairly and spending adequately on health care, it is the lone insurer who is spending $2 million this year in efforts to defeat California health reform proposals designed to increase access to care.

Blue Cross misbehavior shows significant signs of diminishing the supply of physicians, already a growing problem in California. CMA and its county component medical societies have received a number of calls from physicians who have determined that they can no longer financially and ethically provide medical care under the dictates of Blue Cross, and are being forced to terminate their contracts altogether. CMA recently surveyed members about this issue. The CMA survey gathered data from 495 practices representing 1,566 doctors in 31 counties.

Of those who responded, 24.4 % have decided to end their contracts and 48% have not yet decided whether they will terminate their Blue Cross PPO contract. These terminated contracts affect 91,000 patients. “With numbers such as these, it is hard to imagine that Blue Cross can be a ‘trusted choice’ as its marketing materials claim,” CMA says in its testimony.

California Medical Association

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