California doctors, hospitals battle Blues' new fee schedule

The policy on pay for endoscopic services violates state insurance and anti-kickback laws, the medical community says.

By Amy Lynn Sorrel, AMNews staff. July 17, 2006.

Physicians and hospitals are fighting a new Blue Cross of California payment policy that they say illegally interferes with doctors' medical decision-making and restricts access to care.

Under the reimbursement schedule for endoscopic procedures, Blue Cross plans to cut fees by 20% for services done in hospital outpatient departments. Meanwhile, the insurer will pay doctors a 5% rate increase for procedures performed in an ambulatory surgery center or doctor's office.

Blue Cross says the new policy, announced in March, will increase access by expanding its network to include the ambulatory surgery centers, while making procedures more affordable for patients.

But the medical community says it violates several state laws. The California Hospital Assn. filed a lawsuit against Blue Cross to stop the policy from taking effect on July 1. The California Medical Assn. also has asked the insurer to rescind the policy, although the physician group has not joined the lawsuit.

"State law is quite clear -- health plans shouldn't force doctors to make patient care decisions based upon money," said CHA President C. Duane Dauner. Anything short of being able to act in the best interest of patients "is an unethical violation of the sacred doctor-patient relationship."

The CHA and the CMA support the use of ambulatory surgery centers when appropriate but expressed concerns that the new fee schedule does not provide exceptions for high-risk patients who might require a hospital setting to assure patient safety.