PAYING THE PHYSICIANS FEE - BLUE-SHIELD AND THE REASONABLE CHARGE

At a time of debate over physicians’ fees and income, we describe the evolution of Blue Shield plans and programs to pay physicians’ fees. We review how Medicare's “reasonable-charge” formulas fostered Blue Shield “usual, customary, and reasonable” (UCR) contracts. In a three-year period in the Washington, DC, area, Blue Shield UCR protocols permitted “customary” allowances for selected surgical procedures to rise 29 to 75 per cent; charges by two physicians increased allowances for coronary-artery bypass from $2000 to $3500. We find little justification for secrecy in fee-payment protocols. Physicians dominate the District of Columbia Blue Shield Board and its committees, and they control fee-payment formulas. Nationally, 61 per cent of Blue Shield boards have majorities of health-care providers; approximately two thirds of fee-related committees have physician majorities. We urge increased public debate, public representation, and accountability in monitoring and reforming the programs that we describe. (N Engl J Med 301:1314–1320, 1979) AS the United States debates the causes of burgeoning health-care costs, much discussion is focused on containing the cost of hospitalization. Public attention has turned also to physicians’ fees and income, partly because of the widely publicized study by the President's Council on Wage and Price Stability, which reported in 1978 that the rate of inflation of physicians’ fees had “consistently outpaced overall inflation except during the 1971–74 period of wage and price controls.”1 In 1978, the median net income for office-based physicians was $68,000, and today public-policy discussion continues, although since July, 1978, the rise in physicians’ fees has. © 1979, Massachusetts Medical Society. All rights reserved.