May 1, 2002 News


Managed Care

Health Insurance


Cincinnati Brain Drain


Managed Care

The Tampa Bay Florida Business Times has an article about 50% of the state's  HMOs continuing not paying their physicians in a timely matter.  This is against the two year old Florida law.  The State Insurance Commissioner has just finished his first review and begin fining the organizations for their refusal to pay.  The fines are probably not very large at this juncture but hopefully will increase dramatically if the HMOs continue to flaunt the law.  The law gives the insurers 35 days to pay, deny or contest the claims.  If more information is needed the HMO gets an additional 45 days to pay or contest the claim.  The total may not exceed 120 days to pay or deny.  If it does then there is a 10% penalty paid to the provider.  This poor payment record is the basis of the major law suit for racketeering against the HMOs.  

The Florida hospitals are not happy with the fines as they are only a pittance of what they should be. The wimps at the Medical Association state it is a good first step and enough to get the insurer's attention.  It is not often that I agree with hospitals over physicians but this is one.

The Houston Business Journal states HMOs are not alone in their negligent payment practices.  Medicare is also a tardy payor.  The difference here is one can not sue Medicare as easily and the states have no control over the federal government.  Also, the amount of Medicare patients are increasing and physicians can not afford to drop out of the program.  However, they can and are limiting the amount of new Medicare patients in their practices due to both the low amount paid and their tardiness in paying.  At last count approximately 17% of family physicians have limited or stopped taking Medicare patients.  To compound the problem the Medicare + C plans are leaving the market due to low pay.        

In another story the Houston business Journal tells of two medical groups that are quitting practice causing the disruption of thousands of patients.  The individual group members are either staying in private practice or are signing contracts to become employees of Baylor University.  Baylor has found that they are not good at managing physicians and are returning to running hospitals.  This leaves some physicians on their own which means they will have to start paying attention to the business of medicine.  

In California, the largest purchaser of health care is CalPERS.  They have been asked for increases of between 15% to 41%.  Their committee has responded by getting rid of PacifiCare and Health Net HMOs and increasing the costs to the patients.  The thing that was buried in the article is that single insureds will now pay out of pocket a total of $42 per month but the overall increase would be $52 a month.  How much is your health worth?  Is there a more important purchase?  The raise seems cheap compared to other cost increases. CalPERS is getting the large raise since they artificially kept prices down for the past several years. 

In Puget Sound, Washington, Group Health Cooperative HMO is coming to a radical decision. It is getting rid of gatekeepers.  This has been done in the rest of the country several years ago but I guess when news travels by boat it takes longer to reach the ears.  Group Health is also going to try another radical approach, they are going to automate.  Group Health is like Kaiser where the insurance and care are together.

Tom Scully was in Washington to tell the people that physicians will not bolt from the Medicare system.  This is not a significant problem for seniors is probably true if one takes the country as a whole.  There are pockets of the country as in Washington where the reimbursement have gotten below the costs.  In Washington Medicare pays about $4800 per patient per year as opposed to the  $7000 per year national average.  An average means that there are some above and some below.  If Washington is $2800 below the average some state is over $9000 per year.  

Modern Healthcare in a recent special report describes the ever-loosening of the onerous restrictions that caused the HMOs their well deserved reputation.  The managed care organizations state this loosening is causing the increase in costs.  They may be right.  If the people have not been able to get healthcare due to  rationing and now that is removed, there is a backlog of needed care.  This spike of care due to the prior rationing should even out over time but will not return to baseline.  The people's attitude about the rationing is shown in the figures of a decrease in national enrollment from 31% to 23% in the last five years.  There is now a cost differential between HMOs and PPOs of only about $300 per year.  Many people see the $300 as a cheap way to ensure choice and quality.  Without a cost advantage and with the continuing decrease in benefits, the HMO industry is in peril.  

Humana Medicare in Chicago is the only HMO that provides significant prescription plans.  It has also seen a decrease in enrollment by 5% in areas where it is the only HMO.  Last year Humana, being the only HMO left in Chicago, raised prices and decreased benefits.  Also in Chicago the physicians did not cross over and left Humana short on doctors who control patients.  Humana is now selling Medigap policies to replace the lost HMO business. PacifiCare is now doing the same.  Is a trend developing? 

Six of California's largest health plans are getting together as to how they audit the medical groups.  This will save each one individually from performing the audit.  It will also be NCQA and Medicare compliant.  The health plans will post an online questionnaire as to how the medical groups credential their individual physicians.  The online posting will then be available to all health plans that use the same groups.    

In a study by the Center for Studying Health System Change in Washington, D.C., the New England Journal of Medicine reports that those people with non profit HMOs are happier than those with for profit HMOs. The study analyzed 13,271 people under 65 years of age with HMO coverage.  The people in 12,445 cases reported they were well and 826 were reported as sick.  The study showed that 64% of non profit plans were very satisfied as opposed to 58% of the for profit ones.  There was only a P=0.02 for this.  The sick had more out of pocket expenses in for profit plans P= 0.002 and were less likely to be satisfied P<0.001.  

There is confusion and potential illegality in the new tiered managed care plans.  The plans have stated that if you go to a cheap physician or hospital your plan will cover.  If you go to a contracted physician or hospital that is more expensive, the consumer will have to pay more.  This was done without telling the consumer who picked a physician and now has to pay more out of pocket to see the physician.  This is strictly based on cost and has no relation to any quality concerns.  It may cost the patient up to $400 per day to go to a second tier hospital.  In California between the years of 1999 and 2000 there was a 43% increase in medical costs by hospital inpatient and outpatients.  There was a decrease in pharmacy and physician spending.  There was also a 7.2% total increase in healthcare spending for that period.  This was the largest increase in a decade where HMOs rationed care and artificially kept costs down.  

In Georgia, with one of the toughest prompt pay laws in the country, the insurers are still not getting it. They continue to refuse to pay promptly leading their constituents to have greater problems paying their own bills.  A recent hospital association poll showed that 98% of the hospitals stated they were not getting paid according to the law.  The insurance commissioner states he will continue to increase the fines until the insurers get the point.  One of the problems is that he can not fine the ERISA plans that are controlled by the federal law.  The insurers will have a much more difficult time giving their lame excuses when HIPAA goes in.  All claims will then be uniform and electronic.  Another major help would be the companies giving systems to their providers.

Many small physician groups in Greensboro, North Carolina are pulling out of managed care contracts with UnitedHealthcare.  United is not paying the small groups or solo practitioners the same price as the larger groups.  United states that they pay fairly and within the contract, mutually exclusive arrangements.  The current physicians state the reason that United is not hurting for physicians is that new doctors are coming into the area and would rather have small payments over no payments.  Almost all insurers run about 5% higher in payments than United.  Top

Health Insurance

Kansas is finding the health insurance companies offering individual insurance are leaving the state and wants to know why.  The state believes it is business related but the industry states it is regulations that do not allow rate increases per se or at a rate of speed that the companies want. Kansas is interesting since about 11% of the population is covered by individual health insurance.  This is twice the national rate. Many of the companies not only left Kansas but other states as well.  

The People's Republic of Massachusetts has found that free medical care costs money.  Yearly 250,000 people get free care at Boston Medical Center.  The state is paying the hospitals that take the patients who are too well off for Medicaid and not able to purchase insurance insurance.  This includes families earning $60,000 or if large families $121,000. The state has a pool of money totaling $443 million for this care.  Boston Medical and Cambridge Hospitals are getting about half of the pie and are beginning to show a profit.  The other hospitals are not too happy about this.  Last year the money tree ran $44 million in debt and was made up by general funds.  Believe it or not a legislator actually stated that they have to watch who is enrolled and that this is not an entitlement program.  That type of thinking can lose you an election in The People's Republic.  The CEO of Harvard Street states that hospitals do God's work by accepting all comers.  That may be true but they don't need state paid golden scrubs to do the work.      

When Oath HMO went under in Louisiana, a PPO was supposed to take its place.  Now the state has said the PPO is not solvent enough to take on the additional risk.  Ochsner and Tenet have stepped up to sign up the seniors into their own Medicare HMO plans. The state also expects many to return to traditional Medicare in order to keep their physician. Top


In an interesting use of data the Texas Medical Board has stated that there has been a statistically significant drop in malpractice cases in the past several years.  They state the drop has been 36% over the past two years.  The Insurance Commissioner disagrees.  He states that rate of malpractice filing has continued to increase.  He states the discrepancy is that the Medical Board only sees those used for discipline and not those in process.  Texas Watch, a consumer organization, glommed on to the report to state there is not a malpractice crisis in the state.  The Medical Board states their report has not been verified.   

Ten OB/GYNs in southern Nevada are giving up their privileges at some hospitals to reduce their on-call time. They are interested in reducing their malpractice risks since many suits come via ED patients. Most are giving up the privileges at Sunrise Hospital with 67 OBs on staff.  This is mostly due to the hospital's location.  In Clark County nine of 140 OBs have left and another 30 are planning to leave.  Other specialists are also leaving the ED.  Orthopedics and Plastic Surgeons are refusing to do voluntary coverage. The number of hand surgeons has declined so only two hospitals now have them.  

Newt Gingrich wants special medical courts to settle malpractice claims.  The decisions would be by medical experts not lay juries.  Gingrich is a member of Common Good, an organization to decrease the number of medical malpractice lawsuits.  The organization is bipartisan.  The trial lawyers just love this!   

Surprise! Common Good has just printed a story that fear of malpractice suits leads to many unnecessary tests or referrals.  

West Virginia malpractice crisis saga continues. The state medical association is voting to determine if they wish to form a mutual insurance company.  This would be a mutual company and get its seed money from the legislature.  They would take over from the State's Board of Risk and Insurance Management and could have $10 million in the kitty by the start at end of the year.  

Now the West Virginia Charleston Medical Center has decided to pay the physicians a per diem to take call.  They are paying the neurosurgeons a stipend of $2000 per day to help offset the cost of their malpractice insurance.  The physicians and the hospital signed a five year contract on this issue.  They also paid $350,000 to the anesthesiologists at the end of last year.      

HCA in West Virginia will allow physicians buy malpractice insurance from them at reasonable rates.  This is for the physicians that work in their four hospitals in the state.  This is in lieu of the physicians moving or having to pay 10% over commercial rates for the state insurance.  To date only 200 of 3700 physicians have signed up for the state policy.  Other hospitals are also providing insurance availability for their staff.  

In the meantime the West Virginia physicians have asked Governor Wise to call a special session of the legislature to allow the finalization of a physician owned mutual insurance company.  The physicians also want meaningful tort reform with caps on noneconomic damages.

In the latest Forbes Magazine there is a story regarding "The Tort Mess".  The magazine predicts dire consequences for the health of America, especially in the rural aspect.  They point to the asbestos litigations that have bankrupted many companies.  Now the truly sick are not allowed payments due to payments to those who only have fear that they may become sick.  The increase in insurance is hitting all industries.  They cite a construction company that is now paying $580,000 up from $92,000 last year.  They discuss the migration of physicians to areas that have tort control, pharmaceutical companies that are cutting back on their research, corporate boards that are looking for good people to join.  It is interesting that the tort explosion has hit so many fields at once.  

The Boston Globe has a story on the need for the passage of the Patient's Bill of Rights.  The story tells of the need for Congress to pass it forestalling need for lawsuits against insurance companies.  It then gets its snide comment about all the physicians that are doing the horrible concierge practice.  This, the author states, will be the downfall of the poor seniors.  Rubbish!  In the People's republic of Massachusetts there are only two people doing concierge practice.  These two people will not ruin Medicare or bring the system to its knees. If the Globe is going to write a story about a topic , they should stick to the topic and not throw in their political garbage.  

Florida ranks first in the percentage of physicians disciplined by its medical board.  The board does not believe that the increase from 11th to first represents a decrease in care but an increase in in the disciplinary process.

Texas has the opposite problem.  They are intentionally not looking at complicated complaints about physicians.  There are 40 cases in boxes over the past five years that have not been examined by the board due to time constraints.  Prior to this the board had always blamed delays on funding or other outside problems. The new executive director hopes to have a nurse paralegal wade through the boxes and make sense of the cases.   Top

Cincinnati Brain Drain

Cincinnati is losing its physicians and their are no replacements.  Examples of the losses are the closure of ORs due to lack of anesthesiologists, a non-opening of a trauma center due to physicians refusing to cover extra shifts and a year hiatus in a transplant program due to the resignation of a transplant surgeon.  There are also waits up to several months to see certain physicians.  The reason for the lack of physicians is the regional differences paid for care.  An example is a 39% difference for a total knee operation between Indianapolis and Cincinnati.  The employers and insurers don't care as long as they don't have to pay more money.  There is another side.  Studies by Mercer show that there are enough doctors in Cincinnati.  In fact they have more than the national average.  However, there seems to be a lack of certain specialties and the lack of young recruits to take the place of the aging physician population.        Top 


Sutter Health of Sacramento, California with multiple hospitals and clinics around the state has reported a large increase in operating profits.  This has been offset slightly by decreased income on investments.  They reported an unbelievable 5.1% margin of income to total revenue.  It is still short of its goal of total money required to fund capitol projects out of operating income.  These projects included new wings of hospitals and the California seismic upgrades. 

Gardena Community Hospital has decided to drop all managed care plans.  The California hospital is also going to open an emergency room for the first time in its 55 year history.  The hospital will rely on ED patients and those from their medical staff who have flexible contracts or who pay cash.  Since the hospital has no contract with plans, any patient that comes to the hospital via the ED will cost the plans more money (full price) to the hospital for their care.     

Martin Memorial Medical Center in Florida is having problems recruiting OR nurses.  They are attempting to solve the problem by taking their own nurses that have one year of nursing experience and training them in OR technique.     Top


DISCLAIMER: Although this article is updated periodically, it reflects the author's point of view at the time of publication. Nothing in this article constitutes legal advice. Readers should consult with their own legal counsel before acting on any of the information presented.