November 1, 2002 News

Managed Care




Managed Care

In the Louisville and Lexington, Kentucky areas physicians are getting fed up with managed care.  They are doing other business models in order to be free of the chains.  This includes the boutique practices, house calls with yearly direct patient payments, going to salaried positions, starting walk-in with an annual cash only clinics or doing locums. This is apparently catching the eye of some HMOs who are attempting to be less red tape minded in order to retain physicians.  

In the San Jose, California area Blue Cross and HCA have been unable to come to agreement.  HCA has placed advertisements in the local newspapers about the problems.  This is the time of open enrollment and many employers are dropping Blue Cross because of the uncertainty and the loss of local hospitals.  The employers are going to HealthNet and Kaiser.  Also another local HMO, Lifeguard, is bankrupt and getting out of the game.

Health Plan of the Redwoods a small defunct HMO ceases operations at midnight 10/31/02.  The failed HMO continues to owe $38.7 million to hospitals and other providers.  Most of the consumers that were left without coverage joined another HMO with much higher co-pays and monthly fees.

More California insurers are using tiered plans which may cost the patient up to $750 per day if he/she goes to a lower tier hospital.  The tiering is strictly on cost and has no relation with quality.

PacifiCare announced a very restrictive plan only allowing the patient to see a few physicians and go to only a small number of hospitals.  The plan will decrease the numbers of physicians by 50% and the hospitals by 66%.  If the patient goes outside the network they will have to pay.  The only providers that will be included will be those with low fees and who pass some unknown, if any, quality tests. Almost all teaching hospitals will be excluded due to their high costs.  The costs for the employers will be less but the inconvenience and complete disruption for the patient will increase.  Which one matters most??  

California Blue Cross will begin to pay bonuses to those physicians who rate the highest on scorecards.  This will look at one person offices as well as large medical groups.  The scorecards will not be disclosed to the consumers now but may be later.  Since there is only a fixed amount of money and the insurer will not decrease its profits the physician bonus money may mean less money for the routine care.  The scorecard will be based on 16 points such as childhood immunizations, screening for cancer and management of chronic diseases.  Blue Cross will determine the quality by looking at the claims data.  Also included are cost measures such as availability for new patients, prescribing generics and being board certified.  These, of course, have no quality concerns.

Speaking of quality and cost, six California HMOs will use quality concerns to pay bonuses to physicians starting in 2004.  This will be based on performance reviews from 1993.  The parameters will be mostly on patient satisfaction scores but also include cancer screening and immunizations. This does not affect Medicare HMOs.

With over 171,000 calls to the California Department of Managed Care regarding problems by patients with their HMOs about 750 were sent to a panel of physicians for review and the panel sided with the patient in 20% of the cases where the HMO stated the procedure was experimental.  In the medical necessary questions the panel split about 50-50 for the patient or HMO.

In Nevada the head of a Medicaid HMO has accused physicians of lying.  This is always a good tactic to lose more physicians.  The head of the HMO was talking about the red tape and slow reimbursements that physicians are complaining about.  I believe most physicians know this could not possibly happen with managed care. He has also cancelled contracts with the leaders of those questioning his HMO.

The lying physicians are also leaving Lost Wages.  Since the beginning of the year about 1/3 of the OB/GYN have left.  Those who remain have limited the number of OBs they see in order to keep down their malpractice rates.

In Florida, the problem between Blue Cross and BayCare Hospital System is beginning to lead to care problems for the patients.  There are delays in treatment due to the lack of contracts and the patients going to new different facilities.  This also led to rescheduling of surgery and again a potential problem with care of the patients.  Most of the BayCare physicians agree with the hospital system to not take the low Blue Cross rates and make up the difference by being an out of service provider who gets a lower percent of payment but on a higher fee.  As this is open enrollment, BayCare has taken out full page ads giving the phone numbers for Blue Cross competitors.

The San Jose Samaritan Medical Group has filed for Chapter 11 bankruptcy which will allow them to keep operational and restructure their past debts.  They intend to close some clinics and lay off some individuals. 

The Silicon Valley Woman's Health Group  is splitting up.  The organization was founded as a 30 person group two years ago.  They had only one managed care contract and recently lost it when the HMO went bust.  Now there is disagreement among the members as to the direction the group should take.  The splinter groups will go back to the table with managed care insurers and continue to lose money.  

Oxford Health network is expanding.  They have announce the addition of 500 new physicians in Connecticut.  They have done this by affiliating with two IPAs in the eastern part of the state.  This will bring the number of physicians in the state to about 8000 for the current 75,000 consumers.   Top  


Please see Legislation for the new Mississippi malpractice reform.

Florida Aventura Hospital in Palm Beach and Columbia Hospital in West Palm Beach are both closing their maternity units.  The reason is their malpractice premiums for a small unit.  The OBs in Florida pay the highest premiums in the USA at a range of $105,000 to $212,000 per year.  They are also leaving OB and only doing GYN or leaving the state.  This will push maternity services to the large hospitals which may not be close to the people or physicians. 

The Baltimore Business Journal had an article on the high cost of malpractice insurance in the surrounding states.  They featured one physician with four malpractice claims who moved from Pennsylvania to Maryland and paid $87,000 less in premiums than h paid in the other state.  Maryland has physician owned insurance companies and some tort reform with a cap on non-economic damages of $615,000. 

In West Virginia the Wheeling three hospitals in the Ohio Valley Health Services laid off 46 management and non-bedside personnel due to a large increase in their malpractice insurance.  Their rates have doubled in the past year and they are now paying about $10,000 per day for coverage.  

The patient who was left on the table while the operating surgeon went to the bank is now seeking another surgery to correct perceived problems from the original spinal fusion surgery. The patient is complaining about persistent painful right leg nerve injury. The patient has not yet filed a law suit against the physician or hospital. 

Three states are now working on malpractice issues.  In West Virginia a coalition has been formed between providers and business to get liability reform.  They are attempting to get a law like California prior to starting a physician owned malpractice company.  In Florida the malpractice debate is beginning in the legislature.  The Governor's Task Force on Healthcare Liability has met once and will meet twice more in open forum.  In Nevada the physicians are happy but not thrilled about their recent malpractice reform.  They have garnered enough signatures for a ballot referendum to remove the exceptions to the $350,000 cap on pain and suffering.        Top


A Maryland trauma center in Washington County closed due to a dispute over physician compensation.  It then reopened as a lower level trauma center.  The hospital refused to discuss the new payments to physicians.  

In West Virginia the Charleston Medical Center has regained its Level one standing.  It had lost it when there were not enough orthopedic surgeons to cover the service.  The solution came by allowing the trauma physicians the same malpractice coverage as the state medical school physicians and also given an additional $4 million to four hospital trauma centers through increased Medicaid payments.      Top 


The October 15 deadline has come and gone.  However it appears that many providers did not request extensions by the due date.  This either means that there are more providers in compliance that believed or that many will go without payments.          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.