For-profits, HMOs under fire - State Report

New York

State to Oxford: Ante Up

Oxford Health Plans--New York's largest HMO--has finally worked out a plan with the state insurance department to clear up its backlog of hundreds of thousands of dollars in late payments to physicians. Oxford promises to ensure timely payment of future claims as well, and blames the delays on computer problems. Indeed, the HMO is committed to paying "clean" (read: accurate and complete3 backlogged physician claims within 30 days and new ones within 30 days of receipt, a spokesman says.

The problem surfaced in February, when doctors began complaining to New York Attorney Ceneral Dennis Vacco about Oxford's failure to pay. One oncology group, for example, reported being unable to afford expensive drugs because the health plan owed its phvsicians more than $300,000. The HMO is contacting some 1,000 of its high-volume physicians to update them on the status of late payments, the spokesman says, and taking steps to provide cash for doctors whose money problems stem from the delayed payments.

Michigan, North Carolina

For-profits meet resistance

Columbia/HCA Healthcare Corp. and other for-profit hospital chains may be welcome in most of the country, but there's no welcome mat in these two states. After a county judge ruled that joint ventures between not-for-profit and for-profit entities are illegal under Michigan state law, Columbia came up with an alternative: The chain will buy 100 percent of the assets of Michigan Capital Medical Center, with a provision to sell back 50 percent if the ruling is overturned. Michigan Affiliated Healthcare System--the parent company of Michigan Capital--vowed to appeal in state court in hopes of returning to the original 50-50 joint venture. The appeal could take between six months and two years.

In North Carolina, Wake Medical Center will retain its not-for-profit status after the medical staff and community rallied together to oppose acquisition overtures from Columbia. The opposition was so strong that Columbia never made a formal offer. Instead, the hospital board voted unanimously to transfer its assets from the county to a private operator that has managed the facility since 1965.

Similarly, Durham Regional Hospital chose to colhborate with another not-for-profit entity, even though Columbia/HCA had made overtures. No formal proposals were made and no future collaboration is expected.

Ohio

HMO/docs team up on regs

Kaiser Permanente and the Ohio State Medical Association have introduced the Physician-Health Plan Partnership Act, which they hail as the first set of managed care regulations forged by an HMO-doctor alliance. If the regs gain approval by the state legislature, they would result in a joint physician-health plan process aimed at "best practice" industry-wide standards. The areas the bill addresses: gag clauses, prudent layperson emergency coverage standards, disclosure provisions, external dispute resolution processes and physician inclusion in utilization review.

Colorado

Medicare demo protest, less HMO restrictions

HMOs in the state are protesting the Health Care Financing Administration's plan to use Denver as a test market to study the effects of competition on Medicare managed care plans. A spokesperson for the Colorado HMO Association voiced concerns that a benefits package designed by HCFA may be below the existing standard for Medicare beneficiaries. HCFA representatives met with the HMO group to discuss the project's impact, but the association fears that the demonstration will proceed as scheduled anyway. HCFA selected Denver because the city has six HMOs covering more than a third of the area's Medicare beneficiaries.

In other Colorado news, Rep. Marcy Morrison (R3 has proposed a bill that would make it easier for managed care enrollees to seek care outside their network and to file complaints about their health plans with state regulators. Industry officials are opposed to a provision in the bill that would require health plans to pay the full cost of patient visits to out-of-network physicians--if no network physician were available within a reasonable distance of the enrollee's home. The bill would also require HMOs to disclose grievance and referral processes and consumer satisfaction data, include consumer protections in their provider contracts and establish easily accessible complaint processes with the state insurance department.

California

Purchasing pool maintains low rates

The Health Insurance Plan of California (HIPC)--a state-sponsored small business purchasing pool--announced that its rates have increased just over 3 percent for HMOs and 3.9 percent for all participating plans since last year. This despite predictions of rate hikes in the 4 to 10 percent range for 1997. HIPC's new rates go into effect July 1.

The purchasing pool is an outgrowth of Gov. Pete Wilson's (R) attempt to stem the growing number of California's uninsured by bringing small businesses together to increase their purchasing power. While it originally encompassed firms with three to 50 workers, groups of two will be eligible for participation as of July 1.

Participation is voluntary for employers and insurers, but employers that enter the pool must pick up half of the cost of the lowest priced coverage available for a single employee--currently about $40 a month.

Texas, Missouri, New York

Liability looms for MCOs

Several state legislatures are considering bills that would hold managed care plans liable in cases of medical malpractice. The Texas state senate passed legislation that would allow MCOs to be sued when the denial of treatment results in harm or injury to a patient. The bill is now pending in the house. Under existing state law, managed care entities cannot be held legally accountable for treatment decisions; patients can sue their health care providers, however.

ERISA, which exempts health plans that "relate to" employee benefits as well as self-insured employers from state insurance mandates, complicates the issue. Until recently, courts interpreted this to mean HMOs and other health plans that contract with employers could not be held liable for medical malpractice or negligence. However, several recent court rulings have weakened the ERISA preemption.

In Missouri, a provision included in omnibus legislation is designed to permit medical malpractice claims to be brought against HMOs. The bill, which was amended to place a $350,000 cap on punitive damages, is pending in the state legislature.

In New York, the state assembly passed legislation that would hold managed care plans and other payers liable for damages to patients if the plan were shown to have improperly denied or delayed care or reimbursement for care. The bill is pending in the senate. A similar bill, also pending in the senate, would go one step further--holding MCOs to the same standard of liability as health care providers for denying care. The bill would change the standard of liability for HMOs to one of medical negligence.

Kentucky

Enroll now!

In response to a looming crisis in the state's individual health insurance market, Gov. Paul Patton (D) signed this emergency requirement: Kentucky's HMOs must accept all individual applicants throughout the month of May. The measure, which applies to any HMO in existence for at least 24 months, is a reaction to the more than 40 MCOs and insurers that have withdrawn from the state's individual market since the 1995 Kentucky Health Care Reform Act took effect. Before the emergency reg, the only choices for individuals in the state were Anthem Blue Cross-Blue Shield and Kentucky Kare, the state's self-insured plan.

The emergency measure requires 14 HMOs to hold open enrollment this month under revised rate filing procedures. The HMOs are balking because it caps individual premiums at 10 percent over each plan's group rate; they argue that the individual market includes high-risk people whose costs of care far exceed that amount. The HMOs also complain that they had no advance notice of the requirement.

Wisconsin

Business hook-up to state health plan

A bill proposed by Sen. Lynn Adelman (D) would allow private employers here to participate in the state-sponsored managed care plan. The bill calls for the creation of a new purchasing pool that businesses could use to link their employees with state and municipal workers to take advantage of the state's lower rates.

While employers say they're excited about the proposal, state health insurers oppose it, citing concern that it would lead to premium hikes. They claim that the bill would not necessarily guarantee lower rates because companies with healthier than average employees could get cheaper rates on the open market.

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State Report is compiled by Lisa Schift, Editorial Assistant.

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