E-Mail Bulletin #4, September 1998
Contents
1) Big Changes Involving Aetna-US Healthcare Will Impact Many Providers (Especially Eyecare)
2) Heads Up Alert: Department of Insurance Comes Down Hard On Aetna US-Healthcare Contract
3) Heads Up Alert Part 2: Approaching Contract Renewal Time Many HMOs Are In Financial Trouble
1) Big Changes Involving Aetna-US Healthcare Will Impact Many Providers (Especially Eyecare)
As most of you know Aetna-US Healthcare (AUSHC) is the second largest HMO in the nation. Its managed care plans cover several million insured lives from coast to coast. Issues or actions involving AUSHC commonly have a ripple effect, often impacting other healthplans and, ultimately, providers outside AUSHC networks.
Recent news about and announcements from AUSHC indicate some big changes are in the works. These are worth reviewing as indicators of change that may come to your local marketplace. Please make note of the following.
On August 31st AUSHC announced that it was making significant changes in its marketing and delivery of HMO services to seniors. As of January 1, 1999 AUSHC will discontinue its existing Medicare Risk HMOs in Delaware, Maryland, Massachusetts, New Hampshire, Rhode Island, Virginia, the District of Columbia, Windham and Tolland Counties in Connecticut, Polk County in Florida, and Marin and Sonoma Counties in California. Enrollees in those Medicare Risk HMOs will have to choose from alternative sources for their continued coverage and benefits.
Additionally, AUSHC announced it would participate in Medicare "Choice" managed care plans, effective January 1st, in Arizona, California, Connecticut, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maine, New Jersey, New York, Ohio, Pennsylvania, Washington, and Texas. The federal government's new Medicare Choice program, designed to give seniors more flexibility in their benefit and delivery options, will eventually replace existing Medicare Risk programs.
And AUSHC announced on August 19th that it had received approval to begin marketing Commercial HMO products in six counties in Missouri and six in Kansas, and that it was making applications to offer new HMO products in St. Louis and a senior HMO in Kansas City.
Why Is This Important To You?
Everybody knows Medicare-eligible patients are the bread and butter of most ophthalmic practices and a growing part of many optometric practices. If you're an AUSHC provider it's important to note that these changes may mean significant volatility in your Medicare HMO patient base going into 1999. Existing AUSHC Medicare Risk HMOs will not automatically be replaced by new, Medicare Choice plans. And those AUSHC patients currently coming to your office under a senior HMO plan will not automatically come back under a renamed plan. (This is much more than a simple name change, so don't expect your current Medicare Risk provider agreement to automatically roll-over into a Medicare Choice provider agreement. You may be offered an opportunity to re-contract, but nothing is guaranteed.)
Some local and regional AUSHC contracts, including exclusive, capitated vision and med/surg, will be terminated when the Medicare Risk HMOs are discontinued. The patients will be dispatched into other programs. And, with the new and reduced funding methodologies developed for these Medicare Choice programs, some HMOs continuing with a Medicare product may no longer offer "enticement" benefits such as routine vision exams with refractions or associated eyewear (neither a covered benefit under traditional Medicare).
That could mean patients start "shopping and hopping" back and forth between and among their various Medicare plan options. If you're capitated watch out
especially for vision care utilization spikes through December as seniors in these Medicare Risk HMOs use their exam and eyeglass benefits before automatic disenrollment. On the other hand, if you're a fee-for-service provider this volatility might mean a short term windfall in the next few months.
You'll also want to touch base with your AUSHC provider relations or contracting department to inquire about plans for ending Medicare Risk HMO products and/or starting up new Medicare Choice programs. Find out if you'll need to recontract or if your provider agreement will be "grandfathered." Note that if it is "grandfathered" you'll still want to carefully review the agreement looking for any changes written to accommodate the conversion from Medicare Risk to Medicare Choice. Prepare now so that you won't be surprised come January 1st.
And those of you who are not AUSHC providers -- monitor your local Medicare Risk HMOs to see what their plans are in response to the changes coming with Medicare Choice. It's very likely that other HMOs will make moves in some way paralleling AUSHC's.
Note: Seniors leaving or dropped from Medicare Risk HMOs will have three options:
- They can return to traditional, fee-for-service Medicare,
- They can return to traditional Medicare and purchase a Medicare supplement policy,
- They can enroll in a new Medicare Choice HMO if available in their service area.
2) Heads Up Alert: Department of Insurance Comes Down Hard On Aetna US-Healthcare Contract
At the end of July the Florida Department of Insurance (DOI) made a significant ruling that has potential to influence specialty service provider agreements across the nation. You'll want to monitor this closely to see if there is a ripple effect in your area.
Acting on a complaint filed by the Florida Medical Association (FMA), the DOI determined that portions of Aetna-US Healthcare's HMO contract violated Florida statutes. The FMA had attempted to discuss the new contract with AUSHC when it was first presented to physicians in early 1997, but AUSHC refused, citing antitrust concerns. After hitting this stone wall with AUSHC, FMA went to the DOI, presented its concerns, and requested relief. The resulting ruling was, according to the FMA, a victory for physicians over healthplan attempts to control the delivery and quality of care.
Specific AUSHC Contractual Provisions Found In Violation Of Florida Statutes
The DOI sent a letter to AUSHC asking that modifications to the provider agreements be submitted no later than July 31st. By the time you read this bulletin things should be on the road to resolution.
As reported in several sources including Physician Management Bulletin, the following provisions in AUSHC specialty provider agreements were among those cited by DOI as apparently violating Florida statutes.
AUSHC contract stated: "Payor shall have final authority to determine whether any services provided by Provider (including emergency services) were covered services..."
DOI noted that Florida statues specify any determination on whether an emergency condition exists shall be made only by a physician or other appropriate, licensed personnel, but not by an HMO.
AUSHC contract stated: "Provider shall not provide or threaten to provide inferior care or imply to Members that their care or access to care will be inferior due to the source of payment."
DOI noted that this provision could preclude a physician from discussing medically necessary treatment options if not covered by the plan.
AUSHC contract stated: "Provider...shall have access to all data and information obtained or collected by Provider related to Members. Such information shall be jointly owned by Provider and Company."
DOI noted Florida statues clearly specify that the physician who creates the medical record owns it. HMO may have access to such record only if the patient consents.
AUSHC contract stated: "This Agreement may be terminated at any time by either party upon at least thirty (30) days prior written notice."
DOI noted that Florida mandates 60 days notice for termination without cause.
Why Is This Important To You?
Most providers feel powerless in their dealings with healthplans. Certainly solo and small group practitioners have had little or no leverage, and their budgets for legal talent have not matched those of the "big gun" heatlhplans.
In this instance there was a new player, a new dynamic in the equation -- a state medical society. When the Florida Medical Association entered the battle on behalf of its member physicians, it came to that battle armed with higher powered weapons. That additional firepower (including, significantly, its ability to get the DOI interested) created leverage that individual or small group providers probably could never have achieved on their own. For all the bad raps that state and national societies seem to receive there are some good results to report, and some good ideas to bring home to your own societies.
Interestingly, AUSHC initially refused to talk to the FMA. The FMA believed the refusal was AUSHC's way of saying that FMA did not have authority to negotiate for its physicians (thus, the antitrust concern). But the FMA countered that it was not attempting to negotiate. Rather, it sought only to conduct a dialogue. In the end the DOI got behind the medical association and put its weight on the side of what's best for the patients. And, as we realize, when things are done in the patient's best interests the results usually benefit the provider community.
Once finalized, it remains to be seen if AUSHC will extend the Florida changes to its provider agreements in other parts of the country.
3) Heads Up Alert Part 2: Approaching Contract Renewal Time Many HMOs Are In Financial Trouble
As you'll recall from e-mail bulletin #3, it's contract renewal time. Your drop-dead date for saying yes/no to automatic renewal is approaching fast. When you consider each agreement and scrutinize the financial and administrative issues, be certain you're aware of your contracting partners' financial condition.
Weiss Ratings publishes analysis on nearly every HMO in the nation. It reported this month that during 1997 57% of HMOs lost money. Weiss downgraded its ratings on 133 healthplans while upgrading only 54. Ratings are based on factors including capital, historical profitability, liquidity, premium growth, affiliate companies, risk diversification, etc.
Weiss rated the following as the nation's 10 strongest HMOs:
- Blue Shield of California
- Fallon Community Health Plan (Mass.)
- Health Alliance of Michigan
- Kaiser Foundation Health Plan (California)
- Kaiser Foundation Health Plan (Colorado)
- Kaiser Foundation Health Plan (Maryland)
- Partners National Health Plan (North Carolina)
- Total Health Care (Michigan)
- Total Health Care Plan (Ohio)
- United HealthCare (Missouri)
Among the nation's 10 weakest were:
- Beacon Health Plans (Florida)
- Certus Healthcare (Texas)
- DayMed Health Maintenance Plan (Ohio)
- Emerald HMO (Ohio)
- Horizon Health Plan (Kansas)
- Integrity Health Plan (Mississippi)
- North Medical Community Health Plan (New York)
- Priority Plus of California
You can get more information at the Weiss website: http://www.weissratings.com/
Why Is This Important To You?
Want to be paid for your work? Want to be paid on time? Want to minimize the chances you'll be caught in an administrative and financial nightmare when a healthplan files for bankruptcy protection? Then you'll want to have some sense of how your healthplan partners are managing their finances. The information won't guarantee you protection from any adversity. But at least you'll have access to additional data that may tip the yes/no decision.
Please remember the point I made in e-mail bulletin #3. Don't let your contracts roll-over into an automatic renewal unless YOU want them to.
Final Thoughts
1) Find time to surf the world wide web. There is an abundance of great business information available in cyber-space. Whether physician, optometrist, optician, practice administrator, society director, office staffer, or industry executive, these are resources you need to tap.
2) The special rates offered in e-mail bulletin #3 for reviewing your provider agreements are extended through the end of September. Contact me for details.
3) Change and change again -- In e-mail bulletin #2 I discussed the announced merger of United Healthcare and Humana. That would have formed an HMO giant with contracting leverage beyond imagination.
Well, in case you had not heard, the merger has fallen through. United announced an incredible $900 million charge against earnings for the 2nd quarter of 1998. That put a quick end to any merger discussions. At least for now.......
4) Micro-Management Run Amok
You've certainly experienced examples of state and federal "politicos" micro-managing healthcare beyond all reason. Here's one you'll love.
I'm told that Arizona and Texas are the only states that specifically prohibit fee-splitting between physicians and veterinarians. (I'm not making this up.) That causes me to wonder.
Were Arizona and Texas experiencing such problems and abuses with fee-splitting between physicians and veterinarians that their legislatures had to act to prohibit the practice? If that's the case, what kinds of patients were being seen in Arizona and Texas? On the other hand....
Do the other 48 states not consider it a problem if physicians and veterinarians split fees? Therefore, it's allowed? If that's the case, what kinds of patients are being seen in these 48 states?
You have to wonder how managed care would impact on such patients. I'd love to see the patient satisfaction survey results!
Can anyone confirm that Texas and Arizona prohibit such fee splitting?
Until next time......
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