Who Is Ultimately Responsible For Paying Physician Claims?
Special E-Mail Bulletin, November 98
As you're probably aware, there has been a lot of news recently regarding payment defaults to physicians for services rendered on behalf of certain IPAs, PPMCs, PHOs, and other third party entities that hold master agreements with HMOs. For various reasons these entities have been unable or unwilling to pay physicians, and when the physicians made demand to the HMOs were told by the healthplans that they, the HMOs, were not responsible since the HMOs had prepaid the third party intermediary (capitation) for the services. Physicians found themselves caught in an impossible situation. They could not seek payment from the patient (prohibited by mandated state or federal contract language); they could not collect from the third party intermediary (which likely was in bankruptcy proceedings); and could not collect from the HMO (which denied any financial responsibility).
The following item off the newswire should be of interest to you. This is only early action on a front that promises to be increasingly active in the coming months. More failures are certain to follow, and more physicians will find themselves seeking means for financial redress.
California Medical Association to Department of Corporations:
State Law is Clear, Health Plans Ultimately Responsible for Their Own Enrollees
November 19, 1998
SACRAMENTO, Calif.--(BW HealthWire) via NewsEdge Corporation --
California Medical Association today filed a second Administrative Petition with the state Department of Corporations (DOC), the agency responsible for HMO regulation.
The petition calls on the DOC to enforce Health & Safety Code Section 1371, which holds health plans ultimately responsible for paying for the care their enrollees receive. Under Section 1371, plans are responsible even when they subcontract with independent practice associations (IPAs), physician practice management companies (PPMs) or other entities to provide such care.
One PPM, FPA Medical Management Inc., recently filed for bankruptcy, causing health plan enrollees seeing FPA physicians to experience delays and interruptions in continuity of care. CMA estimates that FPA physicians in California may have lost more than $60 million in the bankruptcy after plans with FPA contracts refused to pay enrollees' claims.
"As we have seen with FPA, many plans simply refuse to pay for medical care provided to their enrollees," Jack Lewin, MD, CMA executive vice president/CEO, says. "The law is clear: In return for receiving a DOC license to operate as HMOs in California, health plans must be ultimately responsible for paying physicians even if the IPAs or PPMs the licensed plans subcontract with do not. The DOC issues these licenses, and it is up to them to enforce the law."
The petition notes that the need for strict DOC enforcement of Section 1371 is particularly important given the faltering financial condition of many of the state's PPMs. A study by CMA's Center for Government Relations on the fiscal solvency of the state's limited license entities accompanies the petition. "What our petition demands is very simple," says CMA President Robert A. Reid.
"Health plans -- not physicians -- receive the full premium enrollees or their employers pay for health coverage. In return, plans are legally responsible to see to it that those who provide care receive prompt payment. When plans fail to do so, the DOC must step in."
Full text of both CMA Administrative Petitions to the DOC, and relevant attachments, are available at http://www.cmanet.org. California Medical Association represents physicians from all regions, modes of practice and medical specialties. CMA physicians are dedicated to protecting the patient-doctor relationship and improving the health of all Californians.
CONTACT: California Medical Association
Hobart Swan, 415/882-5131 or hswan - at - calmed - dot - org
http://www.cmanet.org
Return to top