ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, March 27, 1996 TAG: 9603270057
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: NEW RIVER VALLEY
DATELINE: WASHINGTON
SOURCE: THE NEW YORK TIMES
note: lede
MEMO: shorter version ran in the Metro edition.
The federal government on Tuesday issued rules restricting the ability of health maintenance organizations to pay bonuses and other financial rewards to doctors as an inducement to limit the services provided to elderly patients and poor people under Medicare and Medicaid.
The rules, the first of their kind, are intended to protect patients who might otherwise have difficulty getting medically necessary services, federal officials said.
Many HMOs pay doctors a fixed amount to supervise and coordinate the care of patients. That can create financial incentives for doctors to minimize the referral of patients to medical specialists.
The new rules apply just to Medicare and Medicaid, the health programs for the elderly and the poor. But Bruce M. Fried, director of the Office of Managed Care at the Federal Health Care Financing Administration, which supervises both programs, said, ``The rules will set a standard for the entire managed care industry.''
Almost 4 million Medicare beneficiaries and nearly 12 million Medicaid recipients are in HMOs and other managed-care plans.
Under the new rules, Medicare and Medicaid patients have a right to demand that HMOs provide them with information about any financial incentives that might encourage doctors to limit services to patients. Health plans must disclose such incentives to patients on request.
In addition, the rules say, ``No specific payment of any kind may be made directly or indirectly under the incentive plan to a physician or physician group as an inducement to reduce or limit medically necessary services.''
In issuing the rules, Donna Shalala, the secretary of health and human services, said, ``No patient should have to wonder if the doctor's decision is based on sound medicine or financial incentives.''
The new rules carry out a law passed by Congress in 1990; the health care financing agency proposed the rules in 1992. Fried said facetiously that the government had issued the rules, which have the force of law, ``with lightning speed.''
Under the rules, doctors and physician groups with fewer than 25,000 patients are deemed to be at ``substantial financial risk'' if they can lose more than 25 percent of their potential compensation by referring too many patients to medical specialists. In these situations, the HMO must provide protection to the doctors to limit their financial losses.
Under one option, the HMO would have to pay any costs exceeding a certain amount for each patient. So, in a prepaid health plan serving 900 Medicare patients, for example, no doctor could lose more than $10,000 on any one patient.
HMOs say their financial arrangements with doctors discourage the doctors from ordering unnecessary tests and medical procedures. They deny that the doctors withhold necessary care. But some patients have won hundreds of thousands of dollars in lawsuits against HMOs that have refused to pay for costly lifesaving treatments.
Health policy experts say that conventional health insurance policies often encourage doctors to perform too many services because the doctors get an additional fee for each service. Fried observed that these doctors ``are not required to disclose that they have incentives to provide extra services.''
Each violation of the new rules can bring a $25,000 fine. The government can block the enrollment of new Medicare and Medicaid patients and can, in extreme cases, terminate its contracts with such plans.
Under the rules, if doctors in an HMO can lose more than 25 percent of their income because of excessive referrals, the health plan must survey patients every two years to determine their level of satisfaction.
LENGTH: Medium: 73 linesby CNB