HARRIS METHODIST: Fined For Financial Incentives
The Texas Insurance Department yesterday levied a $800,000 fine against Harris Methodist Health Plan for "illegally encourag[ing] primary care doctors to limit medically necessary services," the Ft. Worth Star-Telegram reports (Fuquay, 4/2). A report to state Insurance Commissioner Elton Bomer "conclud[ed] that the insurer improperly fined" North Texas doctors "for exceeding a predetermined pharmacy budget in its contract," the Dallas Morning News reports. "Harris had budgeted $29.9 million in 1996 for prescription drugs ... but doctors exceeded the figure by 26.7%." As a result, the "doctors were penalized about $2.75 million." The report found that the policy of penalizing doctors financially "violated provisions in the Texas Insurance Code 'which prohibit an HMO from using a financial incentive that acts directly or indirectly as an inducement to limit medically necessary services.'" The report "also cited Harris' failure to weigh the degree of sickness among patients before determining its fee schedule." In addition to the fine, the report recommended that "Bomer require Arlington-based Harris to void the pharmacy clause in its October 1995 contract" (Ornstein, 4/2). The report also said Harris should be forced to refund the amount of the financial penalties to physicians.
A Matter Of Interpretation
Harris said in a prepared statement: "We disagree with TDI's interpretation" (Star-Telegram, 4/2). "Harris Methodist Health Plan has always and will always continue to place the care of our members first." The Dallas Morning News reports that "Harris has 20 days to contest the findings, agree with them or negotiate with the state."
What It All Means
Analysts said if the state's "decision is upheld ... it could jeopardize the ability of [HMOs] to tailor rewards and penalties for doctors to improve their efficiency and cut costs." And "[t]hat in turn, could undermine the financial strategy of most managed-health care companies in the state." Health care analyst Sandy Lutz said: "It will have a chilling effect. If there's no gatekeeping device to keep physicians from prescribing too many treatments or too many drugs, then it could result in much higher health care costs." Geoff Wurzel, executive director of the Texas Association of Health Plans, said, "I have no doubt that the regulators are going to set some limits where they believe an incentive is so great that it makes even the most honest people question whether they should or should not do something." Local "doctors said they were thrilled by the Insurance Department's intervention." Dr. Raymond LeBlanc, president-elect of the Tarrant County Medical Society, said, "This is a big step in the right direction."
Not A Great Day For Harris
Also yesterday, "Fort Worth lawyer George Parker Young filed a class-action lawsuit against Harris on behalf of all doctors in the network." The Morning News reports that "[t]he suit seeks repayment of all penalties imposed under Harris' compensation agreements" (4/2).
