HMO TROUBLE: DOJ Targets Pacificare, MD Sues UnitedHealth
The U.S. Justice Department will begin an investigation into whether PacifiCare Health Systems Inc. subsidiary plan TakeCare "deliberately overcharged the government on contracts covering health care services for about 30,000 federal employees" between 1990 and 1994, the Wall Street Journal reports. The Justice Department suspects that the TakeCare plan -- a unit of FHP International Corp. acquired by PacfiCare in 1997 -- failed to follow contract guidelines. HMOs providing coverage to federal workers routinely undergo audits by the Office of Personnel Management to ensure that the government is receiving the lowest possible rate. David Erickson, a PacifiCare spokesperson, said, "We do not agree with (the government's) interpretation of the rules and we have denied any intentional wrongdoing. We are working to settle this amicably." This is not the first time PacifiCare has undergone a federal probe. In June, under similar circumstances, PacifiCare paid $9 million to settle a dispute in Oklahoma. In 1997, FHP paid $15 million to end a conflict over a government-employee contract effective from 1987 to 1991. Both settlements were reached after the Justice Department began its investigations (Rundle, 11/18).
UnitedHealth 'Eroding a Sacred Bond'?
UnitedHealthcare is under fire again, just one week after a public relations victory in which it announced that it will no longer require doctors to seek prior approval for most tests, procedures and hospitalizations. Alabama prosecutors filed a lawsuit Wednesday against the insurer on behalf of Dr. Jerry Harrison, a practicing family physician. Seeking unspecified financial damages, Harrison contends that UnitedHealthcare frequently changes its formularies and limits referrals to different specialists, "eroding 'the almost sacred bond between the doctor and the patient.'" The suit also claims that doctors failing to follow these restrictions "risk being dropped by UnitedHealthcare, potentially losing a major source of revenue." Birmingham lawyer Archie Lam said, "It's nothing more than extortion. There are economic incentives and disincentives to get doctors to forsake what is in the best interest of their patients." UnitedHealthcare officials declined to comment, saying they had not yet seen the lawsuit. The suit is the latest in a series of court actions against HMOs under the federal anti-racketeering laws (Appleby, USA Today, 11/18).