Physican Groups Need New Strategies To Prevent Further Failures
As California physician groups continue to "collapse," health professionals are devising new payment models for health plans, doctors groups and their physicians in an effort to stem the growing crisis, the Los Angeles Times reports. According to the Times, the "purpose" of medical groups was to serve as "middlemen" between HMOs and doctors; however, medical groups have suffered because they often have "miscalculated the cost of care and agreed to inadequate HMO fees," a problem many for-profit groups have exacerbated by charging "management fees." Earl Lui, a health care specialist at Consumers Union, said, "The theory was that these medical groups would be more responsive to consumers ... but in reality they're using the same kind of financial incentives (to doctors to keep costs down) that an HMO would use. And if that's the case, do we really need that clunky structure?" A remedy for failing physician groups has been a financial bailout, as was the case with KPC Medical Management in September. While this procedure provides stability for patients of the medical group, some professionals believe it is a "big mistake." Steven McDermott, president of San Ramon-based Hill Physicians, warned that "propping up flailing groups is bad for consumers as well as business." Instead, he advocates allowing "well-managed, financially solvent groups [to] take over for the ones that are struggling."
Jack Lewin, CEO of the California Medical Association, has suggested that better state regulation of HMOs is needed and that insurers should be required to "reimburse doctors for services if the medical groups fail to do so." Aetna Inc. is pursuing a new plan that allows doctors in a medical group to sign individual contracts with HMOs, thereby allowing doctors to remain affiliated with their health plan if the group fails. Meanwhile, a new state commission on medical group solvency has recommended a proposal that would require medical groups to have "at least $50,000 worth of reserves and $25,000 in working capital;" to pay their doctors within four months of receiving bills; and to "regularly estimate the amount of money they owe to doctors who have not yet sent in their bills." Under the proposal, health plans would be responsible for overseeing medical groups and would be liable for signing contracts with "unstable organizations." While some health plans currently monitor doctor groups, they argue that such requirements are unfair because it is difficult to tell when a group is in financial trouble. Health plans also contend that current regulations prevent them from closely examining financial records. A coalition of health plans, employers and physician-group executives also has proposed a "new HMO" based on the assumption that "patients might be willing to pay more if they knew they would be receiving stable, high-quality care." According to McDermott, under this scenario health plans would pay medical groups more if their medical results were better, which would encourage them "to pay their doctors on time and to treat them well and ... not ration care" (Bernstein, Los Angeles Times, 11/5).