TEXAS: Outgoing AG Sues Six HMOs Over Physician Incentives
In what may be the largest lawsuit against the managed care industry in Texas history, state Attorney General Dan Morales (D) filed a lawsuit yesterday charging subsidiaries of Aetna U.S. Healthcare Corp., Humana Health Plans Inc. and Pacificare Health Systems with violating a year-old state law which bars financial incentives for physicians to limit patient care. Seeking monetary damages and a court-ordered halt to the alleged practices, the move capped a six-month investigation which concluded a mere two weeks before Morales is due to leave office. The suit describes restrictions on services such as hospital admissions and specialist referrals that essentially reward physicians for withholding care: doctors "who stay within the budget receive a percentage of the surplus as a bonus" and those who exceed the budget must "return some or all of the costs." The Dallas Morning News reports that the suit also alleges the plans provided HMO enrollees with "deceptive or untruthful information regarding coverage for emergency services, prescription drugs and referrals to specialists." Two more specific complaints involved accusations that Humana fines its doctors up to $2,000 "each time a patient left the HMO because a doctor suggested another plan that might provide better coverage," and that "Aetna penalizes doctors who speak frankly with patients about the insurer's coverage" (Ornstein, 12/17).
Aetna Mountain High Enough
Aetna owns four of the six HMOs named in the lawsuits: Aetna U.S. Healthcare of North Texas, Aetna U.S. Healthcare Inc., NYLCare Health Plans of the Southwest and NYLCare Health Plans of the Gulf Coast. Pacificare's and Humana's Texas subsidiaries make up the remainder of HMOs whose practices are being challenged. The Ft. Worth Star-Telegram reports that the "three companies denied the accusations and said they were surprised by the suits because they had been discussing the contracts with Morales' office for several months." Aetna regional chief Tim Brown said his company will ask incoming state Attorney General John Cornyn (R) to review the suit when he takes office in January (Lunday, 12/17). While Cornyn also expressed surprise, he said, "If these HMOs have done what Morales claims they've done, then I will vigorously pursue the litigation." The Morning News reports that Texas regulators have recently taken a hard line against physician incentives tied to patient care, with the Texas Department of Insurance reaching a settlement four months ago with Harris Methodist Health Plan in which Harris "agreed to pay a $100,000 fine to the state ... reimburse $3.4 million to physicians" and "stop fining physicians who wrote more prescriptions than their contracts allowed." The state has also seen action by Insurance Commissioner Elton Bomer to set guidelines for incentives --scuttled when an advisory board could not reach consensus -- and a private lawsuit that is currently on appeal (12/17).