Texas Puts PacifiCare on ‘Administrative Oversight’
Citing late payment for physician claims and inadequate patient access to hospitals and doctors, Texas regulators have placed PacifiCare Health Systems under "administrative oversight," the Los Angeles Times reports. In a letter to the president of PacifiCare's Texas operations, state Insurance Commissioner Jose Montemayor said, "The areas of specific concern are complaint and appeals procedures; availability, accessibility and continuity of care; duties and supervision of delegated networks ... quality improvement and utilization review." In one of the most "egregious" complaints raised by regulators, PacifiCare patients in Galveston were assigned to physicians in a city 89 miles away, the Times reports. PacifiCare spokesperson Ben Singer "blamed" the problems on Texas' weakened physician groups. Texas groups, like those in California, are failing "in large numbers, putting the form of managed care practiced by PacifiCare at particular risk," the Times reports. PacifiCare pays providers a set monthly fee, "regardless of the actual costs." The company has until Dec. 22 to submit a corrective plan.
The Texas action is the "latest in a string of embarrassments" for Santa Ana-based PacifiCare, which saw stock prices drop in October after its president, Robert O'Leary, resigned just three months after he accepted the position. Profits have continued to decline due to what industry experts consider PacifiCare's "faulty and outdated business model." The company also has been slapped with two shareholder lawsuits alleging that investors were "misled" into believing that the HMO was more financially secure than it actually was. PacifiCare has announced intentions to "contest the suits" (Bernstein, Los Angeles Times, 12/5).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.