Starting this month, managed-care plans serving Medicare or Medicaid patients must disclose financial incentives enjoyed by their physicians.
Under new federal rules, patients will be privy to such information as whether their physicians operate under capitation, withholds or bonuses and whether incentives cover referrals to specialists and hospitals.
The long-awaited rules also require plans to certify that physician groups have stop-loss insurance and to conduct patient satisfaction surveys.
The stop-loss and survey requirements only apply in cases where physicians are deemed to be at "substantial" financial risk. That means at least 25% of a physician's or physician group's potential income is at risk for services it does not provide, such as specialty and hospital care, and where a physician group has risk contracts for fewer than 25,000 lives, reducing the ability to spread costs over a larger population.
The regulations aim to relieve concerns that doctors who carry significant risk might withhold care to protect their incomes. However, the rules don't limit the types of incentive arrangements HMOs may have with doctors, except for the unlikely scenario of a specific payment to deny care to a particular patient.
Some consumer groups are dissatisfied. The regulations are "pretty limited and very narrowly constructed," said Susan Sherry, director of the Boston-based Center for Community Health Action, a project of Families USA. She faulted HCFA for ignoring payments by HMOs to specialists and home health providers, which she said have generated many successful appeals by beneficiaries who were denied services.
HCFA originally issued the regulations in March. It called them "final" regulations, but it asked for public and industry comments on them before making them effective on Jan. 1.
In response to concerns expressed by the managed-care industry, HCFA eased some of the restrictions on plans and their physicians that were included in the original regulations. HCFA outlined the changes in a policy letter sent to plans last month.
Still, the new rules will create more administrative work for health plans. The American Association of Health Plans recently released a 34-page report to its members explaining how to comply with the new rules. The report included 20 pages of recommended disclosure forms.
Complicating matters, plans must report the financial arrangement under which an individual physician operates. That could be obscured by multiple tiers of contracts.
For example, plans often contract with physician groups or independent practice associations, which in turn arrange various compensation schemes with individual physicians.
HCFA said in its December letter that obtaining the data could be "a considerable undertaking."
Nevertheless, the AAHP is comfortable with the way HCFA is implementing the regulations, said Candace Schaller, the association's executive director for regulatory affairs.
Many states are reviewing HCFA's regulations with an eye toward adopting them for commercial HMOs. But the National Association of Insurance Commissioners reported no knowledge of specific proposals yet from the states.