Call it cream-skimming, cherry-picking, pre-screening, what have you. By whatever name, health plans' illegal practice of weeding out the sickest Medicare beneficiaries to ensure more profitable enrollment is drawing a lot of attention.
An unreleased federal report has found that 18% of Medicare beneficiaries in HMOs were illegally pre-screened.
The former head of HCFA's managed-care operations said recently the problem could get even worse when provider-sponsored organizations begin to enroll seniors next year.
And D. McCarty Thornton, chief counsel of HHS' inspector general's office, said at a symposium on healthcare fraud in February that federal authorities have already launched a large-scale investigation into charges that Medicare HMOs pre-screen patients to weed out sick beneficiaries (March 2, p. 2).
That investigation stemmed from the unreleased report on cherry-picking by Medicare HMOs. Thornton called the problem "widespread, both geographically and in the number of companies involved."
Speaking at the same conference, Bruce Fried, former head of HCFA's Office of Managed Care and now a partner with the law firm of Shaw Pittman Potts & Trowbridge in Washington, warned that the problem is unlikely to end with HMOs.
Fried said PSOs, because they have access to a patient's health records, will have a unique opportunity to cherry-pick healthy seniors.
Fried said the "siren song of heightened revenues" would lead some PSOs to try cherry-picking.
"Some administrator, who is either dumb or desperate, is going to say, `Let's send the healthy (beneficiaries) to the (PSO) and leave the unhealthy ones in fee-for-service,' " Fried predicted. "And that person is going to go to jail."
Lewis Morris, assistant inspector general for legal affairs, acknowledged that the potential for widespread cherry-picking exists as the new PSOs get under way.
"There is a real tension that is inherent" in managed care between providing quality care and keeping costs down, and that could lead to pre-screening, he said.
But advocates for PSOs say the potential for cherry-picking exists no matter what the form of delivery system and that PSOs do not pose a greater risk than traditional HMOs.
"This is something (PSOs) are going to have to take a very strong look at and be aware of" said Donald Fisher, chief executive officer of the American Medical Group Association. "But I don't think it's going to be a significant issue."
According to Fried, PSOs will have to be careful to keep the marketing department separate from the medical staff.