Sending a legal wake-up call to HMOs contemplating similar moves, the state of Florida last week launched an antitrust investigation of seven competing managed-care plans. The investigation stems from the plans' nearly simultaneously announcing intentions to exit the Medicare HMO business in selected markets in the state.
The Florida Department of Insurance and the attorney general's office on Oct. 13 issued subpoenas to the seven managed-care plans, demanding their Medicare risk contracting and marketing records. The plans have a Nov. 13 compliance deadline.
The plans include some of the biggest names in managed care, including United HealthCare, Prudential and Humana (See chart). Combined, the seven plans intend to drop their Medicare HMO products in 25 Florida counties on Jan. 1, 1999, leaving more than 53,000 enrollees without coverage. In nine of those counties, where more than 18,000 of those enrollees reside, no other Medicare HMO is available.
"We are putting HMOs and everyone else on notice that we will not tolerate those who take unfair advantage of some of Florida's most vulnerable citizens," Florida Attorney General Bob Butterworth said.
But, officials at the Health Insurance Association of America blasted the investigation as "little more than an election-year political football."
Butterworth and Insurance Commissioner Bill Nelson are Democratic incumbents running for re-election on Nov. 3.
The HIAA noted that dozens of health plans across the country have made similar decisions to reduce or end their Medicare risk contracts because of the high costs of treating the elderly and what they say is inadequate government payment rates (See related story, p. 8).
According to HCFA, more than 400,000 enrollees will be affected by the pullouts by more than 50 managed-care plans nationally.
The Florida investigation focuses on whether the competing plans colluded to make their decisions to lessen their Medicare risk exposure in violation of state or federal antitrust laws. Under such laws, competitors generally are barred from engaging in group boycotts or other collective anti-competitive behavior.
Don Pride, a spokesman for the Florida Department of Insurance, acknowledged that regulators "do not have evidence" of collusion between the health plans but want to make sure no violations exist.
State investigators want the managed-care companies to explain:
How they solicited Medicare risk enrollees.
What promises they made to enrollees.
How sales personnel were trained.
Why they entered, then abandoned various Florida Medicare markets.
Why they believe HCFA rates in those areas are inadequate.
The targeted plans denied any anti-competitive behavior and said they would cooperate with the investigation.
Officials at Miami-based AvMed, one of the plans, said "inequitable funding" in rural counties, a lack of cooperation and possible antitrust violations by some providers, and inflexibility by government agencies have stymied not-for-profit AvMed's efforts to fix what it describes as a broken Medicare risk system.
"Now that the Department of Insurance and the attorney general are responding, it appears they are willing to shoot the messenger," said AvMed President Edward Peddie.
AvMed's decision to withdraw from seven counties, where it has about 6,400 Medicare risk enrollees, was made only after extensive discussions with state and federal agencies and North Florida's congressional delegation, and after last-minute negotiations with HCFA failed, Peddie said.