Woe to the HMO that sits on provider payments, flouts the state's "bill of rights" for managed-care consumers or scams the government for money.
Eighteen months ago, New York Attorney General Dennis Vacco launched the state Health Care Bureau, dedicated to resolving consumer complaints and cracking down on managed-care abuses. During that time, his dragnet has produced quite a few headline-grabbing settlements and enforcements.
Elected to the post as a Republican in 1994, Vacco, 46, is up for re-election next month (See box). Neither he nor Jerry Gold, his healthcare bureau chief, was available for comment. But their track record speaks for itself:
Last year, Vacco's office scored an unprecedented agreement with the state's largest HMO, Norwalk, Conn.-based Oxford Health Plans. The HMO agreed to pay at least $1 million in interest on past-due payments to doctors and hospitals.
Earlier this year, 18 HMOs were criticized for flouting the state's consumer bill of rights. Vacco issued an ultimatum: Comply or prepare to be sued (April 13, 1998, p. 16).
More recently, a New York-based Medicaid managed-care plan and its top executive were indicted for alleged skimming in a scam against the government, participating doctors and plan enrollees (Oct. 19, p. 21).
Vacco's push continues. Late last month, he settled with Schenectady-based MVP Health Plan for denying access to mental health providers listed in the plan's marketing materials. The HMO agreed to pay $20,000 in fines.
Vacco's Health Care Bureau also serves as the umbrella for other areas in which his office has oversight. His antitrust enforcement arm backed the merger of North Shore Health System and Long Island Jewish Medical Center after it negotiated a two-year rate freeze and a $100 million investment in new programs and care for the elderly and indigent.
The merger had been challenged on antitrust grounds by the U.S. Justice Department but was upheld in federal court, and the systems's 12 hospitals merged Oct. 30, 1997.
Earlier this year he challenged a joint operating agreement between two Poughkeepsie-based facilities-317-bed Saint Francis Hospital and 252-bed Vassar Brothers Hospital. The hospitals are in settlement talks with Vacco's office.
His healthcare charities bureau will weigh in on the proposed for-profit conversions of Empire Blue Cross and Blue Shield and Vytra Healthcare Long Island. However, healthcare leaders in the state noted that Vacco's powers are limited because the state lacks a not-for-profit conversion law.
His crusade has captured the public eye. And in choosing managed care-the nation's favorite whipping boy-Vacco may pick up political mileage at the polls.
Vacco's healthcare fraud-fighting machine is fueled by a toll-free hotline. The bureau fielded more than 5,000 inquiries and complaints in its first year of operation.
Consumer advocates, naturally, are delighted with Vacco's efforts.
"States throughout the nation have been passing managed-care laws, but there's really been no attention to enforcement," said Richard Kirsch, executive director of Albany-based Citizen Action of New York. "Vacco's Health Care Bureau is really an important step toward that, both in New York and as a model to other AG offices around the country."
With its broad investigatory powers and access to various legal remedies, Vacco's office can pursue managed-care abuses in ways that private litigants can't, noted Mark Scherzer, counsel to New Yorkers for Accessible Health Coverage, a New York-based coalition of voluntary health organizations.
But managed-care plans contend that Vacco has created another confusing level of bureaucracy.
Leslie Moran, a senior vice president with the New York State HMO Conference, pointed out that HMOs in New York are regulated by the health and insurance departments. Consumers have a vast array of information available to them.
"There's some question as to whether the attorney general's Health Care Bureau adds value or adds confusion," Moran said. "The plans*that have been brought under public scrutiny via the Health Care Bureau feel frustrated that they weren't allowed to resolve the problem themselves."
MVP Health Plan is a case in point. She said the plan acknowledged jumping the gun by mentioning a mental health network in its marketing materials before securing a signed contract. Vacco's office threatened to sue for denying consumers full access to the plan's provider list. "It resulted in news stories that raised consumer concern needlessly," Moran said.
Independent Health, a Buffalo-based HMO, echoed that concern. This month Vacco's office said it will investigate allegations that the plan misled enrollees in its Medicare HMO by cutting area Roman Catholic hospitals out of the network. Independent Health said it decided to limit the network to save money rather than raise premiums, and it had provided more notice than the federal government requires.
"I think he's got a right to look into it," said Frederick Cohen, the plan's vice president and general counsel. "It's what he does with the information that really is important. If he makes an announcement in such a way that he affects people that aren't affected (by the hospital network limitation), that would be a disservice."
The Healthcare Association of New York State is pleased with Vacco's performance in enforcing the rights of managed-care consumers and helping to ensure that providers pay promptly. But its opinion of Vacco's antitrust enforcement is mixed. While the attorney general helped pave the way for the North Shore-Long Island Jewish deal, hospital leaders question his thinking in the Saint Francis-Vassar Brothers challenge.
"There we believe he went too far," said Jeannie Cross, a spokeswoman for the state hospital association.
Among his peers, though, Vacco's efforts are widely respected. "(He) is one of the leaders in the country in aggressively pursuing and prosecuting healthcare fraud," said Mississippi Attorney General Mike Moore, president of the National Association of Attorneys General.