UNDER THE MICROSCOPE. The California Department of Corporations, which regulates risk-bearing healthcare entities, is taking a closer look at Birmingham, Ala.-based MedPartners. But department spokeswoman Julie Stewart says the review is not similar to the so-called "nonroutine review" it gave now-bankrupt FPA Medical Management. After receiving anecdotal information from health plans and doctors, the investigation of MedPartners was extended from its routine, triennial exam, Stewart says.
Under California law, physician practice management companies and others operating under capitation arrangements with insurers must meet certain financial standards to ensure they can cover the cost of care. MedPartners spokesman Joel Wieden says the company has more than the required amount of reserves.
MedPartners' Southern California troubles have been well-documented. The company in May cut 900 of its 9,500 employees there, including 45 of 998 doctors, and eliminated 450 open administrative positions. Physicians who remained took a 7% pay cut. MedPartners has acknowledged it suffered losses in the region.
AETNA CRACKS. After months of physician complaints and contract terminations, Aetna U.S. Healthcare announced late last month it is revising its provider contracts.
Physicians in Florida, Ohio and Texas have walked away from the Blue Bell, Pa.-based insurer in recent months, citing restrictive and intrusive contract terms, and the American Medical Association has been advocating for its members with the company.
Aetna says the revised contract, which went out to 300,000 physicians last month, is written in "plain language" to clear up misunderstandings caused by the old pact's more legalistic language. Aetna spokeswoman Jill Griffiths says it no longer will own patients' records but must have complete and unfettered access to the records.
Aetna also updated the emergency coverage language, including the same "prudent layperson" definition the government used. But remaining in the contract is a clause that requires physicians who sign an Aetna contract to accept all the insurer's products and plans.
N.J. LEANS ON HIP. New Jersey's Department of Banking and Insurance is monitoring HIP of New Jersey after the health plan's net worth fell to a negative $9.5 million in the quarter ended June 30, well below the minimum net worth requirement of $3.8 million.
The department says it also is looking into the financial condition of Reston, Va.-based PHP Healthcare Corp. as part of the review. PHP's Pinnacle Health Enterprises subsidiary on Nov. 1, 1997, signed a global capitation agreement to treat HIP's 190,000 enrollees.
The department announced its review in late September. HIP and PHP have to issue weekly reports to the Banking and Insurance Department regarding their quality of care, especially in light of PHP's Sept. 4 announcement it would lay off 400 New Jersey employees. The department says it has witnessed "unacceptable delays" in getting appointments with physicians, and staff shortages in laboratories and medical records departments.
IN THE MIDDLE. A breakup between two prominent New York heart surgeons has created more problems for physician practice management company Advanced Health.
Jeffrey Moses, M.D., last month issued a note of "irreconcilable differences" to Valavanur Subramanian, M.D., his partner in Advanced Heart Physicians and Surgeons. The nature of their differences was not disclosed.
Moses was one of the first surgeons to study the use of coronary stent treatment for angioplasty. Subramanian has been a leader in minimally invasive heart surgery techniques.
As a result of their dispute, the doctors want Tarrytown, N.Y.-based Advanced Health, which they affiliated with in 1995, to pay them $3.5 million to reacquire 545,000 shares of stock and cover other fees, the company said in an Oct. 16 statement.
Advanced Health maintains Moses and Subramanian can separate, but each doctor must sign a new management agreement with the company. Advanced Health has been hit with numerous shareholder lawsuits this year related to a precipitous drop in its stock price after it reported poor earnings.
COMPENSATION FLATTENS OUT. After experiencing several years of income increases, primary-care providers' incomes flattened out in 1997, according to a new compensation and productivity survey by the Englewood, Colo.-based Medical Group Management Association and St. Louis-based Cejka & Co.
On average, primary-care physicians' incomes increased a meager 0.42% to $135,791 in 1997, compared with a 1.4% increase in 1996 and a 4.5% rise in 1995.
Meanwhile specialists' incomes decreased slightly by an average of 0.48% to $220,476.
Geoff Staub, Cejka's director of marketing, says the primary-care income plateau is a "rightsizing of the market," and he expects things to stay relatively stable in the next few years.