After a two-month delay, California physicians last month began receiving some of the estimated $50 million the physician practice management company MedPartners owes them.
But physicians weren't entirely pleased with the development. The bad news is that physicians who cash checks or resubmit claims for payment from the company, now known as Caremark Rx, must sign a release form waiving their right to sue the PPM. The release forms are due back to the company by the end of this month.
"It seems like a very underhanded and forceful way of getting physicians the money they are rightfully owed . . . in exchange for the promise not to sue them," says Robert Pugach, M.D., a urologist in Long Beach, Calif., who is waiting for about $10,000 in payments.
"You deliver the service in good faith, you take care of people, then afterwards the plan turns around and says, 'Sorry, there's nothing left. If you want anything at all, you can accept this-which is about 75 cents on the dollar-or wait forever,' " Pugach says.
Like Pugach, many physicians resent the release but expect they will sign. The California Medical Association is urging physicians to sign because it might be the only offer they get.
Birmingham, Ala.-based MedPartners at one time was the nation's largest PPM and owned the practices of more than 10,000 physicians. Its downward spiral began last year after a proposed merger with Nashville, Tenn.-based PhyCor fell apart.
MedPartners announced it was divesting its physician practices in November 1998 and has since sold all of its California holdings. Until this spring, the company was still doing business there through its contracting subsidiary, MedPartners Provider Network.
In March of this year, the California Department of Corporations seized control of the network and placed it in U.S. Bankruptcy Court in Los Angeles, claiming the network did not have the money to pay outstanding claims. Insurers make payments to physicians through the network, and many of the physicians still waiting for payments are specialists who contracted with MedPartners through IPAs and MedPartners' affiliated groups.
In July, the state returned control of the network to MedPartners, on the condition that the parent company pay all outstanding debts. According to Elizabeth McNeil, vice president of medical economics for the CMA, MedPartners initially offered to provide the controversial release form when the settlement was first agreed to, but the CMA never received a copy. Payments continued until August when they abruptly stopped.
MedPartners spokesman Joel Weiden says the payments stopped because the original settlement never finalized the methodology for paying provider claims, and the PPM disputed the health plans' liability.
In September, the state and the CMA stepped in to get the bankruptcy settlement back on track and helped come up with the current plan. Last month MedPartners wrote checks totaling $3.5 million in outstanding claims and promised to continue payments if-and only if-about 350 of the 6,000 physicians who were mailed release forms sign and return the forms. Those physicians represent more than 70% of the unpaid claims.
If those 350 do not sign, the settlement will stall and no payments will go out. Also, if any of the other 6,000 physicians refuse to sign, they are not eligible for any payment from MedPartners and will be forced to sue the PPM for payment.
"Releases are relatively standard. Like all the other parties involved, we need to protect our interest," Weiden says. "This is a good opportunity to begin receiving some payment and to close this whole chapter. I think the fact that the CMA endorsed signing the checks and signing the releases is a strong voice of support."
McNeil says the settlement is not perfect, but given the situation, it's better than nothing.
"We are definitely encouraging physicians to sign the release. We think it's their best chance to get paid and to be paid the most money the soonest," she says, adding that the CMA will sue MedPartners on behalf of the physicians if the PPM fails to pay at least 75% of what is owed.
"We think there's a very good chance that they will get paid. They may not get 100%, but they will get about 75%, and that's pretty good in a bankruptcy situation," she says.
The CMA estimates that physicians who choose to sue the health plans rather than sign the release will, at best, receive about 70% to 80% of what's owed.
Daniel Higgins, M.D., an emergency physician in Los Angeles, says his 10-physician group received a check for $1,700 from MedPartners, but the group is owed about $250,000. If Higgins cashes the check, which he expects to, he automatically agrees to the settlement.
"MedPartners wants to make it as difficult as possible for us providers to get paid," he says, adding that the time and money he will spend resubmitting every outstanding claim will barely cover the payment.
"All eligible claims must be returned to them by Oct. 30. We've already submitted them three times. We're talking like 20,000 claims. It took us about a week to get everything back to them before, and now we have to do it again," he says.
Richard Pershing, a healthcare attorney in Corona, Calif., says his clients have reacted to the settlement like Higgins: most plan on signing only because they see no other way out.
"I think the physicians are beyond mad at this point. I would say it's more like discouragement," he says.