FEE DISCLOSURE RULING. A Georgia court ruled health plans can change the fees physicians are paid, but the plans must tell doctors what those fees will be and how the amount was determined.
The Medical Association of Georgia and Blue Cross and Blue Shield of Georgia both claimed victory in the ruling, which was issued by the Georgia Court of Appeals.
The medical association sued the Blues after the insurer changed its fees in 1997. In its suit, the association claimed the Blues used to pay physicians based on usual, customary and reasonable fees for patients with traditional insurance. Now, the suit charged, the Blues pays physicians based on all fees a doctor receives, including those from government sponsored programs, such as Medicare. MAG claimed that was unfair.
The court said physicians are entitled to know what their rates will be and how they are determined.
KAISER PERMANENTE SUED. A class-action suit filed against Kaiser Permanente accuses the HMO of lying to patients about how physicians are paid.
The suit, which was filed June 22 in U.S. District Court in Seattle, accuses the 8 million enrollee HMO of leading patients to believe that their doctors are free to make medical decisions. The lawsuit claims that's false because Kaiser imposes restrictions and provides physicians with financial incentives to keep costs down. Thus patients aren't getting the coverage they thought they purchased, the suit says.
HMO officials hadn't been served with the complaint at press time.
"There were similar allegations made in Texas in 1997," says Kaiser spokesperson Matthew Schiffgens. "They were dismissed."
He says the medical groups are independent, self-governing entities that contract with Kaiser. Schiffgens says capitation is with the medical groups as a whole and not with individual physicians.
The U.S. Supreme Court in early June ruled that patients can't sue their HMOs for providing financial incentives to physicians (see related story on this page).
PPM CONTRACTS ILLEGAL. The Florida Board of Medicine called into question many PPM contracts last month when it ruled that two such contracts violate the state's fee-splitting statute. Fee-splitting prohibits paying for patient referrals.
The first case involved a New Port Richey opthamologist's contract with Physician's Resource Group, a now-bankrupt Dallas-based opthamology PPM. The contract was found to violate the fee-splitting statute because the agreement called for PRG to grow the practice and provide practice management services in exchange for 35% of the medical practice's net income.
The other violation involved the contract between a Florida physician and a pair of Boston attorneys affiliated with Ophnet, an opthamology marketing and management firm based in Marblehead, Mass. A few days prior to the Board of Medicine ruling, however, a Massachusetts court found that the contract did not violate Florida's fee-splitting law and said the physician, who had stopped paying the firm, must comply with the terms of the original agreement.
The board in 1997 ruled that PhyMatrix, a now-defunct PPM previously based in West Palm Beach, Fla., violated the fee-splitting statute when it contracted to receive a base fee plus 30% of a group's net income in exchange for providing services to increase patient volume. A state appeals court last year upheld that ruling.
HILL PHYSICIANS RESULTS. Amid dire predictions about the state of California's medical groups and IPAs, one of the state's largest and most prominent IPAs recently reported an increase in revenues and membership but a significant drop in net income.
San Ramon, Calif.-based Hill Physicians Medical Group last month announced that its 1999 fiscal year operating revenue increased 12% to $245 million from $218 million a year ago. The group's net income, however, dropped to $218,000 from $2.3 million. CEO Steve McDermott says the drop in net income is the result of increased regulatory requirements and rising medical costs.
McDermott points to the fact that Hill Physicians' membership increased by 31,000 to 380,000 as a sign that Hill can expect annual revenue of $280 million in 2000.
Hill Physicians' Medical Group has 2,400 affiliated physicians in six northern California counties.
INSURER LAYOFFS. AetnaUSHealthcare plans to lay off 150 employees in its Jacksonville, Fla., office within the next nine months.
The company already has laid off 31 Jacksonville employees. Company spokespeople say the move is related to phaseout of administrative services for Prudential Health Plans. Aetna purchased Prudential in 1998.
Most of the affected people work on the healthcare database. Company spokespeople say no other layoffs are pending at Aetna.