Doctors once more are facing the failure of a managed care plan, this time in California. But if history is an indicator, physicians there can take comfort in what has happened in New Hampshire and Massachusetts, when states took control of the day-to-day operations of two of New England's largest health plans. In both situations, physicians say state officials treated them fairly.
The most recent incident is last month's takeover of Maxicare by California's Department of Managed Health Care, just hours before the Los Angeles-based health plan filed for Chapter 11 bankruptcy for its California business. The company had previously announced plans to close its Indiana operations.
Doctors immediately questioned whether they would get paid for back claims. As the situation unfolds, it appears that the health plan is current on capitation payments and on past claims. Even officials at the California Medical Association--usually the first group to point out delayed payments--say Maxicare is current on capitation payments.
Maxicare had 254,000 enrollees when it filed for bankruptcy. In the first quarter of 2001, the company had net losses of $18.4 million compared with net income of $50,000 in the first quarter of 2000.
In late 1999, New Hampshire state officials put Tufts Health Plan of New England in receivership and later ordered its assets liquidated. Less than two months later, Massachusetts' insurance commissioner and attorney general took control of Harvard Pilgrim Health Care, the state's largest not-for-profit insurer.
State officials eventually released Harvard Pilgrim from receivership after developing a rehabilitation strategy. The plan showed a profit last quarter.
Physicians in New Jersey ran into a similar situation when HIP and American Preferred Provider Health Plan went under. The state Legislature passed a bill in which physicians would forgo $50 million of the $150 million owed them. The state and other health plans came up with the remaining $100 million.
In New Hampshire and Massachusetts, doctors were eventually paid. "We were kept very well informed," says Carol Workman, administrator of Concord (N.H.) Otolaryngology, a four-surgeon practice. "What was difficult was that we weren't paid for a year and a half after services were provided."
The state insurance commissioner held meetings and encouraged physicians and others who had questions to attend, she says. The Tufts liquidation was settled last month. Workman says her group received a "good settlement" on the money they were owed, but she declined to reveal specifics.
The near-collapse of Harvard Pilgrim, once thought to be the example of how health plans should be run, captured headlines in January 2000. After discovering an accounting error that put losses at $226 million, plan officials turned to the state. Under a state Supreme Court order, Massachusetts' insurance commissioner took control of day-to-day operations. About 15,000 physicians and the Massachusetts Medical Society wondered whether they would ever see dime one of what they were owed.
They did. And 18 months later, MMS has nothing but praise for how the state handled a potentially disastrous situation. Throughout the receivership and rehabilitation, patients were kept in their networks and physicians were barred by state law from dropping Harvard Pilgrim enrollees.
"We knew--the medical society knew--that if Harvard Pilgrim folded, the physicians of Massachusetts would be required to take care of patients even though there was no hope of reimbursement," says neurosurgeon Francis Rockett, M.D., president of the Massachusetts Medical Society.
It was in the best interest of physicians, he says, for the state to take control of the plan. "We knew if it folded, it would be an absolute catastrophe in healthcare."
By the time the state put Harvard Pilgrim in receivership, the plan owed physicians between $45 million and $60 million, Rockett says. Physicians received prompt payment on claims for any services after the state took over, he says.
Harvard Pilgrim has since paid off its past due payments, Rockett says.
Although he doesn't see any plans in similar financial straits, Rockett says it's important for state officials and physicians to remain vigilant.
"Hopefully we've learned enough about the things that lead up to this that we can watch for what's happening with the plans individually, if they're falling below acceptable reserve levels, if they're delaying payments to physicians," Rockett says.
"These are warning signs that the plan may be getting into trouble."