PRACTICE PULSE
Concern for HMOs'
Financial Status
By Gil Weber, M.B.A.
I read something interesting but
troubling on an Internet news channel at the end of October.
Given the almost daily stories we're hearing about HMOs delaying,
downcoding or denying claims, no matter what managed care plans
you participate in, you should take note.
Weiss Ratings, a respected source
for financial ratings and analysis of U.S. industries, reported
that 10 HMOs had failed to meet the minimum capital level
standards recently adopted by the National Association of
Insurance Commissioners (NAIC). The standards were designed to
establish a minimum amount necessary for an HMO to maintain
financial stability and pay its obligations.
In addition, Weiss reported its
own recent ratings of 572 health plans. Weiss scored 78 plans as
"very weak." It scored another 162 HMOs as "weak."
Only four plans earned an "excellent."
Of the 572 HMOs reviewed, 44% (252
plans) lost money in the first quarter of this year. Martin Weiss
stated, "Among all the industries we rate, including banks,
insurers, and brokerage firms, HMOs currently have the largest
percentage of endangered institutions. What's worrisome is that
these financial pressures can sometimes impinge upon the quality
of care afforded to customers, or potentially leave them stranded."
So what does this all mean to you
-- the community optometrist? What's the relevance of a plan not
meeting the NAIC's capital guidelines or receiving a low Weiss
rating?
Simple. If you're contracted to an
ailing HMO (or its third party intermediary) your receivables are
at risk.
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EYE ON
MANAGED CARE |
It means you must have your eyes
and ears open to monitor what's happening in your community and
in your state with third party payers. You must constantly review
your accounts receivables, and you must take timely, appropriate
action if trends turn and seem headed south.
So if your claims with the XYZ
health plan had been paid in a consistent 30 days but now they're
running a consistent 45, that's a yellow flag. You need to
inquire. It may be nothing more than a "hiccup" in the
claims processing department, and things could be back to normal
after another claims cycle. Then again, it may be an indication
that the plan is short on cash to pay its claims, and that pay-ment
timing is soon to stretch out even farther.
If those 30- or 45-day payments
turn into 60 plus days, the yellow flag has probably turned
orange, or bright red. If your files are full of long delayed
claims pay-ments, it's time to act -- before you're really stuck
with a nightmare. Here's what I mean, and here's why it may be
unwise to wait.
Each HMO provider agreement gives
you certain rights and responsibilities vis-a-vis contract
termination. Typically, you can terminate without cause at the
anniversary date by giving the specified written notice. Also,
you can terminate with cause at any time if the plan materially
breaches the agreement. The amount of notice you must give should
also be specified in the agreement. If you can get out cleanly
before the hole gets too deep, then that's great.
If things are headed south and if
you keep delaying any action hoping things will improve (and
trying desperately to hold onto the contract), you may have
waited too long. If the HMO files for bankruptcy protection, the
court may obligate you to continue to provide services and void
your attempts to terminate.
This means that not only are you
unlikely to collect in full on already past due claims (the
source of the bankruptcy filing). But you may also be forced to
provide services during the bankruptcy period with little or no
prospect to collect in full on these new claims. In other words,
waiting and hoping for a turnaround may end up driving you
farther into an already ruinous, but now court-enforced black
hole.
Talk to your experienced managed
care attorney to determine your rights under state law. Monitor
your receivables. And based on your attorney's instructions, act
sooner than later in pressuring the plan for payment or
terminating your agreement with cause for non-payment.
Read the entire Weiss report at www.weissratings.com/main.asp (click on "news releases").
Note that the end of the report has links to the strongest and
weakest HMOs by state. Enjoy this useful resource.
Gil Weber is an author,
lecturer and practice management consultant to the managed care
and ophthalmic industries. He's also a member of Optometric
Management's editorial board. He can be reached at (954) 915-6771
or by email at gil@gilweber.com.
Also, visit his Web site at www.gilweber.com.
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WEISS'S ANALYSIS OF
THE 572 PLANS: |
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| WEISS
RATING |
NUMBER
OF HMOS |
PERCENT
OF TOTAL RATED |
| A
and A- (excellent) |
4 |
0.8% |
| B+,
B, B- (good) |
87 |
16.5% |
| C+,
C, C- (fair) |
196 |
37.2% |
| D+,
D, D- (weak) |
162 |
30.7% |
| E+,
E, E- (very weak) |
78 |
14.8% |
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572 |
100.0% |
Incredibly, Weiss rated 23 HMOs at E- (the lowest tier of
"very weak"). Not reassuring news.
The 10 HMOs deemed in dire straits based on NAIC solvency
standards:
| HEALTH
PLAN |
WEISS
RATING |
| Bluegrass
Family Health Plan (KY) |
E |
| Community
Health Choice (TX) |
E- |
| Grand
Valley Health Plan (MI) |
E+ |
| Harris
Methodist Texas Health Plan (TX) |
D |
| Health
New England (MA) |
E |
| Health
Options Connect (FL) |
E- |
| Healthcare
Oklahoma (OK) |
E |
| HUM
Healthcare Systems (NY) |
E- |
| Wellcare
(CT) |
E- |
| Yellowstone
Community Health Plan (MT) |
E+ |
+ = upper third of grade - = lower third of grade
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Optometric Management, Issue: January 2001