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Dallas
Texas Flag
Genesis
Physicians Practice
Association's
Stanley Pomarantz, M.D.
Published
February 1999
 Dallas
City Hall
 Cotton
Bowl
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 Texas
has been a fertile breeding ground for measures
designed to curb the excesses of managed care. In
1997, Texas was the first state to pass a law to
enable medical malpractice lawsuits against health
insurers, as well as other patient protections
providing for stricter regulation of managed care.
The Texas Department of Insurance has forced HMOs
to strip gag clauses and certain financial
incentives for limiting care from provider
contracts. And the outgoing Texas attorney general
has filed suit against six HMOs for using illegal
financial incentives for physicians to limit care
and penalizing physicians for not limiting
care.
This
may seem like a medical paradise to physicians from
other states. But not all is well in
paradise.
Many
North Texas physicians are mad as hell and are
dropping out of managed care plans in droves. One
managed care plan in particular. As a former
president of the Dallas County Medical Society put
it in an essay written in 1997: "Aetna, I’m
sorry I met ya’."
After
years of escalating hostility and mistrust, two
large integrated physician organizations have
terminated their HMO contracts with Aetna U.S.
Healthcare, which is poised to become the largest
health insurance company in Texas and the nation
with its purchase of Prudential HealthCare. In
return, Aetna has invoked its "all products
policy," which requires physicians to participate
in all of Aetna’s products in order to
participate in any. And in the case of the larger
physician organization, Genesis Physicians Practice
Association, Aetna has sent letters threatening to
bring in the Federal Trade Commission for an
antitrust investigation of the 560 physicians. The
dispute has percolated up to the Dallas County
Medical Society, the Texas Medical Association and
the American Medical Association (AMA), which is
using the Aetna actions here as a basis for
opposing the purchase of Prudential HealthCare in a
filing with the Justice Department.
By
most accounts, these problems began in 1996 when
Aetna purchased U.S. Healthcare in order to
jumpstart their HMO business. According to a
Wall Street Journal account published in
July, 1998, Aetna adopted U.S. Healthcare’s
more aggressive, stingy approach by replacing
senior management positions with people from U.S.
Healthcare, who in turn made drastic changes in
customer service personnel, computer systems and
provider contracts, resulting in widespread
dissatisfaction among providers, patients and
employers. In Westchester County, NY, for example,
37 percent of physicians chose not to renew their
provider agreements with the company.
In
Dallas, F. David Winter, Jr., M.D., a Baylor
internist, said that prior to the purchase of U.S.
Healthcare, Aetna was the best insurer he worked
with in terms of approving referrals, getting
reimbursed promptly and having a reasonable list of
approved medications. Shortly after the purchase,
however, getting approvals for referrals became
problematic, approved medications kept changing,
payments were delayed or sent to the wrong address,
and it became difficult to get through on the
telephone to Aetna, Winter said in an interview
with Physician’s News
Digest.
A
decisive moment came last spring for Winter and his
colleagues at HealthTexas Provider Network, a fully
integrated joint venture between 220 physicians and
Baylor Healthcare System. Aetna unilaterally
lowered physician reimbursements despite the fact
that they were in the middle of a contract that
specified rates, according to Winter. Physicians
were told that they could either accept the lower
fee schedule or drop out of the contract. The
physicians gave Aetna 90 days notice of
termination, as required in their contract. In the
last week of the 90 day period, Aetna said they
would return to the original fee schedule and most
of the physicians re-joined, except for certain
specialties such as orthopedic surgery and
gastroenterology.
Two
months later, Winter and his colleagues discovered
that Aetna was still reimbursing physicians under
the reduced fee schedule. At first, Aetna denied
doing this. After being confronted with proof,
Aetna said that they would change to the original
fee schedule, but that claims for the prior two
months needed to be resubmitted in order to gain
the difference for that period. Physicians
complained that resubmitting every claim would be
extremely costly and unnecessary. Aetna only
relented on this condition when they found out that
the Dallas Morning News was working on a
story on the dispute, Winter said.
Winter
also discovered that Aetna had sent a $30,000
payment to the wrong address. Aetna belatedly
acknowledged their mistake and agreed to resend the
payment, but it has yet to arrive seven months
later.
In
the meantime, because many Baylor specialists did
not rejoin Aetna, Winter and his primary care
colleagues were forced to refer their patients to
specialists they did not know or that required
patients to travel a long distance. Given the
growing level of mistrust and hostility, as well as
the toll of the hassles endured, the HealthTexas
physicians again gave Aetna 90 days notice of the
termination of their provider agreements. As of the
first of the year, approximately 175 primary care
physicians of HealthTexas are no longer seeing
Aetna patients.
The
dispute between the Presbyterian Hospital System
physicians and Aetna is similar but far more
polarized. In October of 1995, Genesis Physicians
Practice Association entered into a risk contract
with Aetna at Aetna’s insistence, according to
Stanley Pomarantz, M.D., vice president of
medical affairs for System Health Providers,
Genesis’ management company. For a
year-and-a-half, as Pomarantz tells it, all was
well. Genesis received the financial and clinical
data from Aetna it needed to effectively manage the
risk contract. Payments were prompt and
accurate.
But
on April 1, 1997, the flow of financial and
clinical data suddenly stopped. The number of
problems getting claims paid grew exponentially.
Genesis experienced a nine to twelve month
information blackout and Aetna’s share of the
group’s reimbursement problems ballooned to 50
percent although Aetna represented only 13 percent
of Genesis’ business, Pomarantz
said.
Pomarantz
later found that these problems coincided with
Aetna’s shift to U.S. Healthcare’s
software.
Genesis
sent a letter to Aetna in August of 1997 asserting
that these problems constituted a breach of their
HMO contract. Genesis and Aetna then set up work
groups from both companies that met every other
week. But the situation did not improve.
From
November 1997 through January 1998, Aetna could not
accept electronic claims, even though that was the
method of filing claims encouraged by Aetna. When
confronted with the problem, Aetna denied any
responsibility. Later Pomarantz discovered that
Aetna’s electronic gateway had been
inadvertently closed while trying to correct
another problem.
In
the spring of 1998, Genesis began to see some
pharmacy data from Aetna. But less than half had
physician identifiers. Financial data came through,
but was rife with errors and frequently was in
unauditable form.
On
June 12, Genesis sent Aetna notice of how these
problems constituted a breach in their HMO
contract, giving 30 days to correct the problems.
At the end of June, Genesis made a seven-point
proposal of ways the problems could be resolved.
The proposal was rejected and 560 Genesis
physicians gave 90-day notice of the termination of
their HMO contract on July 12. Pomarantz said they
were shocked that Aetna had not made a
counter-proposal or accepted some of the seven
points, since they had already adopted some of the
points in their contracts with other Dallas
physicians.
Aetna
then attempted to sign up the Genesis physicians
individually with hardball tactics. They invoked
their "all products policy," shutting the Genesis
physicians out of all of Aetna’s products even
though the physicians only terminated their HMO
contract. They sent out "hit squads" comprised of
an Aetna representative and a NYLCare
representative (Aetna purchased NYLCare in July
1998) to doctor’s offices with a bounty for
each Genesis physician they could sign up,
Pomarantz said. Pomarantz believes that Aetna
thought they could break up the Genesis group. But
when Aetna could not get physicians back
individually, they charged that Genesis was putting
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