HCFA curtails physician practice bonuses
The Health Care Financing Administration (HCFA) has decided that prepaid contracts that pay bonuses to physician practices for restricting patient services must be virtually eliminated. The regulations change comes amid worries in Congress that such incentives encourage substandard health care.
As of Jan. 1, under the new HCFA regulations:
• Organizations must not operate an incentive plan that either directly or indirectly pays physicians or physician groups in exchange for limiting or refusing medically necessary services to enrollees.
• Organizations must disclose details of physician incentive arrangements to HCFA so the agency can judge regulatory compliance.
• When the incentive plan places a physician or physician group at "substantial risk" for services not directly provided, the organization must provide the physicians with adequate stop-loss insurance protection and conduct surveys of enrollees to determine their satisfaction with the quality of the services they receive.
The risk threshold is 25% of the total payments from the plan.
Because of the changes, provider-sponsored networks may want to re-examine their contracting arrangement with HMOs, which may not want to pay for stop loss insurance, experts warn. It is still unclear whether the ew regulations allow HMOs to pass the cost of stop-loss insurance along to provider-sponsored networks.
Those convicted of noncompliance with physician incentive regulations face civil penalties of up to $25,000 for each infraction and exclusion from the Medicare program.
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