News in brief - Dec. 4, 2000

New California law addresses HMO capitation problem - Insurance lobbies discuss merger - HMO execs agree to cut pay - Medicare HMOs shed 1 million seniors - Maine appeals drug injunction

New California law addresses HMO capitation problem

A measure preventing HMOs from pocketing capitation payments that should go to primary care physicians has been signed into law by California Gov. Gray Davis.

As reported in the Oct. 9 issue of American Medical News, physicians in California discovered that when primary care physicians left HMO panels, it often took months to reassign their patients to a new doctor, and the managed care plans ended up with the capitation money.

The new law requires plans to notify enrollees when their physicians leave the network and show them how they can select a new doctor.

Insurance lobbies discuss merger

The Health Insurance Assn. of America, representing life and health insurance companies, and the Assn. of American Health Plans, representing mainly HMOs and PPOs, have approved a memorandum of understanding to begin discussing a merger.

Speaking with one voice would beef up their clout as Congress debates managed care legislation next year, but traditional life and health insurers in HIAA are said to fear that their voices would get lost.

HMO execs agree to cut pay

Harris Berman, MD, CEO of Tufts Health Plan, and Charles D. Baker Jr., the new CEO at Harvard Pilgrim, have agreed to a pay cut following poor financial performance at both Massachusetts HMOs.

Still, Dr. Berman will earn $511,162 and Baker $500,000 a year. And following good financial performance at Blue Cross Blue Shield of Massachusetts, CEO William Van Faasen is getting a 6.5% pay boost, to $1,062,205 a year.

Medicare HMOs shed 1 million seniors

About 934,000 Medicare beneficiaries will have been dropped by their Medicare HMOs by the end of the year -- a 34% increase from the year before, according to data from Weiss Ratings Inc.

Of 237 Medicare HMOs, 147 have dropped all or part of their Medicare HMO business, Weiss said.

Maine appeals drug injunction

The state of Maine is appealing a federal judge's decision to block it from implementing a drug discount program, which was due to begin Jan. 1, 2001, and eventually could lead to price controls.

U.S. District Judge D. Brock Hornby recently slapped a preliminary injunction on the program after the pharmaceutical industry alleged that the law was unconstitutional and represented an abuse of fair trade practices.