MANAGED CARE QUESTIONS: (California Broker- good magazine for agents. Kate Kincaid, Editor in Chief, is an excellent writer. McGee Publishers, 217 E. Alameda Ave., # 301, Burbank, CA 91502. A more comprehensive questionnaire-with answers- is available by calling 800 675-7563.) Probably the greatest criticism that managed care currently faces is the issue of referrals to specialist. Kincaid's article posed the question that is most frustrating to patients, "Will a plan of IPA (Individual Practice Associations)/medical group ever have the ability and authority to grant immediate referrals for those routine conditions that are "no brainers". If a plan or IPA/medical group has established an exclusive relationship with a contracted physician, why is the judgment of that physician bypassed when it comes time for simple referrals?" For example, why does a woman who is obviously pregnant have to wait two weeks for a written referral via committee for an ob/gyn?


1. Will you guarantee a time limit on approval of additional treatment requests or specialist referrals when submitted by a Primary Care Physician (PCP)?

2. How long does it take to have a referral to a specialist approved? How long does it take to have additional treatment tests approved?

3. What criteria is used to authorize/deny specialist referrals? What criteria is used to authorize/deny treatment tests?

4. What diagnoses are typically referred out?

5. How often do you deny treatment/tests/referrals/ that are recommended by the PCP?

6. Do you have any conditions/diagnoses/symptoms which are automatically referred?

7. Can a pregnant member go directly to a gynecologist without waiting for approval?

8. Can a member with severe back pain get an appointment with an orthopedist immediately?

9. How long does it take to get an MRI or equivalent test when a lump is found on a members's breast or uterus?

10. Do you have a self-referral to a gynecologist for an annual well woman exam?

11. What is the criteria and process for getting a referral to a specialist outside of the medical group/IPA? With a non contracted provider?

12. Can a member get second opinion outside of the IPA or the medical group

13. Are you monitoring the length of time for referral authorizations? What are you doing to reduce or eliminate delays in this process

14. Where are the decisions made (at the IPA/medical group or at the plan) about specialist referrals? About diagnostic testing? About treatment? About surgery? About hospitalization?

15. Do you provide referrals to chiropractors, homeopaths, natuaropaths, acupuncturists? Under what conditions?


1. How is the premium and the risk shared between the plan, medical group/IPA and the PCP

2. Does the PCP participate in profits or losses in any way, either at the plan level or the medical group/IPA level


1. What complementary medical disciplines do you plan to add as covered services and under what conditions (e.g. acupuncturists)

2. How do you define a serious emergency so that it would be covered if the member were outside of their coverage area

3. Does the plan cover blood tests for prostate cancer for men over 70? Is there any age limit after which the test would not be covered

4. Do you cover mammograms for women with no history of breast cancer? Till what ages? How many times?


1. What is your ratio of PCP's per specialists

2. What is your ratio of members to PCPs? Is this a guideline by plan or IPA? How is it monitored and how frequently

3. Do you include treatment by a Physicians assistant or nurse rather than by a physician? Under what circumstances? Will you provide a physicians exam for adults when requested by a physician

4. When test or treatments are recommended by a referred specialist and denied by the plan, will the patient be told that the doctor was overridden by the plan

5. Does the HMO contract with the doctor allow the HMO to terminate the contract if the HMO believes the physician is overutilizing services

6. What systems are in place for assessing participant satisfaction? (A new feature of Kaiser is a money back guarantee for appointments? While seemingly hokey for just a $5 to $15 rebate, it does give the patient a reason to immediately notify staff of unacceptable treatment)?

7. Describe the utilization review process and include the savings reports available to clients?

8. What are your grievance procedures?

9. How can a member get information about a physicians schooling and/or malpractice suits?


1. After selecting a PCP, are members expected to visit the doctor immediately (Wellness exam) to ensure their place as a patients

2. What action is being taken by the plan or IPA/medical group to have online eligibility, administrative changes, referrals, etc?

3. Does your contract include binding arbitrations or mediation? Through which group(s). How are the arbitrators chosen?



1. Are you monitoring length of time for referral authorizations? What are you doing to reduce or eliminate delays in the process


1. What are your loss ratios, including administrative and medical

2. What is the desired operating expense factor for administration

3. Of the premium retained by you, what is the breakdown of its allocation


1. Do you have an experimental/investigative exclusion? How does it work

2. What are the most frequently requested procedures presently being denied on the basis of experimental/investigative or not medically necessary exclusions

3. Do you cover and have reserves for organ transplants

4. How long is the standard allowable hospitalization for pregnancy/birth? Under what circumstances may it be extended? This is perhaps a major indication of a plans recognition of the changing emotional and political environment.? During early 1996, many women/some physicians have called for extending stays in the hospital from the previously "acceptable" 24 hours to perhaps 48 hours due to the early problems with babies.

5. Are oral contraceptives covered


1. Are your providers allowed to share with patients information on treatments which are not allowed by the plan due to the costs involved? Have you previously disciplined anyone for divulging this information

2. How do you plan to determine which providers to contract with? Are providers given incentives for refusing to contract with other plans

3. Do you participate in outcomes research? Do make available physicians performance review data to patients?

4. What is the number of hospital days utilized in a year for every thousand members

5. Is your plan NCQA (National Committee for Quality Assurance) accredited

6. Does your plan participate in HEDIS (Health Plan Employer Information and Data Set) outcome studies? Are outcomes published? (The study deals with sophisticated medical measurements?)


1. Do you notify members when their PCP is no longer a member of the plan? How? Who pays for a visit when a member sees a provider non longer on the plan if the member has not been informed?

2. What happens when a participant is billed for services by a member provider? How do you deal with the fact that the participant is at financial or credit risk when the dispute is between the provider and the plan

3. Do you offer a performing guaranty


1. Do you have a nurse of RN on call 24 hours for question at the plan lever? At the medical level

2. Are all family members required to use the same IPA or medical group? If a member has a child living out of the area, how is this handled (divorce situations for example)

3. What is the procedure if a change of PCP is desired

4. How often can members change their PCP at will

5. Is your service area limited to certain distance from a member's work or home

6. When a member moves our of state, is there any transition coverage available

7. Are you adding IPA to your plans


1. Do you have open formulary

2. If you have a closed formulary, are there conditions for which your formulary does not carry medication

3. Does this mean that if there is only one drug for a condition and it is not on your formulary, it would not be covered? If so, would the medication be covered under a major medical

4. What determines which drugs are on your formulary

5. How do you communicate drugs on your formulary to the members? To the pharmacies? To the providers


1. Of the amount you receive from the HMO, what is the percentage breakdown of its allocation for : primary care, specialists, hospital, administrative (claims, utilization management, stop-loss coverage), carve out (lab services, mental health, organ transplants) and profit?

2. Do you have provider excess loss insurance? If so what is the specific amount? What is the aggregate amount? For terminal liability purposes, in the event of termination, what is the extended period of time for submitting claims incurred beforehand

3. Do you have an HMO coordinator available for member service issues on site

4. Does your plan have gynecologists contracted as primary care physicians? If so, how do you communicate this to members

5. How long is a typical office visit with PCP? Is there any set time allowance/limit for a visit? Recognize that some physicians that have been terminate from HMOs are severely criticized the HMO for not allowing proper time for examinations?

6. Do you have a nurses on RN on call 24 hours for questions at the plan level? At the medical group level?

HMO's and MEDICARE COSTS (1997): In setting HMO rates, the Health Care Financing Administration calculates the average fee for service (FFS) payments for Medicare beneficiaries in each county and sets payment at 95% of that county average. However, "HCFA's method of determining the county rate excludes HMO enrollees' costs in estimated per-beneficiary average cost. The result is that in counties experiencing favorable selection, HCFA's method overstates the average costs of all Medicare beneficiaries and leads to overpayment," the GAO maintains.

Because HMO enrollees are often healthier and thus less costly than the typical beneficiary, including HMO enrollees when calculating each county's average cost would frequently lower the average. GAO says that revising the HMO rate formula using its recommendations would yield payments "that more accurately represents the costs of all Medicare beneficiaries." Further, it would reduce the widely acknowledged overpayments of HMOs by 25%. The remaining amount of overpayments stem from the lack of a sufficiently sophisticated risk adjustment factor, an issue expected to take years to resolve.

GAO applied its revised formula to California HMO payments by Medicare, finding that it reduced payments by $276 mil. in 1995. The Physician Payment Review Commission has estimated that total "excess" HMO payments may reach as high as $2 billion per year.

Managed Care: 1999 ( A recent survey by Inc found that 68.5 percent of respondents were highly satisfied with their Medicare HMOs in 1999, compared to 66.9 percent in 1998. In addition, 80.8 percent said they were likely to re-enroll in 1999, vs. 78.6 percent in 1998.

Highest rated Medicare HMOs, 1999
Arizona CIGNA HealthCare for Seniors
Baltimore/D.C./northern Virginia CareFirst (Blue Cross and Blue Shield) MediCare First
Boston metro Harvard Pilgrim First Seniority
California Kaiser of California Senior Advantage
Cincinnati metro Anthem Blue Cross and Blue Shield Senior Advantage
Connecticut PHS (Foundation Health System) SmartChoice
Florida Prudential HealthCare SeniorCare
New Jersey Aetna U.S. Healthcare Senior Advantage, AmeriHealth 65 (tie)
New York metro HIP/VIP
Greater Philadelphia Independence Blue Cross Keystone 65
Greater Pittsburgh Highmark Blue Cross and Blue Shield SecurityBlue
St. Louis bi-state metro Group Health Plan (Coventry) Advantra