Physicians are ordered to limit referrals Managed care firm's letter 'ill-advised'

August 03, 1996|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

Maryland's largest managed care company, reeling from a 33 percent increase in claims, has warned participating physicians to limit their referral of patients to specialists or risk losing their contract with the company.

In a letter to member physicians, Mid Atlantic Medical Services Inc. ordered that all referrals by primary care doctors to specialists should be for one visit.

"Follow-up visits to specialists should occur only if medically necessary and ongoing care is beyond the scope of the primary care physician," the letter said.

Dr. Alex Azar, president of the Medical and Chirurgical Faculty of Maryland, yesterday said the "ill-advised" letter created "fear and panic" among physicians.

"The quality-of-care issue here is horrendous," he said. "Medically, are you going to force a general practitioner or a primary care physician to do a treatment they feel uncomfortable doing?"

He said MAMSI's July 12 letter was "the first written evidence" confirming physicians' longtime fear that once highly profitable health maintenance organizations will clamp down on health care when they begin losing money. He said doctors have been talking with other HMOs about cost-cutting but have not received such directives.

The company defended the letter yesterday, saying controls were necessary.

"One of the cornerstones of health care management is active coordination between the primary care physician and specialists to assure members receive quality care," said Michael H. Savage, a MAMSI spokesman. "Limiting initial referral to one will help us achieve that goal."

Rockville-based MAMSI operates two HMOs in Maryland, Optimum Choice Inc. and M.D. Individual Practice Association Inc. According to the company's filing with the state Insurance Commission, they cover nearly 650,000 people, mostly in the Washington suburbs.

After several years of increasing profits, MAMSI officials recently told analysts they expect to lose 5 cents to 10 cents a share for the second quarter, which ended June 30. Analysts had expected profits of roughly 29 cents a share.

"I think they're trying to say that they're in financial trouble and would like to cut down on the referral of specialists," Azar said. "To make a blanket statement that only one referral to a specialist is warranted was just not common sense."

In its letter, the company cited a 33 percent rise in claims during the first six months of 1996 and blamed much of that on inappropriate referrals to specialists.

"We have seen that primary care physicians, in many instances, are not actively managing the care of their patients," the letter said. "We are terminating the contracts of physicians and affiliates who fail to meet performance patterns for their specialty."

The letter did not specifically outline MAMSI's policy on specialists, referring doctors instead to the "provider manual."

But Savage yesterday elaborated on the company's policy. After the initial referral, he said, the specialist should submit a treatment plan to the primary care doctor.

"If it's medically appropriate, the primary care physician can provide ongoing treatment himself or authorize that the specialist provide it," Savage said.

Once there has been a specified number of visits to a specialist, the specialist may submit a new plan of treatment, Savage said.

"What we have seen happening is that referrals or specialist visits have been accelerating without benefit of a treatment plan," he added. "We're trying to control costs while providing members with appropriate levels of care."

Azar said the company's costs have risen, in part because of salaries paid to such officials as Chief Executive Officer George Jochum. MAMSI confirmed yesterday that Jochum received nearly $4 million last year through salary, bonuses and the exercise of stock options.

Savage said the company's administrative costs are lower than the average for Maryland HMOs and that the increase over the past 12 to 15 months reflects the company's continuing expansion more than anything else.

The company, which covers 1.7 million people in the mid-Atlantic region, recently announced plans to expand in North Carolina and Pennsylvania.

Pub Date: 8/03/96

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