Texas-Aetna Incentives Settlement Worries Some Capitated Physicians

When Aetna U.S. Healthcare and Texas's attorney general settled a lawsuit over financial incentives last month, the AMA viewed it as an improvement in Aetna's physician relations. However, if the Texas deal ignites a trend away from the use of incentives to keep utilization down, then some capitated physicians worry it will put them in a tight spot.

"This is going to put a tremendous squeeze on primary care physicians," says Walter Lane, M.D., a Florida family practice doctor. "They're saying, 'We're not going to reward you if you manage well.' If you are unlucky, you're penalized."

Under the agreement, Aetna will stop paying incentives to physicians who limit services to keep the cost of care within a budget. Doctors who exceed budgets because of needed care cannot be penalized.

The agreement comes a year and a half after then-Attorney General Dan Morales sued six Texas HMOs, alleging fraud and deceptive trade practices. A number of managed care members complained that they were denied needed care without proper explanation or because of HMOs' financial inducements to physicians.

The settlement applies only to Aetna; Cornyn hopes the other five HMOs will agree to similar provisions. Under the deal, Aetna will:

  • End capitation for physicians and groups with fewer than 100 Aetna members;
  • Offer financial incentives to physicians for providing preventive care;
  • Define medical necessity so members understand the basis for coverage decisions;
  • Stop forcing physicians to accept all-or-nothing products clauses in contracts.

In exchange, the state will not pursue fines against Aetna. Originally, Texas had sought $10,000 per violation.

Lane is concerned that the agreement "emasculates" managed care and capitated physicians' ability to practice it.

"It's another tool out of the tool box," he says. "We are very close to the point where managed care is not managed care — it's just cost containment, not allocating services on a rational basis."

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