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Medical Costs Definitions Differ In Minn. Dispute

MANAGED CARE June 1998. © MediMedia USA
State Initiatives

Medical Costs Definitions Differ In Minn. Dispute

MANAGED CARE June 1998. ©1998 Stezzi Communications

The Minnesota Physician-Patient Alliance last month charged the state's three largest HMOs with spending up to 38 percent of total expenses on administration and other non-medical items. The HMOs--Blue Plus, Medica and HealthPartners — contend that the number is actually about 10 percent, and claim that they are highly efficient.

Part of the discrepancy is based on differing definitions of medical versus administrative costs. The alliance counts the costs of managing physician care as administrative. The HMOs say those are medical costs. The alliance of 1,000 physician members admits its estimates are imprecise, but blames that on vague laws regulating the way HMOs report financial information.

The alliance may have a bigger agenda. It seized on the discrepancy to claim that the relationship between the state's health department, which oversees HMOs, and health plans is so close that plans are allowed to submit confusing data — a suggestion the health department denies. The alliance wants the Department of Commerce to assume oversight of HMOs.