A judge in Fort Worth last month ordered Harris Methodist Health Plan to stop fining physicians who exceed pharmacy budgets. District Judge Bonnie Sudderth ruled that Harris Methodist Health Plan's risk-sharing mechanism violates a state law that bars HMOs from paying physicians or other providers in ways that even indirectly create incentives to limit medically necessary care.

Harris Methodist pays physicians a percentage of premiums to provide care, and budgets a separate portion of premiums for prescription drugs. Physicians exceeding their pharmacy budgets must repay 35 percent of the excess, while physicians who are under budget get some of the surplus back as a bonus.

Harris Methodist faces a class-action lawsuit filed by 400 physicians who contend that its physician-payment system is illegal. The case is scheduled to go to trial in January. On the other side of the fence, 180 physicians have said through affidavits they support the Harris compensation system.

Primary care physicians who contract with Harris Methodist exceeded their pharmacy budgets by $3.2 million in 1995–96, and paid $1.1 million in fines. In 1996–97, doctors were $4.5 million over budget and paid $1.5 million. Nearly three of four Harris Methodist doctors exceeded their pharmacy budgets in 1996–97.

The pharmacy provisions of the Arlington-based health plan's contracts "have resulted, and will continue to result, in the denial of medically necessary care to Harris HMO members," Sudderth wrote in her decision.

"These denials include circumstances of cherry-picking, patient-dumping, practice consolidation and outright denials of treatment, referrals and prescriptions."

In April, the Texas Department of Insurance recommended that Harris pay an $800,000 fine and repay physicians who were penalized for going over budget. The plan has requested a public hearing to explain its practices before Insurance Commissioner Elton Bomer decides whether to accept the recommendation and impose the fine.

The HMO contends that it knows of no case in which its compensation system led to care being denied. It plans to appeal the pharmacy decision to the Texas Court of Appeals, which could rule by July.

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There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

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The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.