SACRAMENTO (AP) — Only 44 percent of doctors’ groups met state solvency standards in the first three months of this year, an indication that many are struggling financially.
“Some are doing well and some are not, but now we have a clear picture,” said Daniel Zingale, head of the state Department of Managed Health Care.
“There’s clearly a serious problem of too large of a percentage not meeting the criteria.”
The standards include whether the group’s working capital exceeds its claims, tangible assets top liabilities, the group tracks unpaid claims and whether claims are paid on time.
Dr. Jack Lewin, chief executive of the California Medical Association, which represents about half of California’s physicians, said the groups’ financial problems are mainly caused by “woefully underfunded contracts with for-profit, investor-owned health plans.”
Zingale said most of the problems are caused by “reimbursement problems or mismanagement or a combination of both” but that the amount of reimbursement was sometimes the cause.
He said the department is bringing HMOs and doctors’ groups together to try to resolve the problems and is beginning to develop more formal plans to fix problems.
The more than 200 doctors’ groups provide medical care under contracts with HMOs.
“Some of them are loose networks of doctors,” Zingale said. “Some of them are actual medical group establishments that own a building and operate as an independent entity but act as a subcontractor for HMOs.”
The California Nurses Association and consumer groups supported release of the information but many doctors’ groups objected, saying it was old and could be misinterpreted by patients.
“We were extremely close to meeting the working capital standard in the first quarter and, as of today, we meet the standard,” said Gloria Austin, chief executive officer of Brown & Toland, San Francisco’s largest doctors’ group.
Meanwhile, more than 13,500 seniors in three San Francisco area counties — Contra Costa, Alameda and Solano — are facing their own health care financing problems. They’re losing their HMO coverage.
The announcement by PacificCare Health Systems that it would discontinue the coverage by the end of the year mirrors a national trend that insurers say has been created by rising medical costs and declining federal Medicare reimbursements.
Blue Cross also sent out notices to about 150 people in the three counties terminating their coverage.
The HMO plans are popular among seniors because they often include prescription drug coverage and other benefits not available through Medicare.
The PacificCare and Blue Cross announcements mean that seniors will have to rely on Medicare or try to find another HMO that may charge more and provide fewer benefits.
“Generally, once there’s less competition, the ones that are left do raise rates,” said Earl Lui, senior attorney for Consumers Union. “HMOs are finding that this line of business is less profitable than they thought.”