Texas Attorney General Dan Morales (D) is looking into whether three of the state's largest HMOS provided financial incentives for physicians to reduce or deny care for patients, the Dallas Morning News reported yesterday. Officials at NYLCare Health Plans of the Southwest, PacifiCare of Texas and Prudential HealthCare confirmed that they have been asked to submit "thousands of pages of information" about their "physician compensation and consumer marketing efforts." Morales is examining whether the HMOs have violated the state's Deceptive Trade Practices Act by failing "to disclose information" about physician fees and other key insurance policy information. The Morning News quoted unnamed "people familiar with the matter" as saying that "the probe seeks to determine whether financial incentives to doctors or cost controls have resulted in reduced care ... or denial of services." The three companies under investigation "are reviewing the attorney general's request" for information, a process two HMO representatives said could cost in excess of $100,000 (Ornstein/Oppel, 6/25).
Harris Methodist Health Plan, which also has been scrutinized by Morales and the Texas Department of Insurance for forcing doctors "to choose between their bottom lines and their patients' best interest," announced that it will do away with caps on prescription spending in physician contracts and compensate doctors who were fined for exceeding the marks, today's Dallas Morning News reports. The offer was made during negotiations between the HMO and insurance regulators who opposed the policy, contending it "served as an illegal financial incentive." The offer was made by Harris Methodist President Patrick Spears after "insurance regulators recommended that Arlington-based Harris be forced to repay North Texas doctors" approximately $4 million. Furthermore, regulators suggested that Insurance Commissioner Elton Bomer require Harris to void the pharmacy clause in its October 1995 contract and pay an $800,000 penalty." Spears, while maintaining that the policies were "legal and ethical," predicted an agreement would be reached "sometime in the next two or three weeks" (Ornstein, 6/26).