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1992.12.18 :  Regulation -- Physician Incentive Plans

Contact:  Anne Verano 202-690-6145
December 18, 1992

       A proposed regulation that requires Medicare and Medicaid
managed care contractors to disclose their physician incentive
plans has been published by the Department of Health and Human
Services.  
       The rule defines the types of financial payments, such as
bonuses, that managed care organizations can provide to its
contract physicians.  Such payments are intended to deter
inappropriate and unnecessary referrals of plan members to
specialists or for expensive procedures.  
       The regulation applies to physicians providing medical
care through health maintenance organizations, competitive
medical plans and health insuring organizations.  It was
published in the Federal Register Dec. 14.
       "We recognize that managed care organizations often have
incentive plans to encourage appropriate use of services," said 
HHS Secretary Louis W. Sullivan, M.D.  "While such arrangements
are important in controlling unnecessary health care costs, we
want to be assured that any physician incentive arrangements do
not encourage physicians to limit medically necessary patient
care."
       "This regulation protects beneficiary access to care while
assuring that managed care organizations have sufficient
flexibility to assure appropriate care," said William Toby Jr.,
acting administrator, Health Care Financing Administration.      
     Under the regulation, HCFA may impose intermediate sanctions
or civil monetary penalties upon Medicare or Medicaid managed
care contractors who fail to comply with the
regulation.                          Comments on the proposed
rule will be considered if submitted within 60 days of
publication in the Federal Register.  Mail comments to the Health
Care Financing Administration, Attention: OCC-024-P, P.O. Box
26676, Baltimore, Md. 21207.

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Editor's Note:  HCFA, an agency of the U.S. Department of Health
and Human Services, directs the Medicare and Medicaid programs,
which help pay the medical bills of more than 62 million
Americans.  HCFA's estimated fiscal year 1993 expenditures are
$230 billion, the 12th largest government budget of any kind in
the world.