OIG issues sweeping model plan for MCOs

Controversial plan recommends MCOs identify, prioritize, and report their own risk areas

On June 10, the Department of Health and Human Services Office of Inspector General (OIG) released what Mac Thornton, OIG’s chief counsel, calls its most important model plan to date, for managed care organizations with Medicare+Choice programs. Thornton predicts the detailed draft program will have a major impact on how managed care organizations deal with hospitals, home health agencies, and other providers.

Thornton unveiled the model plan last Thursday at the Health Care Compliance Association’s Managed Care Conference in Washington, DC. He said it will likely be published in the Federal Register this week with a 30-day comment period. He anticipates the final program will be released by late summer or early fall.

The voluntary draft program offers guidance to managed care organizations that provide care to Medicare+Choice-coordinated care plans. These plans already serve more 6 million of the country’s 39 million Medicare beneficiaries, and that number is expected to rise sharply over the next few years. However, because plans are paid a fixed monthly amount for each beneficiary’s care, the government is concerned about the incentive those plans have to limit the care they offer. The Health Care Financing Administration (HCFA) already requires these plans to have a compliance program in place that includes seven key elements but gives them broad discretion in how to meet those requirements. That is where the OIG’s plan comes in, providing a more specific and focused level of guidance.

Even so, many observers were surprised by the scope of the OIG’s recommendations. "My expectation had been that these guidelines would focus on the process for compliance and not the substance, but I think you will see in there that there is a lot of substance," asserts Wendy Krasner, a health care attorney with the Washington, DC-based firm McDermott, Will & Emery. "Whether we quarrel with it or not, there is a lot in there."

For Krasner, one particular point of contention is the model plan’s recommendation that managed care organizations look at all the areas where their companies face possible exposure and prioritize them accordingly. Asking a provider to do that is tantamount to asking them the hand a potential auditor a map of potential land mines, she says.

Thornton acknowledges that this model plan represents a departure from the OIG’s previous plans. "The other guidance documents basically concern billing issues," he says. "But this document addresses many policies which concern the direct provision of care to Medicare beneficiaries. That is why we feel this guidance is perhaps the most important of all the ones so far."

According to Thornton, the OIG’s "four top areas of concern" regarding Medicare+Choice programs include:

  • Underutilization and quality of care. Thornton says the OIG has a "serious concern" about organizations that inappropriately withhold care. Providers should pay particular attention to gag rules and physician incentive plans.

  • Marketing materials and personnel. Thornton points to a recent General Accounting Office study that highlighted problems with marketing materials and says his office is now focusing on how some managed care organizations might be limiting beneficiaries’ choice of providers. He also says his office urges firms to "employ rather than contract" the personnel responsible for developing these materials.

  • Selective enrollment. Thornton says the OIG is "very concerned" about the practice known as "cherry-picking" or selective marketing, in which organizations find ways to enroll only the healthiest patients.

  • Disenrollment. Citing a recent review that showed beneficiaries were being disenrolled just before they were supposed to receive expensive services, Thornton says the OIG is now investigating the causes behind these disenrollments.