A Medical Device Daily

The Centers for Medicare & Medicaid Services (CMS) reported that, after being found compliant with Medicare requirements through a comprehensive marketing review, seven health plan sponsors may resume marketing their Private-Fee-For-Service (PFFS) plans. The approvals allow the sponsors, as well as all other Medicare Advantage organizations, to market to newly eligible Medicare beneficiaries through Oct. 1, 2007. The plans may also market to those beneficiaries with special enrollment periods.

The health plans were shut down by CMS earlier this year because of concerns about marketing practices (Medical Device Daily, June 20, 2007).

The United Health Group, Blue Cross Blue Shield of Tennessee, Humana, and Sterling Life Insurance represent four of the seven sponsors that voluntarily suspended marketing PFFS plans earlier this year that are now approved.

CMS completed a similar review of and approved PFFS-plan marketing by the three other sponsors, Coventry Health Care, Universal American Financial, and WellCare Health Plans, in August.

“Overseeing the marketing activities of Medicare Advantage plans to ensure beneficiaries have access to the healthcare services they need, and are not discriminated against in any way is one of my top priorities,” said CMS Acting Administrator Kerry Weems. “CMS conducted a comprehensive review of these seven sponsors and found vast improvements to their internal controls and oversight processes consistent with regulations and guidance for Medicare private-fee-for-service plans. But we’re not stopping there. Medicare’s procedures to continuously monitor all plans marketing, including the activities of their agents and brokers, are now in place.”

Any plan that is found to be in violation of CMS requirements can be subject to a full range of available penalties, which can include suspension of marketing and/or enrollment, suspension of payment for new enrollees, civil-monetary penalties, and termination from the Medicare program.

CMS said the suspensions of the plan sponsors’ PFFS market activities were lifted only after it verified that each organization had the systems and management controls in place to meet all of the conditions specified in the 2008 Call Letter and the May 25, 2007 guidance issued by CMS.

CMS said it has more than a dozen new oversight activities underway. Some of these activities include:

• Creation of a dedicated monitoring team and a comprehensive rapid response plan

• Enrollment verifications of new PFFS plan enrollees by CMS to ensure the enrollees were not subject to inappropriate marketing activities and understand the characteristics of a PFFS plan;.

• Increased “secret shopping” at PFFS marketing events.

• Random audits of PFFS agent training and test files.

• Thorough reviews of PFFS enrollment packages to verify all required disclaimers are included.

• Coordination with state insurance departments to share information about agent and broker complaints and license suspensions.

CMS said it has also developed an outreach plan to educate beneficiaries, advocacy organizations, and other interested parties about the marketing guidelines.

• “The best practice is prevention. We believe the new requirements and compliance plans build a system that is designed to prevent marketing violations,” Weems said.

FTC won’t pursue antitrust action against GRIPA

Staff of the Federal Trade Commission (FTC) has advised the Greater Rochester Independent Practice Association (GRIPA; Rochester, New York), a multi-specialty physician practice association that includes competing primary care and specialist physicians that practice in the three-county greater Rochester, New York, area, that it has no present intention to recommend a challenge to the organization’s proposed operation as a non-exclusive physician network joint venture.

GRIPA requested a staff advisory opinion concerning its proposal to integrate and coordinate the provision of medical services to patients by about 575 physicians in 41 medical specialties through a program of “clinical-improvement services” through which the physicians would work together to improve quality and control costs.

GRIPA’s proposed program seeks to coordinate the care provided to patients by its physicians. Physicians generally will be required to refer patients to physicians within the network, in order to better assure that care is subject to GRIPA’s treatment standards at all times, and to better monitor treatment and outcomes. The program includes several components intended to assure that its physicians use “best practices” and “evidence-based” medicine in treating patients.

GRIPA said it will contract jointly for the sale of its participating physicians’ services to health plans on a fee-for-service basis. GRIPA believes that joint contracting with payers is necessary in order to assure that all its physicians participate in the program for all patients and under all contracts, and thereby better achieve its quality and efficiency goals.

The organization will operate as a non-exclusive network, which means that its individual physician members will be available to negotiate and contract separately with health plans and other customers not wishing to purchase the network services.

While the staff letter could not prospectively determine what, in fact, the competitive effects of the proposed program’s operation would be, and raised some concerns about the percentages of GRIPA physicians in certain specialties in some areas, it nevertheless concluded that GRIPA appeared unlikely to be able to exercise market power or have anticompetitive effects in the market for provision of physician services in the greater Rochester area for several reasons.

The staff opinion letter, dated Sept. 17, was signed by Markus Meier, Assistant Director of the Health Care Services and Products Division of the FTC’s Bureau of Competition. It concluded that the proposed program appeared to “involve substantial integration by its physician participants that has the potential to result in the achievement of significant efficiencies that may benefit consumers.” The letter also concluded that joint contracting by GRIPA appeared to be subordinate to the program’s primary purpose of interdependently improving the quality and efficiency of the member physicians’ services, and appeared to be “subordinate to, reasonably related to, and may be reasonably necessary for, or to further, GRIPA’s ability to achieve the potential efficiencies” from the program.

Because of the program’s procompetitive potential, the ancillarity of the joint contracting to furthering achievement of its potential efficiencies, and the indications that GRIPA would be unlikely to be able to exercise market power, staff concluded that they would not recommend that the Commission challenge the program “unless it became apparent that GRIPA in fact was able to exercise market power or otherwise have an anticompetitive effect in a relevant market.”