U.S. to Limit HMO Incentives Linked to Curbs on Medicare, Medicaid Treatment

Important note: Information in this article was accurate in 1996. The state of the art may have changed since the publication date.

U.S. to Limit HMO Incentives Linked to Curbs on Medicare, Medicaid Treatment

Washington Post (12/27/96)
Baker, Peter

Abstract: New federal rules to be instituted next week address the health care industry's dilemma of trying to contain costs while also easing fears that patients will not receive necessary care. The new regulations from the Health Care Financing Administration will restrict the financial penalties which may be assessed against Medicare and Medicaid providers who order referrals or expensive procedures. Health maintenance organizations (HMOs) will still be able to link physicians' pay to their abilities to keep costs down, though financial losses for doctors who refer patients to specialists or prescribe elaborate tests and treatments more often than an HMO prefers will be limited. Industry leaders appear content with the new rules. Industry officials and federal officials both say they are not aware of any specific evidence of problems stemming from an HMO's financial incentives, but rather they note both the public's concern about the issue and the need to reassure it.

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