Office of the Attorney General News Release Archive

Thursday, September 27, 2001


HMO provider payment practices under scrutiny

AUSTIN - Texas Attorney General John Cornyn has launched an investigation into physician and hospital complaints lodged against health maintenance organizations to determine whether their payment practices comply with Texas law.

Physicians and hospitals across the state have complained to the Attorney General about these HMO payment practices. A number of health care providers have terminated contracts with HMOs because of these allegedly improper payment practices.

"This investigation seeks to determine the extent to which other physicians and hospitals in Texas have experienced similar problems," Attorney General Cornyn said. "The information we seek will allow us to determine whether HMOs have been violating Texas laws."

The complaints about HMO payment practices include:

  • bundling services or grouping separate procedures into one at a lesser reimbursement rate,
  • downcoding or reimbursing at rates less than those to which the HMO agreed,
  • failing to communicate or changing reimbursement rates, and
  • retroactively denying payment for certain hospital stays despite prior approval from the HMO.

"These payment problems may affect patients' access to doctors of their choice and, ultimately, affect patient care. No doctor should be forced to choose between practicing medicine and dealing with an unfair payment scheme," Attorney General Cornyn said.

"If a physician or hospital refuses to contract with certain health plans because of unfair payment practices, that necessarily affects patients' access to health care and cannot be good for patients." The investigation involves nine HMOs, which represent approximately 80 percent of the HMO business in Texas.

The practices complained about could violate Texas statutes that regulate insurance companies and protect consumers.

If this investigation discloses violations of Texas law, the Attorney General is authorized to seek a temporary or permanent injunction against an HMO. Additionally, the Attorney General can seek penalties up to $10,000 per violation, plus attorneys fees and costs.

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