A MANAGED CHANGE?
By Jason Moshier
Biology Senior Seminar
November 25, 1996
CONTENTS:
I. INTRODUCTION
II. MANAGED CARE HEALTH INSURANCE
- 1. denying or delaying treatment
- 2. quality of care
- 3. financial incentives for physicians
- 4. the "gag rule"
- 5. switching to new doctors and doctors having
to join more plans
- 6. percentage of premium costs going directly
to medical care
- 7. effects on medical research and education
- 8. effects on the uninsured
E. Assessing plans for quality
III. HOSPITAL REENGINEERING
IV. CONCLUSION
INTRODUCTION
Several years ago, health care reform was a hot political topic with
President Bill Clinton's proposals to revolutionize medical health insurance.
Even though his proposals didn't become law, sweeping changes are occurring
within the health care system, particularly in regards to managed care health
insurance and the reengineering of the hospital. The goals of these changes
are to cut medical costs, make the delivery of health care more efficient,
and to promote preventive medicine, health, and primary care. While these
changes are positive in many ways, they are also creating concerns among
both the health care consumer and provider. These changes must be managed
to insure that high quality care remains at the forefront of medical care.
MANAGED CARE HEALTH INSURANCE
GROWTH AND DEVELOPMENT
Managed care plans are the fastest growing form of health insurance (Whigham-Desir,
1996). Sarah Glazer (1996) describes the concept of managed care: "The
underlying principle of managed care is to keep the entire community healthy
by providing preventive care, such as immunizations and mammograms, at little
or no cost. In exchange for lower premiums, copayments and deductibles,
the consumer agrees to see a limited group of physicians selected by the
plan. The plan keeps costs down by limiting the consumer's access to expensive
specialists and procedures." Since three-fourths of Americans receive
health insurance through their employer, managed care plans are becoming
increasingly popular as both employer and employee seek to decrease medical
care costs (Whigham-Desir, 1996).
Managed care has been around since the 1930s when HMOs were formed to promote
preventive medicine among doctors (Spragins, 1996). In the 1970s, the federal
government encouraged the formation of HMOs to control rising hospital costs
(Glazer, 1996). In the late 1980s, costs skyrocketed, and in 1988, employers'
health benefit costs rose a record 18.6 percent (Glazer, 1996). As a result,
managed care began to take root, and by 1993, a majority of employees were
covered by managed care (Glazer, 1996). With medical costs approaching one
trillion dollars, 15 percent of the Gross National Product, cost containment
is a major issue (Shortell, Gillies, & Devers, 1995). As of July of
this year, 56 million people have joined managed care plans (Bennett Clark,
1996), and another 50 million will have joined by 2000 (Spragins, 1996).
TYPES OF HEALTH INSURANCE PLANS
At least 1,000 health insurance plans exist but they fall into certain categories
(Whigham-Desir, 1996). The traditional plan has been the indemnity or fee-for-service
plan. Patients visit any doctor at any time and pay directly for their treatment.
They can be reimbursed later, usually for 80 percent of the cost (Whigham-Desir,
1996). These plans are the least restrictive, but the most expensive.
Four types of managed care plans exist. They are the health maintenance
organization (HMO), preferred provider organization (PPO), point-of-service
(POS), and independent practice association (IPA). In an HMO, the member
is offered a specific list of doctors and hospitals from whom he or she
must receive care in order to be covered. He or she must also choose a primary
care physician clled the "gatekeeper" through whom all care is
channeled. This type of plan is the cheapest but most restrictive.
Three other types of managed care plans are available. A PPO contracts with
doctors and specialists to provide care at discounted rates. Members usually
have a wider choice than an HMO (Glazer, 1996). They can utilize these services
without going through a gatekeeper, but if they go outside of the plan they
pay like fee-for-service, usually with 70 percent of the cost covered (Whigham-Desir,
1996). A POS plan is similar to a PPO, in that members can receive care
from a certain list of doctors and specialists who've contracted with that
insurer. They can also see non-plan doctors with or without a gatekeeper's
permission, but they must be willing to pay more and pay like fee-for-service
if they do so (Whigham-Desir, 1996). An IPA is a fourth managed care plan
"in which individual physicians, typically practicing out of their
private offices as part of a medical group, contract with a health plan
for a fee or fixed amount per patient" (Glazer, 1996).
ADVANTAGES OF MANAGED CARE
Managed care offers advantages over the traditional fee-for-service plans.
Cost is the primary reason so many people are joining managed care plans.
Members pay premiums like fee-for-service, usually by having the cost deducted
from their paychecks, but when they visit the doctor they only have to pay
a $5 to $10 copayment fee so an $8,000 bill for delivering a baby would
only cost a $10 copayment fee (Whigham-Desir, 1996). In fee-for-service,
proponents of HMOs say that doctors had a tendency to overtreat to receive
more income since each treatment or test carried an additional fee (Glazer,
1996). Managed care seeks to control more how doctors treat patients to
prevent overtreatment and higher costs.
Other advantages are that there are no deductibles to pay or insurance claims
to fill out by the consumer (Whigham-Desir, 1996). Also, a person has one
"wellness checkup" a year, while babies have several checkups
during their first year so such a plan is ideal for families or people with
health problems that need regular checkups (Whigham-Desir, 1996). Doctors'
credentials also tend to be screened more by managed care companies (Glazer,
1996). Glazer (1996) points out another advantage: "By relying heavily
on a primary-care physician as an overall health-care coordinator, HMOs
may give more comprehensive care to someone with a disease that crosses
several specialties."
DISADVANTAGES AND CONCERNS OF
MANAGED CARE
Despite the positive aspects of managed care, problems have arisen. Former
U.S. Surgeon General C. Everett Koop (1996) notes that "the rapidly
proliferating HMOs-most of them investor owned and for profit-seem to be
interested firstly in managing costs and only secondarily in maintaining
health. When profit, not health, is the objective, it poses a real threat
to the doctor-patient relationship, to academic medical centers, to medical
research, and to those who are unable to obtain health insurance. Whatever
its flaws, traditional fee-for-service medicine always allowed physicians
to act as advocates for their patients. HMOs cannot assure us that physicians
will, in every instance, put their patients first."
In recent years, a few incidents have made the news in which a patient's
medical care wasn't covered by an HMO. A major legal battle usually followed
in response to the HMO's refusal to provide coverage. Nelene Fox was a patient
who was found to have breast cancer in 1991 at the age of 38. A $200,000
experimental bone marrow transplant was thought to be her best chance at
survival, but her HMO, Health Net, refused to cover it. She and her family
raised the money for the operation, but in early 1993, she died nine months
after receiving it. Because they didn't provide coverage, Health Net was
sued by her family for $89 million but an undisclosed amount was settled
on later. The case caused Health Net and other HMOs to allow more bone marrow
transplants (Glazer, 1996).
As in Nelene Fox's case, denying or delaying
specialized care is a major concern for members in a managed care plan.
Glazer (1996) mentions that "as the nation shifts to managed care and
changes its focus from high-tech care for the very sick to keeping the overall
population healthy, controversies like the Fox case are inevitable, some
experts say." She also says, however, that "delays in referrals
to the right specialist can have serious consequences for people with complicated
illnesses." Therefore, people with severe illnesses may be at a disadvantage
if they are enrolled in a managed care plan. Since cost containment is a
major goal, limiting access to specialists is encouraged among the primary
care doctors in a managed care plan.
The question of whether or not the quality of
care is suffering because of managed care is debatable. Quality has been
found to be equal according to studies comparing traditional fee-for-service
and managed care (Glazer, 1996). Glazer (1996) also notes that the same
studies reveal that HMO patients tend to be less satisfied with their care
but happier with the costs than people in fee-for-service plans. Bennett
Clark (1996) cites a study indicating that managed care members with illnesses
are more restricted from specialized care, wait longer for care, and tend
to be unhappier with their physicians than people in fee-for-service plans.
Not only is access to specialized care more restricted
in managed care plans, but many plans offer physicians financial incentives
to deny advanced care. Glazer (1996) cites what two Harvard doctors feel
about HMOs: "Doctors who contract with HMOs may find that the fixed
fee they receive for each patient, known as "capitation", just
covers their costs, they said. To make a reasonable income, the authors
said that physicians must earn bonuses for keeping down hospitalizations,
referrals to specialists, and other costs." Sometimes an HMO will withhold
pay from a primary care doctor to pay for specialized care (Bennett Clark,
1996).
The incentive not to refer patients to specialists
leads to another problem with managed care: the so-called "gag rule"
which threatens doctor-patient relationships. Contracts with doctors often
contain a clause which doesn't allow the doctors to discuss with their patients
financial incentives to deny treatment or about treatments not covered by
the plan (Glazer, 1996). This has caused many consumers, especially those
with chronic illnesses, to form organizations with the American Medical
Association and physician specialty groups to promote legislation forbidding
"gag rules" (Glazer, 1996). One group, Citizen Action, has 3 million
members and "has been lobbying in state legislatures for laws that
would require plans to disclose how they pay their doctors; give patients
the right to choose specialists outside the plan; and provide appeals for
patients who get turned down for expensive treatments" (Glazer, 1996).
The doctor-patient relationship is also affected
if a patient must switch to a new doctor under managed care. Having a longterm
relationship with a primary doctor is important because he or she is more
knowledgeable about the patient's history. If employers switch often to
to other managed care plans, the primary care doctor a patient sees is also
likely to change (Glazer, 1996). This affects the physician's practice as
well. To keep patients, a doctor is often inclined to join more insurance
plans. This is the case for OB-GYN physician M. Gerald Hood of Atlanta who
belongs to 15 different plans, but despite this, his practice has declined
50 percent in the last three years (Bennett Clark, 1996).
Another concern deals with the percentage of
the premium cost which goes directly to medical care. The remaining percentage
finances administrative costs and profits. Bennett Clark (1996) says that
"a plan with 90 percent of premiums going to medical care is "very
good"." Some plans, however, set aside up to 25 percent for administration
and profit according to a California Medical Association survey, and Cathy
Hurwit of Citizen Action says, "There are a lot of plans that are ripping
consumers off" (qtd. in Glazer, 1996). Legislation is being promoted
by Citizen Action which requires at least 85 percent of premiums to be spent
on medical care (Glazer, 1996).
Medical research and education is also being
affected by managed care. The HMO, Health Net, like other HMOs doesn't spend
money on research and also won't cover experimental or investigative treatments
(Larson, 1996). In the past, research has been paid for by patient bills,
but teaching hospitals are having to compete with managed care plans for
patients (Glazer, 1996). Since managed care promotes preventive medicine
to serve community needs better, medical research is becoming a lesser priority.
Managed care is also hurting the uninsured poor.
In the past, doctors paid for such people through the bills of other patients,
but with managed care, such a cushion won't be available (Glazer, 1996).
ASSESSING PLANS FOR QUALITY
With the concerns managed care is bringing, assessing plans for quality
is vital. Close to 600 HMOs exist, and most are new (Spragins, 1996). Managed
care plans receive accreditation from the National Committee for Quality
Assurance (NCQA), and they are judged on 50 different characteristics such
as the credentials of the plans' doctors (Spragins, 1996). Under half of
the HMOs have been reviewed, and 37 percent received full accreditation,
39 percent received partial accreditation, 11 percent received provisional
accreditation, and 12 percent failed to be accredited (Spragins, 1996).
These results show that many plans need to improve to be fully accredited.
The quality of a plan can also be reviewed if it publishes the results of
the Health Plan Employer Data and Information Set (called HEDIS) (Spragins,
1996). Two other quality control measures to look for is the percentage
of a managed care plan's doctors that are board certified and if the plan
is associated with hospitals accredited by the Joint Commission on Accreditation
of Healthcare Organizations (Spragins, 1996).
Regardless of these quality control measures, another concern exists. According
to surveys, NCQA results aren't used by most employers in determining which
plans to use (Glazer, 1996). Cost, rather than quality, is the determining
factor in deciding which plan to sign up with. However, employers will need
to start assessing plans for quality more now that costs are being controlled
(Glazer, 1996).
HOSPITAL REENGINEERING
Managed care will continue to revolutionize the health care industry, and
hospitals are being "reengineered" to accomodate the goals of
managed care. They will no longer be the "core business" of health
care, and they are being replaced by outpatient services which can provide
primary care, health promotion, and chronic disease management (Shortell,
Gillies, & Devers, 1995). Outpatient care has increased 73 percent between
1980 and 1992, and 98 percent of medical care now occurs outside the hospital,
with 70 percent of surgery being done on an outpatient basis (Shortell,
Gillies, & Devers, 1995). Advances in medical technology are causing
such growth in outpatient services, and more group practices, ambulatory
care centers, home health agencies, subacute units, and hospices are becoming
available (Shortell, Gillies, & Devers, 1995).
Shortell, Gillies, & Devers (1995) mention that after assessing the
needs of the community, many hospitals find that they have too many patient
beds and specialists and too few primary care doctors, home health, an after
care services. They also describe how in 1873 there was one hospital bed
for 800 people, but in 1994 there was one bed for 200 people, and it is
believed that only one bed is needed for 900 people. Some hospitals have
an excess number of inpatient beds with some only being half-filled, so
both staff and facilities are being downsized, and staff are being trained
to perform more procedures (Shortell, Gillies, & Devers, 1995). Many
hospitals have closed, and those remaining open have decreased hospital
admissions and lengths of patient stay. From 1980 to 1993, 949 hospitals
closed, and between 1984 and 1992 there was an 11 percent decrease in admissions
and a 20 percent decrease in inpatient days (Shortell, Gillies, & Devers,
1995).
CONCLUSION
The sweeping changes which are occurring in health care are bringing
positive changes such as cutting costs and promoting preventive medicine,
but these changes are not without concern. Problems arising from managed
care need to be understood so that the changes occurring will put the needs
of the patients first. With time, it is hoped that the problems occurring
will become history. C. Everett Koop (1996) says, "It may take five
to ten years to find the right balance of managed care, physician autonomy,
and patient rights. Health care reform poses the greatest political challenge
to a democratic republic, because each of us is being asked to do something
for all of us, and many of us feel what might be best for all of us is not
best for each of us. Before we can enact the reform we need in health care,
we should agree on the basic values and ethics upon which our health care
system-indeed our society-is based, and from which it derives its moral
power." Health care is one of the most important aspects of society,
and with the change taking place, it is paramount that it is a managed change
which will benefit everyone.
WORKS CITED
Bennett Clark, Jane (1996, July). What you should ask your HMO.
Kiplinger's Personal Finance Magazine. pp. 92-93.
Glazer, Sarah (1996, April 12). Managed Care. CQ Researcher, 6,
313-336.
Koop, C. Everett (1996, Fall). Manage with care. Time. pp. 69.
Larson, Erik (1996, January 22). The soul of an HMO. Time. pp. 44-52.
Shortell, Stephen M.; Gillies; Robin R.; & Devers, Kelly J.
(1995, Summer). Reinventing the American hospital.
The Milbank Quarterly. pp. 131-160.
Spragins, Ellyn (1996, June 24). Does your HMO stack up? Newsweek.
pp. 56-60.
Whigham-Desir, Marjorie (1996, February). What to know about choosing
an HMO. Black Enterprise. pp. 160-165.