The Morality of Managed Care: Who is Affected?
By Steve Schrock
November 25, 1996
Thesis statement: Present managed care systems require health
care providers and recipients to reexamine established principals regarding
physician-patient interaction.
I. Introduction
II. Body
III. Conclusion
"The preservation of health is a duty" according to Herbert
Spencer, an English philosopher (Andrews, 1993). Managed care conglomerates
provide health coverage for increasing numbers of Americans. Many critics
question whether these businesses provide care dutifully. At the very least,
the present managed care system requires health care providers and recipients
to reexamine established principles underling physician-patient interaction.
Although health maintenance organizations are commonly misunderstood, Americans
hope these institutions will dampen runaway health care expenditures. Since
HMO's are increasing in number, health care recipients need to examine how
established, ethical principles in America are changing. These subtle alterations
create conflicts between physicians, HMO's, and patients. Ultimately, patients
are regarded as consumers, and understandably, quality care may be more
difficult to obtain.
Definition Of Managed Care
Although numerous health care plans presently exist, managed care plans
have dominated the marketplace since the early 1980's. Preferred provider
organizations (PPO's) and health maintenance organizations (HMO's) are the
most common, and they continue to grow in number. Since managed care has
become commonplace, the differences between PPO's, HMO's and fee-for-service
reimbursement arrangements must be critically evaluated. Without understanding
their general organizational and payment structures, moral judgments pertaining
to varying plans cannot be ascertained easily. PPO's contract with a limited
number of physicians and hospitals who agree to care for patients on a discounted
fee for service basis. On the other hand, HMO's amass insurers and providers
into one unit. Patients usually have the opportunity to enter into two basic
HMO plans: independent practices associations, which are loose networks
of private hospitals and physicians, and group models which combine doctors
and hospitals together under one complete system (Bodenheimer, 1995). Unlike
fee-for-service reimbursement which was normative previous to managed care,
HMO's usually pay doctors and hospitals massive sums up front. These payments
are arranged per diem, by capitation, or sometimes by fixed salary. Many
critics of managed care believe that these compensation packages are immoral.
What Health Care Is Now
In order to ascertain the merit of managed health care, ethical presuppositions
guiding our health care system require consideration. In the United States,
four main principles undergird the way health care is practiced. These principles
are: beneficence, nommaleficence, autonomy and justice. Beneficence is the
obligation of health care providers to render help to people in need. Just
as health care workers are called to provide care, they also have a duty
to do no harm. This principle is commonly called nonmaleficence. At times,
the possibility of doing good may result in injury. Therefore, the principle
of beneficence and nonmaleficence do not always concur. Thirdly, the principle
of autonomy allows patients to make choices regarding their health care.
In other words, health care providers should allow patients to make the
final decision regarding their treatment plan. Finally, justice refers to
the ethical concept of treating everyone in a fair manner. In regard to
medical ethics, justice is the newest and most controversial principle (Bodenheimer,
1995). Many ethicists question the meaning of justice in medicine, and there
is no clear consensus. Although this is the case, most would agree that
differential treatment of Harry and Sally is unjust, and many point to the
golden rule, treat others as you would want others to treat you, as a common
guide (Bodenheimer, 1995).
As hard as it is to maintain all of the ethical principles simultaneously,
financial considerations make decisions even more difficult. Quality, access,
and cost of health care are considerations that must continually be evaluated
in today's monetarily driven health care environment. Although two of these
three considerations can be obtained relatively easily, maintaining high
quality standards, allowing universal access to medical treatments, and
keeping prices low is almost impossible. Until recently, the United States
has maintained high standards of quality in technological advancements and
treatment possibilities. On the other hand, the country has not done as
well as many other developed countries in providing access to the largest
number of inhabitants at a low cost. Managed care is trying to reduce the
cost of health care, thus enabling more patients to receive treatments at
prices employers and self-insured persons can tolerate. In the process,
quality may be sacrificed. Beyond sacrificing expensive technological treatment
and treatment options, the principles of beneficence, nonmaleficence, autonomy,
and justice are being unconsciously overlooked, if not at times completely
ignored.
"Managed care is a movement away from medical professionalism
to a managerial professionalism," says Philip Boyle, Ph.D., associate
for medical ethics a the Hastings Center, a research group that studies
ethics in health care (Appleby, 1996). "You have to have a nice blending
of business and medical ethics" (Appleby, 1996). Few disagree that
medical ethics must now adopt sound business and management techniques,
but do business and medicine have the similar goals? Can they be combined,
or do they seek conflicting ends? Arnold S. Relman, the Editor-in-Chief
Emeritus of the New England Journal of Medicine, stated, " .
. . clearly there are important distinctions to be made between what society
has a right to expect of practicing physicians and what it expects of people
in business. Both are expected to earn their living from their occupation,
but the relation between physicians and patient is supposed to be quite
different from that between businessmen and customers" (Relman, 1992).
Dr. Relman continues to differentiate between medicine and business, "
. . . businesses rely heavily on marketing and advertising to generate demand
for services or products, regardless of whether they are needed, because
each provider's primary concern is to increase his sales . . .they have
no responsibility to consider the consumer's interest" (Relman, 1992).
Unlike business persons, medical practitioners, by our definition, are required
to provide benevolence and nonmaleficence. Therefore, health care providers
must act from differing presuppositions. Dr. Relman goes on to say, "This
(business) is quite different from the situation in health care, where the
provider of services protects the patient's interests by acting as advocate
and counselor. . . Moreover, a sick patient often does not have the option
of deferring his purchase of medical care or shopping around for the best
buy. . . he will very shortly have to trust someone to act as his beneficent
counselor, and he will surely want the best care available" (Relman,
1992). One may rightly contend that physicians have abused their positions
to gain financial reward at the expense of third party payers and society
in general, but profit-motivated businesses may not be better suited to
provide care based upon patients' best interests.
While one can argue the pros and cons of business's influence in medical
practice today, risk rating is an observable result of managed care. Risk
rating is the practice of setting premiums and other terms according to
the age, sex, occupation, health status, and health risks of policyholders.
Donald W. Light, a Professor in the Division of Social and Behavioral Medicine
at the University of Medicine and Dentistry of New Jersey states, "Through
competition, risk rating should give policy-holders the best value for their
money and also be the most fair. However, with half of all expenses incurred
by 5% of the population and 70% of all expenses incurred by 10 % of the
population, risk rating can be both highly profitable and highly injurious
to its victims" (Light, 1992).
There are several forms of risk-based insurance. The two most popular
are direct risk rating and indirect risk rating. Direct risk rating operates
by examining each policy holder and reducing coverage, adding charges, or
dropping coverage entirely because of documented medical problems. This
practice now includes minor health abnormalities such as allergies, asthma,
back strain, arthritis and obesity . Insurance denials and exclusions are
frequent when they involve disabilities, serious illness, and chronicity.
Some insurance companies even exclude certain industries, such as hotels,
restaurants, trucking firms, hospitals, nursing homes, and physicians' practices
(Light, 1992). Indirect risk rating combines the use of waiting periods,
co-payments, and payment ceilings along with exclusion of certain procedures,
tests, or drugs. These cost cutting devices reduce the claims that companies
pay and discourage sick people from abusing the third party payers. Eventually,
this should lead to lower costs for employers.
Unfortunately, risk rating supports an inverse coverage law and discrimination.
The inverse coverage law states that the more people need coverage, the
less coverage they are likely to get or the more they are likely to pay
for what they get (Light, 1992). Donald Light continues, "Risk rating
systematically discriminates against disadvantaged minorities, older workers,
and those with chronic conditions, and against groups that include such
individuals (Light, 1992). He goes on to argue that "high risk"
and "uninsurability" are not necessary realities, but products
of risk rating (Light, 1992). Therefore, individual patients with costly
illnesses are a financial liability, and patients in good health are a financial
advantage. Insurance companies try to identify groups of healthy individuals
and concentrate on providing them insurance. One could also argue that selective
marketing might reject inquiries from higher-risk groups. In this sense,
people are just like cars or homes. In fact, recruiting sessions for Medicare
recipients are typically held in restaurants and hotels, self-evidently
selecting seniors who are relatively healthy and more mobile; inducements
to attend such sessions often include free dance tickets, not much use to
bed-ridden or ailing patients; in some cases, recruitment sessions are held
on the second floor of these location, a convenient way of spotting or discouraging
the feeble (Evans, 1995). Depending upon these circumstances, some people
are not able to receive any reasonable insurance coverage. This has contributed
to the high degree of medical impoverishment that is prevalent in America
today.
Risk rating realizes the belief that it is unjust to force one person
or group to pay for the needs or burdens of others. This stance is commonly
accepted in the United States, and it follows our individualistic culture.
Once again Dr. Light states,
When insurers state that underwriting is fair because low-risk
people should not have to share the burdens of high-risk people, they are
consciously or unconsciously assuming that the purpose of the health insurance
market in society is to allow those who are younger, or affluent, constitutionally
more sound, and healthier to pursue their advantage of lower risk over those
who are older, poorer, constitutionally less sound and less healthy. . .
.Our society has decided that race, sex, physical handicaps, and in some
cases, age shall not be so used for employment and access to many facilities
and resources, though the law is more ambivalent about equal facilities
and resources, the law is more ambivalent about equal access to health care
(Light, 1992).
Effects On Receivers Of Health Care
Risk rating is one of the tools that managed care plans use in order
to create a profitable enterprise. Managed care and risk rating are realities.
Therefore, it is important to examine the effects of these actions on health
care recipients. Dr. Michael J. Franzblau, a professor at the University
of California at San Francisco stated, "I believe no matter how committed
you are to your patients, in today's environment it will take significant
moral courage to practice independently in the best interest of the patient.
However, physicians will survive economically no mater what the system.
I believe those most at risk are going to be the patients" (King, 1995).
As a whole, managed care should provide medical care to a larger segment
of society at reasonable expense, but will the patient's quality of care
deteriorate? In a study performed by the Inspector General of the Federal
Health and Human Services Department, in at least 58% of the HMO's, from
11% to over 50% of the beneficiaries said they waited more than 12 days
for a scheduled appointment with their primary care doctor (Evans, 1995).
In 40% of the HMO's, from 11 % to 50% of disenrollees reported the medical
care they received from their HMO caused their health to worsen (Evans,
1995). Even if these statistics are based upon the opinion of patients,
and not scientific fact, many patients are obviously dissatisfied with the
quality of their HMO's. An article in Consumer's Research reported,
Here for instance, is the list of benefits promised seniors
by one major HMO: "No Medicare deductibles. Affordable co-payments.
Unlimited hospital stays when medically necessary. Emergency care anywhere
in the world. Virtually no claim forms to file....Routine physical exams.
. . Such appeals are persuasive to many seniors, who naturally would like
to be relieved of these expenses. The kicker is the innocent-sounding phrase,
"when medically necessary," which suggests that more expensive
services will be provided . . . A recent account in The New York Times
profiling a large consulting firm that furnishes guidelines to HMOs for
deciding what services should be paid for. One guideline, for example, stated
that a patient needing cataract surgery was entitled to have only one eye
corrected. . . the same company recommended that someone whose leg was amputated
above the knee was entitled to two days in the hospital, that a mother should
leave the hospital 12 hours after giving birth, that a patient receiving
bypass surgery should leave in four days and so on. (These guidelines ranged
form one-half to one-eighth of existing national average hospital stays
for such cases) (Evans, 1995).
Effects On Health Care Providers
The most effective way to examine how patients will be affected
by managed health care would be to examine how health care providers will
be required to operate. Providers interests are increasingly divided between
financial incentive and patient interest. Some physicians are allowed by
their respective managed care employers to only partially disclose all treatment
plans, and high pressure tactics are escalating (Kassirer, 1995).
Many health care recipients concern themselves with where doctors'
allegiances lie. Doctors are increasingly responsible to insurance companies.
In a New York Times article entitled "Hidden Agenda", Bob
Herbert writes, "To a frightening extent, the practice of medicine
has already been hijacked by inflexible, cold-hearted corporate types whose
interests are in profits, not patients" (Herbert, 1996). In today's
managed care environment, insurance agencies are paying physicians capitation
payments. These payments are given in relation to the risk rating that the
physician works with. After doctors receive these cash infusions, they are
able to manage their inflows as they wish. If patients need hospitalization
or treatment from specialists, these treatments come out of the doctor's
capitation payments. When physicians are unable to treat their patients
within the insurance companies guidelines, they may be dropped from the
HMO (Kassirer, 1995). If this is the case, all of the physician's patients
must leave this doctor and find a physician still in the plan. Therefore,
physicians must not only understand the patients needs, but they must also
examine the needs of all patients in the system, the plan's economic situation,
and their own self-interests as well. In the previously mentioned article,
Sidney Wolfe, the director of the Health Research Group for the consumer
organization Public Citizen, said, "You can't have a doctor-patient
relationship where the doctor, instead of devoting full attention to the
patient and what's in the patient's best interest, is saying, 'Oh my God,
if I refer this patient to a specialist, or if I hospitalize the patient,
it's going to come out of my pocket'" (Herbert, 1996) Unfortunately,
this is now the case.
Physicians' divided interests are not the only issue with which many
citizens have concern. Under present law, HMO's must not disclose how they
pay their physicians or how physicians must make decisions. Therefore, patients
cannot find out how their doctors are being paid. Dr. Uwe Reinhardt, an
economist at Princeton University, stated, "What is needed is legislation
that requires the posting in every doctor's office stating his or her arrangement
with a managed care plan. If a doctor can make money by withholding a referral
from a patient, the patient, at the very least, should know it" (Herbert,
1996). He continued, "Disclosure is needed. And that is what the industry
is fighting" (Herbert, 1996). Not all doctors are accepting the HMO's
prescribed guidelines. Unfortunately, these physicians
must lie in order to receive treatment for their patients. Dr. Edmund Pellegringo,
a member of the Georgetown University staff, wrote, "Some physicians
may be tempted to rectify what they perceive as injustice to patients and
themselves by "gaming" the system, i.e., by exaggerating the severity
of the patient's illness or shaping the data and the diagnosis to fit the
rules. . . . The long-term ethical effect on the characters of physicians
and on society of dishonesty in the name of beneficence is not a trivial
matter" (Peliegrino, 1994).
Finally, HMO's are using high pressure tactics in order to keep physicians
"in line." In effect, HMO's scare physicians into treating patients
under certain guidelines. In The New England Journal of Medicine, Dr.
Jeroeme Kassirer wrote,
When the care in a community becomes heavily capitated, many physicians
are forced to join managed-care plans or be left without patients. In addition,
the physicians are often compelled to sign contracts containing "no-cause"
nonrenewal clauses: their contracts can be ended for any reason at all.
In the past this would have had a negligible effect: an unemployed doctor
had only to move and start over. But other managed-care organizations are
not likely to be interested in a physician who was dismissed from another
plan; and such physicians may well be considered unemployable (Kassirer,
1995).
Although one may feel little empathy for these physicians, patients
will be the ones who are eventually affected by this treatment. Perhaps
doctors will adjust their morals, but patients will have far fewer options.
Adamantly against the managed care proliferation in society today,
Dr. Kassier questioned the role of research and educational institutions
in medical specialties. He writes, "The conversion to managed care
has the potential to squeeze hospitals so badly that they will no longer
be able to support research or education adequately, fund the debt service
on their capital loans or provide many community services, such as free
care for the uninsured" (Kassirer, 1995). These issues may not affect
us presently, but it is important to at least question how managed care
will affect educational and research institutions. Dr. Kassier makes a valid
point if one believes that the influence of business will abolish any project
which does not support the company's bottom line.
Although there are few easy answers, health care expenditures are increasing
at a diminished rate. Since the country cannot afford to spend a larger
percentage of our income on health care, some aspects of quality care may
continue to be marginalized. At the same time, physicians and patients cannot
maintain honest relationships under many managed care plans. Therefore,
providers and recipients must continually investigate how managed care is
affecting our health care system. Ultimately, it is our duty to preserve
the type of health care that will represent us all in a humane manner, but
how?
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