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PREPARED FOR
U.S. HOUSE OF
REPRESENTATIVES
COMMITTEE ON COMMERCE
SUBCOMMITTEE ON HEALTH AND
ENVIRONMENT
MICHAEL BILIRAKIS, CHAIR
OCTOBER 28, 1997
SUMMARY AND
ORAL STATEMENT
Exactly
seventeen months ago, I came here, as a physician and former medical
director, to tell you that the unnecessary death of even one patient
is
unconscionable to me. By informing you of my participation in
acts of
patient harm, I, in effect, shared my moral responsibility. I
return today
aware that very little has been done to effectively and
uniformly protect
other patients from needless suffering and possible
death. So, my message is
the same, but more urgent: the American
public needs your help.
My written testimony gives you details
about how the health care industry
systemically causes patient harm.
What we call "managed care" is an
organized system of limitation and
denial--an unprecedented market-driven
system of rationing medical
resources.
Let me demonstrate this first by revealing some things
to you I have never
before made public. I have here with me four
copies of personal reports from
my previous days as a company
doctor.
The first is a denial for admission to a hospital, for which my
supervisor
marked "Linda, good work."
The second is a sample of one
of my monthly denial profiles.
The third is a memo from a fellow
medical director advising me about the
euphemisms to use when denying
care.
The last is a report I submitted projecting my expected "savings"
based on
targeted amounts of denials of inpatient admissions,
referrals, outpatient
services, emergency room use, etc.
Let me
note quickly that this is representative of all my work and not
isolated to any particular company. Also, before someone attempts to
dismiss
my experience as too outdated or narrow to be of value, let me
assure you
that I continue to have inside knowledge of how managed
care works. In my
teaching and consulting, I see thousands of
documents--handbooks, marketing
materials, contracts, policy and
procedure manuals, denials, patient
complaints, internal memos, etc.,
that substantiate all of this. I am a
witness to the rapid growth of a
monstrous business whose economic success
is based upon the
micromanagement of medicine through avoidance, denial and
control.
How does this happen? Let's imagine that you are
starting a new managed care
organization and you have hired me to help
you put it together. What do we
do?
First, I exchange my
traditional doctor's bag for a health executive's box
of tricks.
Second we agree that we do not want just any group of patients.
We
will use all the sophistication of modern advertising and marketing to
ensure that we avoid those persons who cost money. We have many ways
to
eliminate the old, the sick, the disabled, the malignant, the
chronic, the
risky lifestyles, and any other who may be a drain on our
premium pool.
Presuming we get a pool of healthy, prepaid members,
what do we do now to
ensure our maximum economic return--i.e. that we
succeed in our business of
health management?
First, we LIMIT
THE NETWORK. We justify this based on costs and business
necessity. It
will be of no concern to us that we may create something that
requires
parents to travel 42 miles in the middle of the night with a sick
child.
Second, we LIMIT BENEFITS, MAKE EXCLUSIONS and CREATE
AMBIGUOUS LANGUAGE to
give us the maximum power to deny services based
on coverage issues. It will
not worry us that we may eventually cause
the death of some persons when
they are told that they do not have
coverage for necessary treatments. We
are doing business, not
welfare.
Third, we create COMPLEX, INEXPLICABLE RULES AND
PROCEDURES for navigating
our managed care maze. This will be some of
the simplest, least questionable
"denials," because we can just refer
to our requirements for payment. We
make the rules.
Fourth, we
have our most versatile, authoritative, and profitable tool: our
ability to make MEDICAL NECESSITY DETERMINATIONS. Empowered with
physicians
employed by us, we become the final medical authority.
Regardless of what
any treating physician may want to do, we assume
control and practice
medicine our way.
Fifth: we cannot do
everything directly, so we ensure that our physicians
become our
agents. We create FINANCIAL ARRANGEMENTS that will encourage them
to
limit or deny directly without our intervention.
Sixth: we
supplement this with extensive contracts devised to control
physician's power and authority. We PROFILE THEM ECONOMICALLY; we lure
them
with SELECTION and threaten DESELECTION once hooked; we usurp
their power
and authority with CONTRACTS FULL OF CLAUSES EXTRACTING
PERFORMANCE,
COMPLIANCE, GAG CONDITIONS, CONFIDENTIALITY, GOOD MANAGED
CARE BEHAVIOR. We
make them our agents of denial.
Seventh: For
good measure, we add a TERMINATION-WITHOUT-CAUSE clause to give
us the
ultimate power of ridding ourselves of inappropriate
physicians.
Eighth: Should anyone challenge our decisions, we
ensure that THE GRIEVANCE
AND APPEAL PROCESS is closed and weighted
against the member and in our
favor.
Ninth: We add MANDATORY
ARBITRATION, in which there is no record of issue or
outcome, giving
no benefit to other members, case law, or public/legislative
action.
Tenth: Even if all this fails, and someone should
suffer from our tactics,
nearly everything we do will be SHIELDED FROM
ANY LIABILITY thanks to our
ERISA PREEMPTION.
Finally, we work
to CHANGE MEDICAL EDUCATION, creating from the beginning
manageable
doctors to suit our purposes. Also, by not paying for things, and
excluding everything we can under the designation of "investigational"
we
can DIMINISH RESEARCH, and slowly eliminate the availability of new
treatments, prolonging of life, and added expense of the care of
persons.
Now--this is what is left...and if we work smart, we will
think of ways to
deny this as well. Then we will have achieved the
ideal health care
business: money coming in and none going out--a
"medical loss ratio" of
ZERO.
Is this fair? I leave it to you
to decide. You have the means to intervene
and protect the public. I
encourage you to use every opportunity to do
so.
INTRODUCTION
The health industry is the first to extol
its success in braking the rising
costs of medical care. However,
little has been done to really examine the
ways in which they have
achieved this "success." Studies show repeatedly
that HMOs and other
managed care organizations achieve their results by
lowering hospital
admission rates, shortening hospital stays, relying upon
fewer
subspecialty services, making less use of laboratory, radiology, and
other technological services, and limiting networks--all techniques
for
restricting or denying medical care. Although the numbers for
these measures
have been drastically lowered, we have only the
industry claims that only
the "excesses" of the fee-for-service era
have been eliminated. Where is the
line between "necessary" and
"unnecessary" care? How do we define this line,
or the standards by
which to know it and the circumstances under which we
use it, when the
managed care processes themselves are constantly changing?
Regardless
of the health system changes, we can say one thing with
certainty: we
are in the midst of an unprecedented system of market-based
rationing
of medical care which is resulting in patient harm. Unless we
understand it systemically, we cannot begin to assess its impact or
attempt
to make appropriate corrections. Meanwhile the suffering, and
even death, of
some patients continues.
"MANAGED CARE":
ASSUMPTIONS AND QUESTIONS
Before exploring the restrictions and
denial of care by managed care, it is
important to note that several
unquestioned assumptions underlie the
apparent virtues of these lower
numbers and costs. The health industry would
have everyone believe
that:
any cuts in service effect only care that is excessive and
unnecessary;
these cuts can be achieved without independent clinical
research to
determine the appropriate norms; and
it is unnecessary
to monitor the consequences and clinical outcomes of the
managed
care's economic and cost-cutting tactics.
This means that we do not
really know what is happening in the managed care
era. Few studies are
available to address the actual impact of economic
decisions on the
clinical care of plan members, especially for chronically
ill
patients. To date, there is only one extensive outcome study that begins
to give us a clue. It reveals that elderly and poor chronically ill
patients
had worse physical health outcomes in HMOs than in
fee-for-service systems.
In fact, this conclusion was significant
enough to prompt a special hearing
before the Senate Appropriations
Subcommittee on Labor, HHS, and Education
on November 13, 1996. Out of
the discussion around this paper, a critical
point was made: the data
for the study were collected in 1986, and we are
now over a decade
more entrenched in managed care. What is happening now?
Despite claims
of success by the managed care industry, we do not know. We
are like
astronomers examining the light of a star that may have already
exploded. We continue to operate under the delusion that all is well
in the
system. Unfortunately, in our rapidly changing health care
system, by the
time we know the real facts, it may be too
late.
Thus it is critical that we use every avenue of information
available to
determine the effects of these unprecedented changes in
our health care
system. The "real time" stories from persons
encountering managed care
directly have inestimable value. We know
this from "quality management"
work. Regardless of what aggregate data
and statistical summaries can tell
us about how a system is
performing, when there is a particular failure it
no longer matters
what the cold numbers of past history show. For example,
if a
hospitalized patient dies from something the hospital could have
prevented, it matters little at that moment for that individual
whether the
hospital's mortality rate is rising or falling. A failure
such as this in a
system is 100% evidence of itself. Although we may
need studies to identify
the sources of failure and the ways for
correction, the individual incidents
themselves sound the alarm for
attention. No one can deny that we are
receiving ample evidence
(consumer stories, legal cases, public testimonies,
etc.) to suggest
that increasing numbers of individuals, especially those
who are
vulnerable and expensive, risk serious obstruction to services and
care which they need when placed in some managed care plans.
Of
course, the individual cases enable the industry to rationalize or
discount each incident, thereby avoiding accountability at either
specific
plan level or at the industry as a whole. What we need first
is to
acknowledge that we have evolved a complex, bureaucratic
(managed) system
for delivering care that has the potential, as with
any system involving
human lives and their well-being, to cause harm.
When an airplane crashes,
we do not allow the airline industry to
dismiss its importance by calling it
"anecdotal." It is something
(what systems analysts call a "signal event")
which should not occur,
and represents a failure of something in the whole
system, in this
case the system of airline safety. We investigate, not only
to
identify responsibility, but to use the information for prevention of
further disasters.
We should do the same for health care. When
a patient experiences
inappropriate obstruction to care with increased
suffering and harm, then
the system of "care" has failed. We need then
to use these events to work
backwards to determine how this has
occurred, and determine if it represents
a pattern of failure. Unless
we do this, the health industry avoids the kind
of detailed dissection
that reveals incompetence, exploitation, fraud or
abuse, about which
the public has the right to know and correct. How do we
do
this?
First, we must acknowledge that the managed care process is a
highly
organized integration of delivery and payment. By the
industry's own
definition, "managed care" is a way of distributing
health care such that
"different financial incentives and management
controls" are used to "alter
the decision-making of physicians and
hospitals by interjecting a complex
system of financial incentives,
penalties, and administrative procedures
into the doctor-patient
relationship." Furthermore, managed care "attempts
to redefine what is
best for the patient and how to achieve it most
economically."
Obviously, "managed care" is more than a claims payment
system. It
distinguishes itself from fee-for-service by directly influencing
the
decision-making and conditions of care--i.e. THE PLAN PRACTICES
MEDICINE.
As all plans make clear to their members, they -- the
plans, not the
members' doctors -- retain the final medical
determinations on any request
for services. Of course, a plan wants
this control over medical
decision-making until there are adverse
consequences arising from those
decisions, and then the plan claims
that it is simply making "benefit" or
"payment" decisions. Such
sleights of hand enable the plan to play it both
ways, and always to
its own economic advantage. However, despite the
euphemisms, denying
payment under managed care means denying care, and when
necessary care
is denied, there are consequences -- some serious enough to
cause
death. This is more than a benefit decision, and certainly decisions
for which plans should be held accountable.
Second, we must pay
attention to the language of the industry. Defenders of
managed care
repeatedly say that they "do not deny care." Unfortunately,
this is
just another rhetorical flourish that sufficiently disguises the
process. What managed care organizations do, by their own admission
and
design, is authorize care. This is, in fact, the inherent nature
of managed
care. The genius of "managed care" is that it integrates
delivery and
payment, and this can only be done by determining upfront
what care will
receive payment. Another leading textbook on "managed
care" states clearly
that "one of the definitive elements in managed
health care is the presence
of an authorization system...It is the
authorization system that provides a
key element of management in the
delivery of medical services."
"DENIAL OF CARE" AND ITS EUPHEMISMS
"Lack of authorization" is the
predominant euphemism for "denial of
care." In the reverse, and
"authorization" is simply the absence of
denial. What this means in
practicality is that a member, depending on
the extent of "authorization"
processes, essentially begins with no
benefits until the plan approves them.
In other words, all services
begin as de facto denials. A plan member (and
his or her physician if
still committed to patient advocacy) must enter into
a maze of
dangerous tactics designed to prevent the receipt of the
approval.
Technically this begins with the designation of the
benefit package, but
close examination of most member handbooks
reveals that there are wells of
ambiguity and nuance that make the
even the clearest of benefits
questionable. When needs arise, plans
erect various barriers to give them
the opportunity to examine their
merit for "authorization." Approval
("authorization" or lack of
denial) is the only way to ensure payment. Only
when a request makes
it way through the series of "authorization" barricades
will it be
"given" (paid) to the member. It is easy for plans then to claim
that
they do not "deny benefits," per se; they only choose to authorize or
not their availability.
The textbook quoted above notes that
the "authorization" procedures can be
"as simple as precertification
of elective hospitalizations in an indemnity
plan or preferred
provider organization (PPO) or as complex as mandatory
authorization
for all nonprimary care services in a health maintenance
organization
(HMO)." In fact, this is a helpful way to understand the
spectrum of
"managed care" organizations. If one understands that they are
inherently focused on controlling the two critical aspects of health
care --
patients and doctors -- then one could take any organization,
regardless of
its "alphabet" designation, and plot it along a line of
degree of controls.
(See diagram A) These controls can be viewed as a
series of sieves designed
to filter through the medical needs in
various ways such that as little as
possible will ultimately be
covered (paid). Under this schema, one should
note that plans can be
compared according to degree and intensity of
controls, rather than
categories. As different plans and their processes are
examined, one
finds that there are some "PPO" plans that are more worrisome
in the
nature of their techniques than some "HMO" plans--a reminder that the
focus should be on how the plans really work and not on what they
claim to
be.
These layers of "authorization" utilize "medical
necessity" determinations,
network limitations, and other less obvious
ways to limit and deny care. The
inconsistency of benefit availability
and the ambiguity of the benefits that
are offered provide additional
means for plan intervention to control access
to medical services.
Generally, the layers of controls are organized as
such:
BENEFIT AMBIGUITY AND "MEDICAL NECESSITY" DETERMINATIONS:
The plan is able
to intercede into the medical decision-making process
by defining the
standards for care, the conditions in which it may
occur, the services and
providers that are available, and the final
medical word on everything that
comes under the "authorization"
process of the managed care plan -- access
to specialists and tests;
admissions to the hospital; availability of
treatment options, etc.
When a service or treatment is not authorized, it
is, very simply,
denied. For example, if a plan offers coverage for
maternity care, but
in turn denies admission to a hospital for treatment of
"hyperemesis
gravidarum," or extreme vomiting of early pregnancy, (on
grounds that
treatment can occur as an outpatient) that is a denial of a
benefit
which technically occurs under the contract promise of maternity
care.
Of course, a plan would argue that this "benefit" does not necessarily
include hospitalization for this condition. However, the nature of the
benefit and the legitimacy of the "denial" could only be accurately
determined by considering all the facts of the particular incident,
especially the outcome of the "denial." Whether this "denial" was
appropriate or inappropriate can only be determined by some kind of
follow-up of the condition of this patient. Did her condition worsen,
did
she have complications because she was not as aggressively and
intensely
treated as she would have been in the hospital, were there
complications
from her outpatient management, did the baby suffer any
damages, etc.? These
are the many clinical questions that would have
to be asked, answered, and
tracked in order to determine the
consequences of the "failure to authorize"
a request for
hospitalization of a particular patient. It should be clear
though
that any decision made here is not a payment or benefit decision
only;
it is a medical decision with potentially serious clinical effects.
Someone other than the treating physician is practicing
medicine.
MEDICAL STANDARD AND POLICIES: These decisions, made by
the "medical"
persons of the plan, are underpinned by medical
standards and policies
determined by the plan. Even though many plans
rely on common sources for
these guidelines, there are still
predominantly produced within the industry
itself. They are neither
consistent nor standardized across plans. For
example, the criteria
for approval of a hysterectomy varies widely in the
industry. These
clinical details are used by the plan as screens for
"nurses" to
either authorize, deny or refer requests to a doctor employed by
the
plan. These doctors in turn rely upon the plan's definition of medical
policy rather than their own clinical judgments. Since managed care
inherently restricts and limits access, these clinical guides become
the
additional layer through which "authorization" can fail. If a
doctor
requests authorization for a surgical procedure and does not
give all the
magic answers, the plan will "fail to give the
authorization number." Once
again, the choice of words does not cover
up the fact that a member has been
denied a benefit through the denial
of medical care. A plan has contracted
to provide medically and
surgically necessary care. By retaining the right
to arbitrarily
determine what constitutes the criteria for authorization
based on
"necessity," the plan once again clinically impacts care. Of
course,
to claim that this is just a "benefit decision" is easier when the
plan has no responsibility to report these "denials" or to follow-up
on the
outcomes of its decisions.
NORMATIVE STANDARDS: The
organizational and financial success of managed
care depends upon
exhibiting certain performance results, particularly in
the areas of
lengths-of-stay, admissions per thousand, days per thousand,
referral
rates, etc. These have become the normative standards for comparing
the profiles of differing plans, hospitals and physicians. As the
recent
issue with maternity stays represents, there has been no
independent
clinical research around the issue of the appropriate care
of a post-partum
patient. What happened instead was a race to the
bottom by the various
plans. There were even reports that a plan in
California had dropped the
postpartum stay to eight hours! What we saw
was the industry squeezing down
the length-of-stay lower and lower
until the public screamed. We should take
this event seriously,
because it is happening with every condition in
medicine. We are aware
of it with mastectomies, and other surgical
procedures. The current
norm becomes the next number to beat, and downward
the industry goes.
Here the issue about benefits gets grayer because we do
not know in
any of these cases what the appropriate care is. (Even with
legislation now in the area of post-partum care, we still do not know
what
the appropriate mix of hospital/home care is for mothers after a
delivery!)
Until we begin to monitor the decisions that are made and
their
consequences, we will not know the true impact on patient
care.
CONTROLLING THAT WHICH CAN BE CONTROLLED: The evolution of
managed care has
depended upon increasing intrusions into the actual
medical decision-making.
In many of the plans, financial gains are
achieved by targeting the
high-cost, high-control, or high-volume
requests, e.g. for MRIs, referrals
to specialists, admissions to the
hospital, etc. Of course, consumers are
never warned in plan material
that their risks of "failing to get something
authorized" (READ:
"denied") rises with certain areas of need, especially
when certain
services become the targets for control or bottom-line
improvement in
a plan.
MEDICAL DIRECTOR/REVIEWERS: Physicians who take these
positions cease to be
the autonomous professionals they were trained
to be. They become, even with
the best intentions, "company doctors."
There is no code of ethics, or
review body, to ensure that they do not
lose sight of their medical ethics
and responsibilities. In fact, the
pressure to "succeed" (i.e. ensure the
success of the plan), is so
pervasive that it is easy to quickly become
economic agents who use
medical knowledge and experience to the benefit of
the plan, not for
the members of the plan.
APPEALS AND REVIEWS BY OTHER PHYSICIANS:
Appeals of a medical decision are
usually made by the same physician
who made the initial denial, or to a
physician or group with whom the
plan has contracted for such appeals.
Either way, the system is again
organized so that the decisions are weighted
in favor of the plan, not
for the patient.
APPEAL PROCESS: Although this sounds good in
theory, even in the best
circumstances, it is highly ineffective in
ensuring that patients are
protected. The very idea of appeal is
foreign to most persons who still live
with the remnants of trust in
health care delivery and doctors. For those
who may pursue it, the
very conditions that have prompted the necessity for
an appeal are
usually traumatic and associated with confusion, anxiety,
fear, grief,
etc. and these conditions are unlikely to produce the strong
self- or
family-advocacy, clear thinking, and perseverance that would be
necessary to make a successful appeal. It is also unreasonable to
believe
that plans, which do not even have 24 hour "authorization"
services
available, would have appropriate appeal processes available
in emergency
situations. Furthermore, with the fox guarding the hen
house, a member will
always be at a disadvantage in attempting to
appeal to the very plan which
has made the adverse decision in the
first place.
THE PATTERNS OF MENACE
How does one go about
forming and examining patterns of practices for these
plans? First,
there is no single piece of evidence that will suffice. One
must pull
together a variety of elements and see that they fit together like
a
puzzle. Also, the evidence that is not there is probably more important
than some of the evidence which is present. It is important to note
that the
most critical information is often the least available. The
industry has
become adept at avoiding, delaying, disguising, or
withholding the most
revealing data about their practices and
performance. For example, the
public may know the percent of women in
a plan who receives yearly
mammograms, but know nothing about the care
of the women found to have
breast cancer. Furthermore, the public may
never know how the plan's
policies and procedures, contracts and
network limitations, financial
arrangements and bonuses, and other
tactics are organized against the
patient. Even in those few cases in
which there have been legal claims,
lawyers find that obtaining
critical information from a plan is akin to
getting gold bars out of
Fort Knox. We cannot continue to have an industry
with so much
authority and power, with such grave consequences in people's
lives
with so little accountability and public protection.
It should be
obvious that we need full disclosure, standardized practices,
and a
demand for ethical conduct of business. The following would be a
useful beginning:
BENEFIT/COVERAGE BOOKLETS should be readily
available for examination in
order to determine what is told, and not
told, to members, especially with
regard to "medical necessity"
determinations, disclosure about restrictions,
exclusions, rules, etc.
Also the promises and marketing claims should be
matched to the
reality of a plan's practice.
MEDICAL STANDARDS AND POLICIES, along
with evidence for the ways in which
these are determined, and the ways
in which they are used.
Everything that is possible regarding A
PLAN'S "AUTHORIZATION" PROCESS: what
is authorized; basis for
authorization (or denial); details of the
processes; who has ability
to authorize (and deny); the
credentials/qualifications of persons who
do this; the information
management system for tracking authorizations
(and the reverse: denials);
how this information is used for
utilization management, quality management,
physician profiling,
credentialing and re-credentialing, and financial
management; is
authorization people-, telephone- or computer-based; what are
staffing
ratios; etc.
Although plans rarely track "DENIALS," they will have
some information
tracking systems that would enable one to determine
what kinds of requests
are made, the disposition of those requests,
and the cumulative effect of
those results. It is through this kind of
information that plans can keep
track of the economic results of their
organization and to identify the
areas on which they must get tighter
control. It is just a matter of getting
and interpreting the
information that is available. Plans should be required
to track and
report decisions which restrict or deny care to members, and to
include the outcomes of such decisions in their outcome
studies.
The failure to track "denials," especially with regard to
the outcomes of
those decisions is a significant deficiency about
which we (the public,
government) should be concerned. REAL OUTCOME
ANALYSIS is not possible
unless this kind of information is made
available. Also, under capitated
plans, there have to be methods to
identify, track and correct
underutilization in order to ensure that
necessary benefits are not
decreased or denied. Outcome analysis
should include the effects of the
plan's financial/reimbursement
arrangements on the delivery of care.
All the CONTRACTS, especially
provider contracts, should be readily
available to determine
constraints on providers. Many types of clauses and
requirements are
designed to ensure that providers become the virtual agents
of the
plans. Financial/reimbursement arrangements should be disclosed
completely.
he MEDICAL DIRECTOR/REVIEWER contracts, performance
standards, means for
monitoring and evaluation, payment,
incentives/disincentives, methodology
for decision-making, etc. The
presence, or more likely the absence, of any
methods for review and
assessment of the administrative physicians'
decision-making and
performance should be available.
MEMBER SURVEYS, especially if
there are narrative sections in which members
can lodge specific
complaints. The specific complaints should be made
available, as well
as the means by which they have been addressed.
The above is only a
beginning, for there are many other aspects that would
vary with
different plans, e.g. bonuses, quality data for subcontracted
services
and providers, etc. Anything which has the potential to adversely
effect the care of a member should be completely disclosed and
available for
scrutiny by the public.
With as many pieces of
the puzzle as possible, it would be easier to discern
the integrity of
a plan or group of plans. One could determine the degree to
which a
given plan attempts to balance their medical and economic
responsibilities to their members versus the degree to which it may
attempt,
overtly as well as covertly, to withhold as much care as
possible and to
exploit members for financial gain. It is important to
realize that this
obstruction to care can occur as much in
"non-profit" as in for-profit
organizations. Some plans, which find
themselves struggling to stay alive,
often tighten their
"authorization" procedures as a first attempt to rein in
costs. It is
important to understand that the industry itself says that "an
effective authorization systems is a requirement of any managed care
plan"
and "the tighter the authorization systems, the better the
plan's ability to
manage the care." Translated simply, this means that
the success of
"authorization" depends upon the flip side:
obstruction, restriction or
denial of service or care. Like all
puzzles, the patterns of potential
menace will be obvious when enough
pieces are present.
Finally, there is one larger concern which must
be addressed: the increasing
transfer of risk to the level of the
treating physician. Sophisticated
managed care plans are shifting the
entire process of "authorization" and
"denial" to the level of
treatment decisions by patients' physicians. The
mechanisms then
become more subtle and even more elusive for purposes of
accountability. Such arrangements remove plans one or two steps
further away
from the consequences of the processes they have put in
place, making it
easier for them to claim that they are only making
benefit decisions and are
not responsible for the clinical
consequences of their system of care. Many
physicians are agreeing to
these arrangements out of ignorance of their
implications, and even
more are complying as a matter of professional
survival. Until the
entire process we call "managed care" is systematically
understood, we
cannot know how to build in the means for industry
accountability and
patient protection.
THE MANAGEMENT--i.e. CONTROL--OF PHYSICIANS AND
PATIENTS
The system of "managed care" redefines what is best for
the patient and how
to achieve it economically. There is no subterfuge
here. To work, managed
care must alter the decision-making of
physicians by interjecting complex
management methods into the
doctor-patient relationship.
With this kind of explicit statement
of purpose, why is there little
investigation into the methods of
management? From the standpoint of a
business only, there are certain
principles by which practices and
consequences of management can be
evaluated, such as honesty, fairness,
integrity, disclosure, trust,
accountability. No human endeavor is free from
ethical considerations,
especially management, which, by its nature,
involves directing or
controlling something toward an end -- an activity
fraught with
ethical questions. From the choice of end to the choice of
means to
achieve that end, the way is laden with ethical issues. There is no
business now in which this can be clearer than that of medicine and
healthcare.
In the pre-managed care days, the division between
medical delivery and
payment was more distinct. Without getting into
whether this separation was
good or bad, we can discuss the mechanics
of how clinical care occurred. Let
us take a simple case of chest pain
in an aging male: He experiences a
disturbing change in his health and
seeks the advice of a physician. His
physician takes a medical
history, does an exam, and works through a
differential diagnosis,
moving from the most acute and serious possibilities
to the less
urgent causes for the complaint. Based upon the physician's
assessment
of likely causes, he or she may treat the patient conservatively,
suggesting dietary and lifestyle changes. If the physician believes
there is
urgency then he or she may order laboratory tests or
diagnostics studies to
rule in or out the more serious,
life-threatening diagnoses. As a result of
additional information
gained during this phase, the physician may choose to
admit the
patient to the hospital for a procedure or for surgery. All of
this
proceeds through an analysis dependent upon the clinical acumen and
expertise of the physician. Presuming the patient has health
insurance, at
some endpoint claims are submitted to the insurance
company for payment. Of
course, we know that physicians are no
different than any other
professional, and payment structures can
effect decision-making. However,
inherently professionals have a
responsibility to train, license, and
monitor their ranks for the
preservation of the profession as a whole.
Presumably, the degree to
which any profession does this internally, there
is less need for
external supervision and control.
Regardless of the reasons for a
shift to managed care, it is certain that we
have entered into an era
in which there are blurred distinctions between
delivery and payment.
In fact, the hallmark of managed care is, as the
definition above
claims, the integration of medical services and finances.
In such an
arrangement, physicians are no longer independent, autonomous
professionals. Health care is managed to the extent that physicians
(and
patients) are managed. This control of physicians has proceeded
insidiously,
and the practice of medicine is no longer by physicians
alone. Many would
argue that this is better, that any professional
should be scrutinized in
proportion to the power they carry over the
lives of others. For public and
self protection, we must ask
ourselves:
What methods are used to manage physicians?
What is the
aggregate effect of the various methods?
What are the consequences to
patient care?
What are the basic considerations for future
reform?
METHODS FOR THE CORPORATE PRACTICE OF MEDICINE
A
leading health industry text claims that the management of physicians is
one of the "common operational problems" for managed care
organizations.
Failing to deal with "difficult or noncompliant
physicians" can result in
rising expenses, ill effects on members, and
negative morale. Despite this
internal admonition, nearly every
managed care contract holds itself out to
the public as having an
"independent contractor" relationship between plan
and physician. A
member will be told in various ways that their physician
will exercise
independent medical judgment in their care. Indeed, the
managed care
industry banks on this remnant belief in autonomy from the
fee-for-service era. All the while they are fully aware that they
would not
be managed care if they did not have extensive methods used
to ensure that
their participating physicians were kept in line with
the plan's ends. So
the idea of independent physicians is more than
wishful thinking on the part
of managed care plans. The logical
impossibility of independent
decision-making midst the kinds of
methods used to manage physicians makes
this claim blatantly
fraudulent. This becomes clear if we work through how
management of
care, especially the implicit methods, actually works.
The
evolution of managed care processes, as it relates to physician control,
can be understood in terms of the ways in which a plan intercedes into
the
patient/physician relationship. [See Diagram B] On this timeline
of
patient/physician interaction, three phases are
significant:
Post-care controls: methods occurring after care is
delivered
Intra-care controls: methods occurring during the delivery of
care
Pre-care controls: methods occurring before any particular patient
receives
care
It is important to note before going into detail
that these divisions are
somewhat artificial. They are most effective
when interrelated and working
in concert. As seen below, data compiled
on physician's past practices can
be used to create profiles designed
to change current and future care
decisions.
Post-care
processes/controls
Retrospective review for utilization/quality
assessment
Retrospective review for "medical
necessity"
Retrospective review for coverage issues
Aggregate
profiling of provider network to assess and determine normative
statistical standards for utilization, e.g. lengths-of-stay,
admissions per
thousand, referral rates, etc.
Physician monitoring
and profiling, with individual and comparative
utilization and
economic report cards
Economic credentialing
Post-care processes
involve all the management processes used after some
service has been
rendered, best represented by retrospective review of
claims and
charts to assess appropriateness of medical treatment and
charges.
Although the results of such reviews do not effect the specific
patient event in question, they can have sentinel effects on future
decision-making. For example, if a hospital documented that a surgeon
was
removing too many "normal" appendices, such information could be
used to
rein in an aggressive (or greedy) physician, or identify a
physician who may
need additional training in diagnostics. Similarly,
if a physician admits
too many sick elderly patients, such information
could be used to identify
the physician as "wrong" (expensive) for the
hospital, or a plan. This kind
of review was commonly used before
managed care gained prominence. As with
most of these activities, it
is not the methods itself which is
questionable, but the ends to which
it is used which should concern us.
With the entrenchment of
managed care, a new kind of retrospective
management developed.
Information management enables plans and hospitals to
do extensive
physician monitoring and profiling. Although informative and
educational, such data is often used to change physician behavior
toward a
norm determined by the managed care plan or the industry as a
whole. This is
particularly true when the data provide statistical
quantification, such as
length-of-stay, admissions-per-thousand,
referral rates, etc. With such
report cards, certain physicians will
fall away from the median. These
physicians, known in the industry as
"outliers," become immediate,
identifiable targets for control. Since
such reports are rarely accompanied
by qualitative, clinical
information on actual patient conditions or
outcomes, physicians are
left with little real information about their
practice patterns. This
means that one ceases to be an outlier less by
improving clinical care
and more by changing numbers.
For example, OB/GYNs are regularly
profiled on lengths-of-stays for the
maternity patients. If the norm
for a specific plan is 1.7 days, and a
particular physician has a
length-of-stay of 2.4 days, he or she may appear
as an "outlier" on a
report which compares him or her to all of the plan's
OB/GYNs. If the
physician is worried about maintaining participation in the
network,
receiving a bonus or return of a "withhold," or simply appearing to
be
a "compliant, good" managed care doctor, he or she will begin to do what
is necessary to lower the length-of-stay. The plan does not even need
a
twenty-four hour policy if they indicate in some way that the norm
they
prefer is a length-of-stay of 1.0, or if the physician knows his
or her
withhold/bonus will be greater is the length-of-stay is closer
to 1.0. When
there are no report cards indicating complication rates
to mother or baby
from premature discharges and there are no
incentives for providing patient
education or home health follow-up,
the guiding factor will be staying at
the "norm," set either by the
plan, the financial arrangement or the
physician's own colleagues. The
net result will be a push of all patients to
the lowest possible stay,
striving to make the magic number. Even with the
mandates from
Congress, indirect pressures ensure that physicians will make
decisions consistent with their financial arrangement and in keeping
with a
plans' expectations for performance.
Managed care has
certainly spawned the progress in data acquisition and
management for
health care delivery. However, this would not have been
possible
without the progress in information collection and management made
available by the proliferation of computer technology. When used
properly,
information on practice patterns is a powerful educational
tool for
physicians. Unfortunately, it is also being used as a
bludgeon to herd
practitioners toward managed care norms. It does not
take long for
physicians to learn that they must practice "by the
numbers," concerned more
for their statistics on utilization (e.g.
lengths-of-stay, admissions per
thousand, referral rates, etc.) than
they may be for their complication
rates. As teachers have long known:
you get the results you can measure.
Serious ethical questions arise
when the measurements in turn are used to
elicit results that are
economically, rather than clinically, driven.
To compound this
problem, the data used, by the industry's own admission, is
often
inadequate and maybe inaccurate. In the managed care text mentioned
above, another "common problem" is identified as: "Failure to Track
Correctly Medical Costs and Utilization." Within this section, the
author
notes that: "As growing plans develop problems with operations
(the
authorization system, claims, or data gathering in general),
medical expense
and utilization reports frequently suffer." Despite
this, aggregate and
physician-specific data is being regularly used to
direct care and impede
independent decision-making by physicians. No
one raises the obvious ethical
concern: by changing the practices of
physicians with these methods,
inadequate and even erroneous data are
used in ways that can result in
serious harm to patients. Where are
the consumer protections?
Finally, since most of the monitoring and
profiling focuses on utilization
and the resulting economic
consequences, this information provides a rich
resource for physician
selection and deselection. This phenomenon, known as
"economic
credentialing," is often the basis upon which physician networks
are
formed. A leading managed care textbook warns about the "expense"
involved directly and indirectly when a physician causes a plan to
"lose on
each member." Plans cannot afford expensive physicians for
any reason.
Physicians who wish to be members of a managed care
network, or wish to
remain members of the network, learn quickly that
the plans have extensive
utilization and financial information
available from which they can make
determinations about their
continued ability to practice medicine. Those
physicians who care for
the neediest members of our society -- women, some
children, the
aging, patients with chronic illnesses and other disabilities,
the
economically disadvantaged -- suffer under such measurements. Plans want
neither costly patients, nor the physicians who must care for
them.
Intra-care processes
a.. Concurrent review for
"continued stay" for hospitalized patients for
earlier
discharge
b.. Pre-admission authorization
c.. Shifting of some
conditions from in-patient to out-patient
requirements
d..
Length-of-stay assignment prior to admission
e.. Authorization for
laboratory and diagnostic services
f.. Authorization for emergency room
use
g.. Authorization for specialist referrals
h.. Primary care
gatekeeper with limitation on access to other care
i.. Limitations of
physician and facility networks
j.. Second opinion requirements
k..
"Medical Necessity" determinations by plan
l.. Drug formularies with
limitations on availability of certain
pharmaceutical choices
m..
Manipulation of definitions to suit plan's needs, e.g. changing
"skilled care" needs to "custodial care" needs
Intra-care processes
arose as managed care plans moved to control the
physician
decision-making at the time care was in progress for a particular
patient. Essentially this occurs through the general process of
"authorization," and its most significant subset: the medical
necessity
determination. My previous written testimony of May 30, 1996
discusses this
more extensively. However, the authorization process as
such should be
examined more closely.
The authorization system is
considered to be "one of the definitive
elements" in managed health
care. As noted above, this can range from a
precertification of
elective admissions in a "managed" indemnity plan and
extend to the
mandatory authorization of all nonprimary care services in an
HMO.
Whatever the extent and structure for such authorizations, the purpose
is to enable a plan to question a medical provider's decision
regarding the
care of the patient. This is most often done for
"medical necessity." The
plan, through use of its own criteria (rarely
grounded in clinical studies,
and even more rarely made public), holds
itself (by way of its own doctors)
as the point of final medical
determination.
Whether through a gatekeeper system, or a structured
system in which
physicians must make each request for their patients,
the result is the
continuous, micromanagement of decisions regarding
the care of a patient at
hand. Physicians have varying responses to
this:
some are intimidated easily into submission to the plan's
requirements,
easily done by physicians from a distance, often
anonymous, and with unknown
power over the practicing physician's
professional future;
some physicians are "hassled" into submission,
simply giving into plan's
requirements because other patients and
practice demands prevent them from
battling it out with numerous
individual patients and plans; and/or
some physicians are rebellious
and confrontational, but plans soon identify
these physicians as
"noncompliant," as noted above.
Whatever the response, eventually
physicians understand that they do not
practice medicine alone.
Despite claims that a plan does not practice
medicine, the final
medical determination, as every plan states in their
coverage booklet,
is the prerogative of the plan. Medical reviewers and
medical
directors, employed or contracted by the plan, operating under no
ethical codes for their hybrid positions, and monitored themselves by
no
one, make decisions based on little information, and from a
distance,
without ever seeing or touching the patients. Few physicians
can afford,
professionally or economically, to advocate for their
patients against these
decisions.
The power to influence
decisions about care during the diagnosis and/or
treatment phase is
underestimated by the public. Strong financial concerns
drive
virtually every decision. Real quality and outcomes monitors are still
too primitive, superficial, labor-intensive and/or costly to pick up
the
consequences of "medical necessity" determinations made for the
best
interest of the plan at the expense of the patient. In the
meantime,
physicians are increasingly walking a tightrope between
allegiance to the
system which makes it possible for them to practice
and advocacy of the
patients for whom they have primary professional,
ethical and legal
responsibility. It should be no shock that more and
more physicians are just
accepting the medical criteria and decisions
of the plans. To do otherwise
is professional suicide. Meanwhile, the
unsuspecting public continues to
believe that their physician is their
trusted advocate. Once again, the
managed care industry banks on
remnants from the fee-for-service system to
achieve its surreptitious
goal of physician control.
Pre-care processes
a.. Financial
incentives/disincentives, through capitation, withholds,
bonuses,
penalty clauses
b.. Practice profiling and targeting
c..
Selection/deselection
d.. Contractual conditions ("gag clauses") both
explicit and implicit
which prevent disclosure of financial
arrangements, utilization management
procedures, treatment options,
structural limitations on referrals or
available care; etc.
e..
Contractual clauses to ensure compliance with plan's policies and
procedures
f.. Contractual clauses to prevent disparagement of a
plan
g.. Market penetration
h.. Unequal bargaining power
Pre-care
processes are those mechanisms by which professional
decision-making
is influenced and constrained so completely that a physician
essentially becomes a "dual agent," with some other interest competing
equally with any commitment to patients. In the worst cases, these
other
interests -- a plan, success in the managed care market,
professional
viability, economic survival, etc. -- become pre-eminent.
The effect of
"pre-care" controls is to change the very way a
physician thinks before any
patient enters his or her domain of care.
If the physician begins to think
as a "medical director" of the plan,
then he or she will no longer need to
have medical decisions
overturned by another physician. The physician has
"learned" to
practice a new kind of medicine -- that defined by the managed
care
plan or the industry as a whole.
Understanding this kind of management
technique is critical to understanding
the most evolved managed care
plans. When the right conditions are created,
the plan simply sets
processes in motion. The treating physicians themselves
do the "dirty
work" of managed care. In the most sophisticated forms of
this, plans
have come full circle, appearing to give back "independence" to
their
physicians. However, such autonomy is elusive when the conditions have
been designed to limit the range of "independence." A mouse in a maze
has
choices, but if there is no way out, freedom is reduced to
exploring the
impediments.
This is the most insidious form of
management, for it involves eliminating
the conditions which
previously enabled a professional to remain independent
and
autonomous. The most effective payment arrangements and contract
provisions are calculated to induce restrictions on resource use -- a
powerful, effective method to change the way a professional approaches
the
distribution of those resources. To argue that physicians continue
to
practice appropriately under such circumstances is essentially
wishful
thinking, for it ignores several critical facts:
we know
from the fee-for-service era that financial arrangements linked to
quantity do effect what physicians decide;
physicians are equally
susceptible to human forces of greed, self-interest,
or just ordinary
apathy as the rest of the population; and
there are virtually no ways
to identify or measure underutilization or
inappropriate treatment
currently.
Increasingly, physicians are simply the instruments for
a philosophy and
practice dictated by persons without training,
license or permission to
practice medicine. Ultimately, the most
sophisticated form of pre-care
control will occur when medical
education is sufficiently controlled and
directed toward managed care
goals. Few external controls, and very little
management of physicians
will be necessary when they have all been trained
to practice as
economic extensions of a particular health care
organization.
AGGREGATE EFFECT OF THESE METHODS?
In this
kind of environment, the practice of medicine becomes little more
than
a trade in which sophisticated means are used to manage job
performance. Imagine the effect of all of the methods above as a
physician
attempts to do his or her work. [See Diagram C] This slowly
erodes the
professional's capacity to act independently, to use
education and training
for the benefit of his or her charges, and to
continue to develop ways that
accentuate clinical acumen. Although
skill is important, there is some
special dimension of the profession
of medicine that makes a doctor more
than just someone who services
malfunctioning parts of a machine. A
physician is a professional to
the extent that he or she sees an illness as
more than disease,
infection, injury, or just numbers on a report. As a
professional, a
physician is granted the means to enter into a web of
psychosocial
relationships and responses to conditions of need.
Although medical
ethicists explore in depth the autonomy of patients, there
is little
concern about the autonomy of the physician. A significant aspect
of
that autonomy derives from the ability to make independent decisions
about how to treat. When a physician and a patient enter into a
relationship, we need more than assurance of clinical competence. We
need to
know that a physician and a patient have a space conducive to
care,
compassion and choice. There must be mutual respect and trust by
both
parties. Self-interest of the physician (or interest by some
other party)
must not effect what occurs here. There must be
confidentiality. There must
be peace -- or at least as few
disturbances as possible. This means that we,
as a society, must do
the hard work of figuring out benefit and payment
decisions before the
emotionally laden events of need occur. We should
strive to create
conditions which enable physicians to be open, fair,
compassionate,
and caring -- indeed to be the professionals we train them to
be --
with every patient equally. We should provide uniform structures and
operations to ensure that the health plan does not amplify existing
fear,
pain, suffering, anxiety and confusion.
Justice in health
care means that there should be no financial, geographical
or
discriminatory barriers to a levels of care that provide relief or care
to any member of our society. If care is to be denied, particularly
beneficial care, it should only be because resources will be better
used
elsewhere for other patient care. The determination of that
should be open
and explicit. Currently we do not have a system in
which "cost- savings"
from the "denial" of any services, however and
whenever that occurs, can go
back into the care of more people or more
conditions.
With the combination of controls on all aspects of
care, from post- to
pre-care, we enter the most treacherous of
management techniques: management
by avoidance, denial and control. Is
this the managed care goal -- to have a
physician
a.. who makes
more by doing less;
b.. who suffers additional penalties for
losses;
c.. who cannot divulge critical information to patients,
including
treatment alternatives or availability of specialty
care;
d.. who will be profiled and credentialed for economic and
utilization
performance;
e.. who must comply with the plan's
requirements for authorization and
determinations of medical
necessity;
f.. who risks sanctions, and possibly deselection, if
contract provisions
are violated; and
g.. who ultimately cannot
express any negative comments about these
conditions?
CONSEQUENCES
TO PATIENT CARE
We are already deluged by patient stories. How many
more will it take?
Under such an subtle and obstructive management,
the physician becomes
essentially an agent of the plan or the society
which is allowing these
constraints to occur. Initially, the
limitation or withholding of care could
be supported by a genuine
attempt to provide appropriate care. Gradually,
reasons of
self-interest, financial gain and assurance of professional
future
within managed care can begin to creep in. As troubling as this might
be, there are more serious stages of concern. Empowered by the ability
to
grant or deny care, and rewarded financially when care is denied, a
physician can easily slip into other reasons (consciously or
unconsciously)
to deny care based on personal, religious, and
sociological factors. There
is no perceptible line between denying
care to someone because it incurs
financial reward and denying care
because spending the money is considered a
"waste" for a particular
type of patient or a specific condition of need.
GENERAL QUESTIONS
FOR REFORM
It is interesting that that this phenomenon called
"managed care" has
developed and evolved with very little significant
and effective ethical
challenge. Serious questions must be
answered:
Are we willing to tolerate a system of access and resource
allocation which
depends upon constraints of professionals in order to
achieve its results?
If we object to the micromanagement of plans by
the government, why do we
allow, without examination, the
micromanagement of physicians by managed
care plans?
If we believe
that physicians must be scrutinized and controlled, then
should not
the other health care professionals undergo the same degree of
scrutiny and control?
Are we really making cost-cutting changes for
some "greater good"?
Under what circumstances can an individual be
harmed or even sacrificed for
this "greater good"?
Who defines this
"greater good"?
Is any "greater good" so great that it justifies
ethical transgressions to
achieve it?
CONCLUSION
A few
months ago, a writer in the Wall Street Journal posed this question:
"Think of the health-care system as an airline that freezes ticket
prices
while inflation drives up the price of everything else. It
makes a big
difference how the airline has cut costs. If it is using
aircraft more
efficiently and firing underworked baggage handlers,
customers will be
pleased, even if baggage handlers aren't. But if the
airline is avoiding
maintenance and forcing pilots to fly without
adequate rest, customers will
be rightly worried."
We may be
pillaging our most vital resource, changing dangerously the very
system we each must rely upon as we age, as we care for our children,
family
members, friends, and neighbors. Let us hope that we have the
willingness to
understand and challenge the ethical assumptions made
by managed care's
dangerous practice of medicine. The real care of
patients is difficult
enough without the menace of an industry who
eludes its responsibilities
through avoidance, denial and
unconscionable controls. We should be rightly
worried.
George
Anders, HEALTH AGAINST WEALTH: HMOS AND THE BREAKDOWN OF MEDICAL
TRUST, pp. 1-13.
John E. Ware, et. al., JAMA, October 2,
1996.
Peter Boland, MAKING MANAGED HEALTHCARE WORK: A PRACTICAL GUIDE
TO
STRATEGIES AND SOLUTIONS, 3.
Peter R. Kongstvedt, ESSENTIALS OF
MANAGED HEALTH CARE, 182 ff.
Kongstvedt, 182.
Kongstvedt,
287.
Kongstvedt, 287.
Kongstvedt, 286.
Kongstvedt,
287.
Kongstvedt, 182.
Kongstvedt, 182.
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