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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my experience as too outdated or narrow to be of value, let me assure you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. 16
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