Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 14, 1993 TAG: 9303140057
SECTION: NATIONAL/INTERNATIONAL PAGE: B-3 EDITION: METRO
SOURCE: R.A. ZALDIVAR KNIGHT-RIDDER/TRIBUNE
DATELINE: WASHINGTON LENGTH: Long
HEALTH-CARE TREND RAISING FEARS ABOUT PATIENTS FOR PROFIT IF CLINTON'S
If you have health insurance and get sick, the last thing you would expect is to be treated as a threat to your doctor's bank balance.But, with President Clinton's health reform plan expected to steer millions of people into cost-conscious HMOs, consumer groups are warning that patients could be denied needed treatment to protect the bottom line.
Most health maintenance organizations hold doctors partly liable for the cost of patient care through an elaborate series of financial rewards and punishments.
"There are so many inappropriate incentives that unless we're really careful, we're going to have a system that is significantly under-serving the entire population," said Geraldine Dallek, director of the Medicare Advocacy Project. The Los Angeles-based organization has documented problems in some HMOs that serve the elderly.
If physicians start seeing the sick as a potential economic threat, it could distort their decisions about treatment.
"The loyalty has to be doctor-patient, not doctor-HMO," said Dr. Robert Yerrington, a San Antonio family practitioner who sees some HMO patients. "I don't like it when I'm sitting with a patient and I'm thinking dollars and cents, but there's no way a human being cannot think of that."
The risk consumers run in an HMO stems from the age-old power of money to influence human behavior.
Traditionally, American doctors have been paid on a fee-for-service basis. The more services they perform, the more fees - and profits - they get.
Incentives reversed
That traditional system has a well-known danger: Doctors may perform unneeded procedures that cost a lot of money and put patients at physical risk.
For example, a doctor may recommend a man get surgery to remove an enlarged prostate gland, when less invasive treatment might do. Indeed, researchers estimate up to 30 percent of medical tests and procedures may be unnecessary.
In HMOs, the financial incentives - and risk to patients - are reversed.
HMOs agree to cover all their patients' medical needs for a set monthly fee. Like any kind of insurance, they spread the risk among many people. They can also buy their own backup insurance to protect against the cost of patients with catastrophic illnesses.
But eventually, either to make money or break even, HMOs have to hold the line on tests, surgery and other services.
Studies have shown there is no significant difference in quality of care between good HMOs and good fee-for-service doctors, but a badly run HMO can wind up denying needed services to squeeze profits. It's the mirror image of Medicare mills where doctors perform as many procedures as possible to get maximum reimbursement.
HMOs like to say that they make money by delivering preventive care that keeps people healthy. What the industry doesn't advertise is that HMOs use a wide range of financial incentives to get primary care doctors to hold the line, even when people get sick. Some examples:
HMOs that contract with independent medical groups or individual physicians may withhold 10 to 20 percent of doctors' potential earnings in special funds called risk pools. The pools cover things like hospital and specialist care, and doctors get a cut of what's left after paying patient costs.
Those year-end dividends can amount to thousands of dollars. "That's not chump change," said Yerrington. He said if he hits all his cost-containment targets, he could bring in $12,000 to $20,000 more.
The government is trying to put limits on the use of risk pools by HMOs that serve the elderly.
Some HMOs cut future payments to doctors if a risk pool is overdrawn in a given year.
HMOs that contract with independent doctors usually pay them a small "capitation" fee per patient each month. If too many HMO patients descend on the doctor's practice, the per-head fee may not be enough. The doctor may start putting off appointments.
HMOs that employ their own salaried physicians usually award a year-end bonus based in part on how well doctors kept costs in check. Studies have shown that the bonus alone does not have a significant effect on doctors' decisions. But staff doctors may feel peer pressure to hold down costs.
The HMO industry, aware that concerns about quality could threaten its expansion under health reform, is designing a report card that would allow consumers to compare the quality of different health plans. Early versions of the report card measure such factors as the thoroughness of preventive care, patient satisfaction with HMO doctors, and staff turnover.
"The trick is neither to overshoot nor undershoot on medical care," said James Doherty, president of the Group Health Association, a leading HMO trade group. Doherty acknowledged that under-service is "a danger" in HMOs, but he said the industry's independent quality-monitoring agency serves as a check on abuses.
Adjustment problems
Still, the changeover to such a different system is sure to create adjustment problems. The average patient sitting in an HMO doctor's office may not realize how different the rules are.
"Most consumers don't understand that the financial incentives have changed in an HMO," said Janet Shikles, director of health policy issues for the congressional General Accounting Office. "If I were a consumer, I'd want to know if the plan I was joining was going to think twice about referring me for tests."
Such information is not easily available now. Consumers considering joining an HMO should beware of hard-sell marketing - a sign of go-for-the-money management. Also, studies have shown that larger, older HMOs are less likely to have financial problems.
Harder to switch
Shikles believes government and employers have to closely monitor HMO quality.
The reason for added safeguards is simple. A dissatisfied patient in a traditional setting can walk out on a doctor. Switching out of an HMO is more complicated. Most employers only permit it once a year, although Medicare beneficiaries can drop out at any time.
"Managed care can provide excellent care," said Shikles. "The issue is to make sure that all HMOs provide excellent care."
Alan Hillman, a doctor who directs the health policy program at the University of Pennsylvania's Davis Institute, has studied HMOs extensively and documented that financial incentives do affect doctors' decisions. For instance, salaried doctors are statistically less likely to hospitalize a patient than fee-for-service doctors.
"Despite what some doctors tell you about being above financial incentives, that doesn't appear to be the case," Hillman said.
Yet Hillman said the question is not whether financial incentives affect a doctor's judgment. If it saves on unneeded care, so much the better. The real concern, he said, is whether money can distort medical judgment.
He believes the greatest risk arises in situations where there is no clear-cut course of treatment, and a doctor has several options.
Hillman said an aggressive, publicly accountable quality control program is essential to establish consumer confidence in HMOs. Some HMOs, he added, have already started taking quality measures into account when determining bonuses for doctors.
Cost comparisons
LA's Medicare Advocacy Project recently attempted to carry out its own quality study. It had to sue the government to get data on HMOs serving elderly Medicare beneficiaries in Southern California.
As expected, MAP found that hospitalization rates for HMO patients were significantly lower than for patients in fee-for-service plans. But what surprised researchers was the discovery of a wide gap in hospitalization rates among the three largest HMOs.
For instance, patients in one health plan were six times less likely to have a heart bypass operation than patients in another. MAP director Dallek called the finding troubling. She suspects the profit motive is somehow involved, but said more research is needed.
Philosophy shift
The shift from the more-is-better psychology of fee-for-service to the less-is-better philosophy of HMOs is jarring for doctors as well as patients. Doctors are not used to the idea that they could lose money providing services to insured patients.
"Doctors feel like they're in a vise between the HMO and the patient," complained Dr. Barry Marks, an osteopathic physician with a solo practice in inner-city Philadelphia.
A few years ago, Marks signed up to take HMO patients. He said he was paid a monthly fee of about $8 per patient. As he got more and more HMO patients, Marks found he was having trouble making his overhead. His choice: Turn away patients who wanted to see him, or pull away from HMOs.
He took the latter course and scaled back his HMO caseload. "If that had become the mainstay of my practice," said Marks, "it would have given me an incentive not to work."