Costs vs. care

Managed care has controlled costs, but at what price?
In a recent airing of the television drama ER, emergency room physician Carrie Weaver took up the case of a patient who required an experimental drug to cure his malady.
Weaver argued vehemently with a managed-care benefits approval supervisor that administering the drug would cost only $400. Without the drug, the man would require hospitalization to the tune of $10,000, she pleaded.
Weaver lost the telephone argument on the grounds that the man’s managed-care plan did not allow unapproved drug treatments.
While that example is fictitious, it is being played out daily in hospitals and medical clinics across the country as managed care gains a stranglehold over modern-day medicine.
Nobody can dispute the claim that managed care has brought spiraling health-care costs under control. But sometimes, critics contend, necessary medical treatment is delayed or denied by managed-care cost-control protocols. When that happens, things can get ugly.
Milwaukee internist James Buck had a patient hospitalized with pneumonia. When the patient’s allotted days of treatment were up, her HMO refused to allow her to stay in the hospital.
But she had chronic arthritis. After days in a hospital bed, she couldn’t walk. She didn’t have anyone at home to care for her.
“She would have been in horrible straits if she were sent home,” Buck recalls.
Buck had to prove medical need. Fortunately, the HMO “used common sense in this case,” he says.
Milwaukee dermatologist Kathleen Stokes’ patient was not so lucky. A 40-year-old woman came into her office with a lesion on her nose. Her referral instructed: “Diagnosis only, no treatment.”
Knowing it could potentially develop into cancer, Stokes called the HMO to get the referral changed. It denied the request.
“It took persistent effort before finally getting approval two months later,” Stokes recalls.
By then, the lesion had developed into cancer and had to be cut out. Today, the woman lives with a visible scar, serving as a visual reminder of the rigidity of today’s health-care environment.
Bottom-line financial issues overriding medical concerns is becoming an increasing strain on doctors who are charged with providing the best possible medical outcomes to their patients.
This inherent conflict led members of the Medical Society of Milwaukee County to issue guidelines last year to help physicians sort through ethical challenges raised by managed-care plans.
The guidelines reiterate physicians’ duty to inform patients of the most beneficial method of treatment and to serve as an advocate for patients to ensure they get it.
For doctors, that’s a tough order. Physicians often deal with multiple managed-care organizations that have radically different methods of contracting. Milwaukee oncologist Kurt Oesterling is not alone in contracting with 426 separate managed-care and insurance organizations.
“All have different requirements,” Oesterling says. “Some need pre-authorization for treatments; others require co-payments. The main issue for me as a physician is the increased time involved in administration,” he said. “It takes away from time I could spend with patients.”
It has also pushed solo practitioners into physicians’ associations, observes Robert Straub, president of the Columbia-St. Mary’s Physician Association.
“One needs to be affiliated with an organization to feel support negotiating contracts and surviving in the managed -care environment,” Straub says.
Management strategies
Strategies like pre-authorization requirements, case management practices, approved pathways or guidelines, formularies, and electronic reminders give physicians specific instructions on
“The pressure in a capitated system is enormous. If, as a physician, you go over your budget, you eat it.”
Kathleen Stokes,
Milwaukee dermatologist
what a physician should do in a given situation. They make doctors work within the limits of the system.
As a family practitioner, Straub gets approvals to refer patients to specialists, but “it requires a little extra effort. Managed care requires more work and pays less,” he notes.
“Being a gatekeeper is a mixed blessing,” Straub says. “It gives family physicians and pediatricians the ability to get their patients to the right place for appropriate care.”
On the other hand, it can drive a wedge between patients and doctors if patients think their doctors’ bonuses depend on limiting referrals.
“Some ethical doctors find themselves squeezed – having to petition health-care plans every step of the way,” Buck notes. “The people we deal with initially are often non-physician administrators, using cookbook guidelines for each diagnosis.”
Oesterling, president of the St. Joseph’s Physician Association, considers the red-tape of managed care “a necessary evil.”
Sometimes, doctors learn how to work the system. “Unfortunately, there are some physicians who will take advantage of the situation,” Oesterling notes.
“If one has an unlimited budget, there is an incentive to do more,” agrees Buck. “Just as a minority of physicians padded their bills in the old days, these days, greedy doctors can do better by limiting care.”
For Buck, the most difficult aspect of practicing under managed care is having to make compromises.
“Trying to give the best care I can give within the limitations of the system,” Buck says. “The tremendous improvements in available health care run head-long into capitation.”
The strongest pressures to limit treatments are felt in capitated systems, in which doctors’ compensation is based on numbers of patients rather than services provided.
“The pressure in a capitated system is enormous,” Stokes says. “If, as a physician, you go over your budget, you eat it,” she says.
On the other hand, full capitation give physician organizations the flexibility to experiment with innovative care delivery systems that might incorporate different resources such as nurse practitioners and outreach services that were not always reimbursed under the fee-for-service system.
“We still haven’t found the ideal reimbursement system,” adds Milwaukee allergist Toby Enright. “The payment system of the future must reward outcomes. Is the patient better? The best medicine is the least expensive in the long run.”
The difficulty of devising an outcome-based compensation system comes from the nature of medicine.
“In cases like cancer, regardless of how heroic the doctor has been, the patient still dies,” Enright says. “It’s the natural course of the disease.”
The results
Contrary to the ER physician’s complaint that bureaucrats are creating arbitrary rules that determine who gets a certain level of care and who does not, there is solid evidence to suggest that health care is better with managed care than without it.
Managed care seems to do a better job of finding some cancers – such as breast, cervical, colon, and melanoma – sooner than traditional indemnity plans, according to a study in the American Journal of Public Health.
The biggest impact of managed health plans have had on the practice of medicine is the introduction of
“We still haven’t found
the ideal reimbursement system. The payment system of the future must reward outcomes.”
Toby Enright,
Milwaukee allergist
accountability, says Nancy Wenzel, executive director of the Association of Wisconsin HMOs.
“In the past, doctors treated patients in isolation,” Wenzel says. “Now they have to provide data that shows they are delivering quality care.”
It also give patients somebody to hear their complaints, says Lorena Chicoye, medical director of PrimeCare.
“Before managed care, short of litigation, who could you complain to? Nobody,” Chicoye says.
Some of managed care’s best impacts are preventative.
“The resources of managed care can be used to provide education, to teach patients to maintain their health and reduce their risks,” says James Ketterhagen, senior vice president and medical director of Fortis Health.
Disease management programs offered by managed health organizations for patients with chronic illness have proven effective. Also, educational services like 24-hour nurse lines help patients take care of themselves.
“These direct approaches to customers are the way of the future,” Ketterhagen predicts.
Doctors and other health-care providers say managed care has forced them to focus more on the outcomes of treatment, and that’s good.
“Managed care has helped make mental health treatment much more solution-focused, time-limited, and efficient,” says Milwaukee psychotherapist Poul Sandersen. “We can focus on getting clients through a problem rather than encouraging them to develop a long-term dependency on their therapists.”
On the other hand, managed care emphasizes a focus on the bottom line that can test the moral fiber of physicians and medical care providers.
Psychotherapist Marilyn La Court quit accepting managed care patients last year, in spite of the financial repercussions, because of new requirements to limit service to those of “medical necessity only.”
That would have required her to diagnose clients as mentally ill if their therapy was to be covered. La Court says such a diagnosis would limit their employment options, life and health insurance benefits, and their ability to adopt a child or maintain custody of their own children.
“Insurance companies have the right to limit their coverage,” La Court says. “But the result is a segment of the population can’t get counseling unless they are given a diagnosis that will follow them for the rest of their lives.”
Fortis Health’s Ketterhagen often speaks to physicians about working in the managed-care environment. If he could give physicians only one piece of advice, Ketterhagen would urge them to maintain a focus on the patient.
“If we managed health-care organizations, and physicians realize that serving the patient as efficiently as possible is our common goal, it will be easier to work together,” Ketterhagen says.
June 1998 Small Business Times, Milwaukee