So, you're thinking about purchasing, or you currently have, an HMO health insurance plan. You read the nice brochure and the coverage looks like just what you've been looking for. They tell you great things up front, and show you pretty color pictures of happy people using their plan. So what could be wrong? Why not purchase their plan? There are a number of things that they tell you that are 1/2 truths, and the most important things they won't tell you at all. If you already have an HMO, compare the 10 points below to how you have been treated with your plan. It should help make sense of it all. If you are thinking of purchasing one, beware.
1. "The less your doctor sees you, the more he earns." - One of the great things about joining a health maintenance organization is the convenience. You visit the doctor, the HMO pays for it. Most of the time there isn't a single form you fill out. But how is your HMO doctor really getting paid? You might be surprised.
Sixty percent of all managed-care plans, including HMO's and preferred provider organizations, now pay their primary-care doctors through some sort of "capitation" system, according to the Physician Payment Review Commission in Washington, D.C. This is, rather than simply pay any bill presented to them by your doctor, most HMOs pay their physicians a set amount every month- a fee for including you among their patients. At Chicago's GIA Primary Care Network, for instance, physicians get $8.43 each month for every male patient between the ages of 25 and 44, and $10.09 for every female patient between the ages of 20 and 24.
You could argue that these capitation programs are an incentive to keep you healthy: Even if you don't need your doctor, he or she gets paid. But what you need to look out for are the additional financial incentives that come with some capitated payment systems. Some HMOs, such as Oxford Health Plans, Cigna and Aetna, have "withhold" Systems, in which a percentage of the doctors' monthly fees are withheld and then reimbursed if they keep their referral rates low enough. Others, like U.S. Healthcare, pay bonuses for low referral rates. Still others, such as Health Net, have so-called risk pools, whereby primary doctors get a lump sum on top their capitation rate to pay for any patent test or specialist referrals. Anything left over is their bonus. "Capitation is the strongest reason not to recommend a patient to specialist," contends Carolyn Clancy, director of the Center for Primary Care Research at Agency for Health Care Policy and Research in Rockville, Md.
The pressure to avoid specialist can be considerable, says Dr. Lee fisher, a family physician in West Plan Beach, Fla. When he was with CareFlorida, a regional HMO, it was withholding 20 percent of his pay every month, coughing up the money only if he kept referrals low or didn't order too many test or X-rays. Ultimately, Fischer decided to drop out of HMOs altogether. "We were devoting more and more time to a small pool of patients, and we weren't getting paid very much for it, " he says. A spokesman says that when CareFlorida merged with Foundation Health in 1994, it overhauled its capitation system. "It's likely that he would not have this same issue if he were contracting with CareFlorida today," the spokesman claims.
2. "Your primary-care doctor is your specialist." - Everybody wants a doctor who's versatile, but sometimes, in their effort to rein in cost, HMOs really overdo it. How? By pushing their primary-care doctor to take on the additional duties of being a specialist. "Specialist immediately attack a problem with expensive procedures," says David Scroggins, a medical=industry management consultant with Clayton L. Scroggins Associates. "Consequently, HMOs put in the primary care physician's contract a broader scope of responsibilities."
Dr. David Himmelstein, a Boston-area primary care physician, has seen these contracts time and time again. "It's typically vague, you're-responsible-for-everything type of language, " he says. Some are even set up to reduce a doctors monthly pay if he refers you outside for work that was "reasonably available" in his own office, says Scoggins.
The result is that you'll have primary-care physicians either doing procedures for which they're not adequately trained or, more commonly, just cutting corners. They'll do a flexible sigmoidoscopy-in-serting a tube for a colon-cancer check-instead of referring you to a gastroenterologist. Or maybe they'll aggressively prescribe antibiotics for ear or sinus infections instead of sending you to an ear, nose and throat specialist. What can you do? Speak up. If you don't pester your primary-care doctor for specialist referrals, you may never get them.
3. "Your health is a numbers game to us." - Everybody knows HMOs have guidelines for the types of treatment they'll allow and the length of care you're entitled to. That's how they keep their cost down. But did you ever wonder where most of them get those guidelines? Actuaries.
That's right: Number crunchers at actuarial firms such as Milliman & Robertson collect historical care data and perform outcome studies on different procedures and lengths of stay. Then they provide the information to HMOs to be used industry standards. So never mind how you're feeling. If you've had a Caesarean section, according to Milliman, you should leave the hospital within 48 hours. You've had a stroke? You're typically headed home within three days, even if you can't walk out on your own.
It sound more than a little cold, well, that's because it is. "There's no scientific basis" for actuarial guidelines, says Carolyn Clancy. "Any guidelines are based on someone's 'expert opinion,' and that may come from a variety of perspectives."
And make no mistake: These guidelines are strictly enforced. Lee Wesner, an electronics-manufacturing manager with Comsat, had a pinched nerve and needed back surgery. The condition was so bad that he was losing the use of his foot and was actually dragging it. Delaying an operation could cause "serious damage" said his orthopedic specialist, Dr. Neil Kahanovitz, who asked Wesner's health plan, Jefferson Pilot, to approve the surgery. Kahanovitz was told that the condition had only persisted for four weeks and that Wesner had to wait the recommended six weeks.
"The denial was based on a nontreating physician's interpretation of guidelines," Kahanovitz contends. The other doctor "Failed to appreciate that the guidelines were designed to be used as exactly that, i.e., guidelines for proper, timely and appropriate care." Kahanovitz later performed the operation and Wesner recovered. Still, the surgeon says; "my patient needlessly suffered for two more weeks." A Jefferson-Pilot spokesman responds that the company looks at each case individually and that it considers its guidelines appropriate.
4. "Our exclusions could kill you." - Willing to try an experimental medical procedure? If you're in an HMO, good luck. Many not only frown on experimental or non-FDA procedures, they strictly forbid them. Take bone-marrow transplants. "In general they're performed for leukemia patients," says Dr. Martin Malawer, a Washington, D.C., orthopedic oncology surgeon. "But for the last 10 years they've also been proven to be effective treatment for breast cancer, although it's not an FDA-approved treatment." Because of this, many HMOs he deals with won't pay for it. Malawer thinks the logic is flawed. "Standards of care developed over time, and these HMOs are impeding such developments." He says. By all means, you should spend a few minutes scanning the fine print of your enrollee contract. That's where your HMO's rules about these procedures are spelled out. Chances are your contract will also explain that the policy covers only "medically necessary" treatments.
Unfortunately, that phase is wide open to interpretation, notes Dr. Laura Sudarsky, a plastic surgeon practicing in New City, N.Y. She recently saw an asthmatic patient whose Oxford Health Plans primary-care physician recommended breast-reduction surgery. It's not uncommon for asthmatics to have breast reductions-it alleviates some of the weight on the chest wall- but before Sudarsky could operate, the HMO denied the procedure. "Oxford said it did not meet their criteria for reconstructive surgery, "Sudarsky says. Tom Travers, vise president of health xcare delivery at Oxford, declines to comment on that case specifically. However, he adds, "There's no little black box into which we're putting health care and coming out with 20-30 percent savings. It's got to come from squeezing unnecessary services out of the health care dollar."
5. You're not sick until we say you're sick." - Most HMOs Demand Pre-approval for just about any care you get. For just about any care you get, whether it's simple referral to see a specialist or an emergency. Why? "It's clear that the approval process is a hurdle to reduce procedures and referrals," says David Himmelstein. "It's not the turndown that's the issue. It's the hassle it makes for the doctors."
Eric Jung, a Bellcore computer programmer, knows this firsthand. Last summer, he was on his way back to New Jersey from Rhode Island when disaster struck. After stopping to eat, he was overcome with sudden and extreme diarrhea. " I realized I wasn't going to make it home," he says. "Then I realized I wasn't going to make it to the bathroom." After the initial onslaught, he says, he passed out by the side of the road and, delirious, he was taken by his girlfriend to an emergency room in Summir, N.J.
Jung thought he followed all the claim-filling rules of his HMO, PruCare: He called his primary doctor within 24 hours of his ER visit and left a detailed message. Yet a month later, he got a $541 bill from the hospital and one for $259 from the doctor, saying that PruCare had denied it. The HMO's explanation: The emergency-room visit hadn't been pre-authorized.
In the end, Jung got reimbursed for the hospital charges. But it took five months of phone calls and letters, and, as of mid-January, there was still some dispute as to whether PruCare had followed through on its promise to finally pay the doctor's bill. Responds Kevin Heine, a spokesman for Prucare: "When he field his appeal, PruCare said they would notify him of the decision. In early December, he was informed that the facility portion would be taken care of and that PruCare was still examining the doctor portion of the bill. Would we have liked this process to have been quicker? The answer is yes."
6. "Your ignorance is our bliss." - Managed-care providers are all too happy to tell you about some things, like their coverage on well-baby care or their $125 reimbursement for new eyeglasses. But for the most part, they treat the really important information like a state secret.
How many patients have dropped out of their plan in the past year? Are doctors paid on a capitation system? How good are the doctors? We ask these questions of six different HMOs and only two - United Healthcare and Oxford- could provide any answers. "You would like to know that you percentages for surviving a heart attack, based on all the variables, are better with one plan that another," says Robert Krughoff, president of the advocacy group Consumers' checkbook. "This is exactly the kind of comparison shopping you won't be able to do among plans."
About the only place for general information on HMOs right now is the National Committee for Quality Assurance. This Washington, D.C., managed-care-industry watchdog collects various performance data on HMOs and provides it to employers. The group, which is just beginning to market its information to consumers, also runs a reasonably helpful World Wide Web sire (http;//nega.org), where you can look up when your HMO was last audited and whether it has the NCQA seal of approval. But it pretty much ends there. Want to see your HMO's actual performance data? Sorry, that's not available to the public. Another negative: Only about half of all HMOs have volunteered fro an NCQA audit so far. "It's an evolving field, and it's very young," concedes Barry Scholl, an NCQA spokesman. "I mean, it's embryonic."
7. "We're loose with the facts." - You call your HMO's toll-free number and get a cheerful-sounding representative who answers you claim question promptly and with authority. But when you do what she suggests, the HMO denies your claim.
Sound familiar? It happens all the time. A recent study of HMOs by the New York City public advocate found that the companies; telephone representatives often gave out badly misleading advice. Five of the 12 HMOs surveyed, for instance, claimed that all of their physicians were board-certified, an exaggeration of up to 25 percent. When a customer-service representative at one HMO was asked if she understood what board-certified meant, she replied, "It means they graduated from medical school." (In fact, it means the doctor has completed a period of post medical-school training and passed an exam in his or her specialty.)
The study pointed out at number of other problems. Representatives gave inconsistent information about the number of allowable specialist visits for instance. And they gave out wrong advice about how soon you have to notify the HMO after an emergency.
Robert Krughoff, for one, wasn't terribly surprised by the study's findings. His group has done its own surveys and found, among other things, that doctor turnover is often much higher than the numbers claimed by HMOs. "You should never accept their statements at face value," he says. "Without auditing, HMO data is meaningless."
8. "We use second-rate parts." - "Top shelf" doesn't quite describe the hip or knee replacements you may get from an HMO. In fact, "generic" may be more like it. "HMOs will often use less-expensive versions of medical devices," observes surgeon Malawer, who consults with several medical-device companies. "In fact, there are entire product lines developed for the HMO market."
Although there's a constant stream of new devices coming into the marked, don't count on getting the latest rechnology, either. "There are often better medical devices on the market than are being used, but HMOs are engaged in a policy of silent rationing," argues Steve Speil, a spokesman for the Health industry Manufacturers Association. "They don't tell the patient about the alternatives because they would have to spend the extra money."
How can you tell if you're getting the real thing or a house brand? Ask how it's made. Most implants are made by either a forging or a casting process, says Dr. Charles Miller, professor of orthopedic surgery at the University of Virginia Health Sciences Center. "Forging is much, much stronger." For major work, such as hip replacements, "these less expensive cast implants are not appropriate," he adds.
9. "Send you to an expensive therapist? Are you Crazy?" - Treating mental health is one of the trickiest issues for any insurer, whether it's a fee-for-service plan or an HMO. How much therapy, after all is really enough?
Unfortunately, some HMO critics say, managed-care companies have an easy answer to that question: very little. Their response is often to prescribe medication instead of therapy, because it's so much less expensive, says Russ Newman, an executive director at the American Psychological Association. Medication is not an improper treatment," he adds. "It's just that [in some cases] therapy is being completely excluded."
Dr. Edward Gordon, president of the New York State Psychiatric Association, cites a recent case involving a severely dysfunctional family enrolled in the Physicians Health Services HMO. The father had drug and alcohol problems and was threatening his wife. Their child was suffering from learning disabilities and chronic depression. Gordon would have recommended family counseling at least once a week. But the HMO- whose mental-health care was administered by a separate company, CMG health allowed only four visits each for the mother and child during a three-month period. Meanwhile, the two were put on antidepressant drugs. "CMG has a reputation for being single-mindedly focused on reducing services, " says Gordon. Responds Alan Shusterman, chairman and CEO of CMG, "We are hard-nosed, but not about cost; [not are we] antipsychiatry. We're very aggressive about trying to get patient the most efficient and effective care possible."
10. "Unhappy? Go ahead, just try to sue us." - Since doctors have long been a magnet fro mal practice suits, you might think that HMOs-which often dictate treatment- would now be taking their share of litigation hits. But not so, for most HMOs have been cloaked with a protected status rivaling that of the spotted owl.
For many HMOs offered through large or midsize employers, state law is superseded by the Employee Retirement Income Security Act of 1974 (Erisa). Because Erisa was originally intended to regulate employee pension plans, there isn't much specific to health-plan regulation and, as a result, the legislation makes lawsuits against a health plan an uphill and unprofitable battle.
For starters, any suit against your Erisa-governed HMO is properly a matter of federal law. "Being federal law, it's more-ambiguous legal terrain and there are fewer [plaintiff's attorneys available," says Mark Heiplerm a California civil litigator who has successfully sued several California HMOs. Worse, under Erisa you have no chance at any punitive-damage award. "All the HMO has to do is pay for the disputed claim with no interest paid," says Carol O'Brien, a senior attorney with the America Medical Association. "There's only the possibility of attorneys fees and cost (of treatment) but no damages."
Three exceptions: If you're a participant in a government plan or a plan sponsored by a tax-exempt organization, or if you buy your health insurance n your own (not through an employer), you plan is not covered by Erisa. Under these circumstances you have the potential to be awarded both bad-faith and punitive damages, says Hiepler. Otherwise, you're out of luck.
Health Insurance can be very tricky. Arm yourself by reading the policy exclusions and limitations before you buy their plan. Most insurance companies will reluctantly give you a sample policy before you buy if you ask them. Always remember... they are in business to make money, anyway they can.
This article would seem funny, except for the fact that it is true.
I have written several other articles on related subjects for your information and caution. Shop wisely.
Scott Rowen is an accomplished insurance professional with 18 years business insurance experience. He has MBAs in Business Insurance and Finance, and is a highly requested speaker at many professional venues across the US. He's currently the CFO of a very successful, award winning errors and omissions insurance company. [eandoinsuranceofamerica.com]
