You've probably seen "managed care" used to describe certain medical plans, and you may have wondered what the phrase meant.
"Managed care" is medical care that is provided by a corporation established under state and federal laws - a company that makes medical decisions for you in much the same way a financial adviser takes charge of your investment portfolio. Your managed care provider tells you which physicians to consult, monitors the medications and treatments they prescribe, and ensures that your costs remain as low as possible. For these services, you pay a set insurance premium each year.
To perform these services in a satisfactory manner, the company (or business) hires doctors, nurses, and other health-care providers. These "employees" are under contract and, to some degree, take their orders from corporate management.
There are many kinds of managed care plans - an alphabet soup - for example, with PSO's, PPO's, and HMO's the most prominent. At present, 150 million people belong to one plan or another - almost 60 percent of the population.
The HMO (Health Maintenance Organization) can itself take a number of forms. The first HMO in this country was the Kaiser-Permanente plan, which began in California in the 1930's. Kaiser Permanente has its own free-standing outpatient offices, its own hospitals, and its own doctors. At present, about 10 million subscribe to this particular plan.
At the other end of the spectrum, for example, is the Oxford Health Plan. In this type HMO, the company contracts with various hospitals and with physicians who operate out of their own private offices. Like all HMO's, the Oxford Health Plan offers medical care at a discounted rate. In order to ensure this low cost, Oxford's contracts with physicians might call for doctors' fees that are only 50%-60% of the going rate for a given service. Physicians who work with the Oxford Health Plan accept lower fees because they have a guaranteed income and do less regarding business matters.
Another managed-care approach is known as "capitation" (derived from "caput," meaning "head" in Latin). The best example is the British system, and it operates as follows:
The general practitioner takes on a "subscriber list" of patients. The doctor is paid a certain amount per month by the government - perhaps five dollars per patient - and he usually has less than 3,000 patients enrolled on his list. These come to his office only when they need care. He does not go to the hospital to see patients. If anyone on the list has a significant problem, the doctor refers the patient to a specialist, who may or may not recommend hospitalization.
In this plan, the general physician is the "gatekeeper," and he must sanction referrals to specialists. Thus he is forever busy, and office visits are brief - perhaps 5-7 minutes. Britain does allow physicians to maintain a private practice as well, which accounts for about 15 percent of the medical care provided in that country. While only the gatekeeper can refer patients to a specialist, in the event of an emergency - e.g., a heart attack or a life-threatening injury - a person may go directly to the hospital.
Under this system, Brits get "free" medical care - that is, tax-supported medical care. However, they pay a high cost in taxes. In addition, patients must often wait months, even years, for routine surgery like an operation for hemorrhoids or a hernia.
In addition, health care is really rationed in Britain. For example, anyone over 55-60 suffering from a serious kidney disease isn't put on renal dialysis - often a life-saving measure. Dialysis equipment is expensive. The number is limited. If Grandpa runs into serious trouble, the government may just let him die (unless someone else pays), as he isn't "eligible" for such care.
In the United States, managed care organizations have proliferated, particularly in the past 10 years. One reason for their popularity is the necessity for businesses to offer medical benefits at lower costs to attract and retain employees. The solution: Go to managed care and cut a deal. You can offer your employees medical benefits and still be competitive in the job market. But when businesses sign on with HMO's or some other form of managed care, they roll the dice.
Here are some of the potential benefits of managed care - and some of its more obvious pitfalls.
First, the good news, or some of the advantages:
- In a time when medical costs have been rising at dizzying rtes, HMO's have helped to make health care more affordable.
- HMO's provide good medical care - within certain well-defined limits. They provide what is called "focused care" - that is, just enough treatment to correct the patient's current problem - and no more.
- They are efficiently run, and you may spend less time in an HMO waiting room than you would in a private physician's outer office.
Now the bad news:
- Sometimes sound medical procedures are not approved because they add unnecessary costs to the treatment. For example, a CT scan or an MRI - often prescribed by a private physician to eliminate less common possibilities - might be disallowed by an HMO because the procedures cost $800-$1,000, and considered unnecessary in a given situation.
- The "gatekeeper" (a general medical doctor) system discourages referrals to specialists who may be the only physicians qualified to make an authoritative diagnosis and prescribe the most advanced treatment. But the gatekeeper may lose money when he refers patients to specialists, and choose dollars over good medical judgment.
- Doctors who order "too many tests" or prescribe "too much care" may be penalized financially. For this reason, they can fall into the habit of doing less for patients in order to please management. Make no mistake - this is rationing of health care.
- Doctors on salary are encouraged to spend less time with patients. One president of a managed-care company was quoted as saying: "If this specialist sees twenty patients a day, we pay him a salary. If he sees thirty patients we give him a raise. If he sees ten patients a day we reduce his salary. If he sees less than ten patients a day he is fired."
- In the event you're the victim of malpractice, you can't sue an HMO (except in Texas) or a medical health insurance company operating a managed-care program. This enables HMO's to offer lower-priced medical plans, since "defensive medicine" costs at least $50 billion a year and also less costly medical services are provided. But suppose your child is hit with a baseball bat and the HMO won't allow a CT scan or MRI. And suppose serious internal cerebral bleeding might have been detected by one of these tests and quickly treated. Shouldn't the HMO be held accountable for the failure to diagnose the problem? For me, the answer has to be "yes" - and I say that even though I believe we've become too litigious in this country. If such suits are permitted by law, how about the worry about the floodgates opening for many such suits by non-bashful plaintiff's lawyers.
So how do you strike a proper balance between lower-cost medical care and a system that allows victims of malpractice to collect damage for their suffering and expense?
On balance, I believe MICRA - the California Plan - is the best model to follow in crafting federal legislation to address this problem. MICRA has a number of features that have enabled the program to operate successfully since 1975.
A few features -
- The California Plan allows for malpractice suits - a feature that not only allows patients to win awards from negligent doctors (and others), but also keeps the medical profession on its toes.
- The plan places a reasonable cap on non-economic awards.
- Periodic payment of future damages (over $50,000) is done in a structured manner that benefits both payor and recipient - rather than a lump sum payment to a successful plaintiff.
- Limitation of plaintiff attorney contingent fees - example, 40 percent of the first $50,000, 33 1/3 percent of the next $50,000, etc. (several years ago New York state also passed similar legislation).
Several years ago, New York State also passed a restriction on legal fees - about 30 percent for the first $500,000, and a declining percentage for each subsequent $250,000 awarded to the plaintiff. This legislation was a step in the right direction, but malpractice awards still come in one lump sum - a policy that helps lawyers and fails to protect patients - hence the value of structured awards.
Over the next few years, the U.S. Congress is bound to pass legislation regulating managed care programs. Too many abuses have surfaced, and too many Americans are disturbed by the current system. I advocate the passage of a bill that will allow injured parties to sue HMO's and insurance companies (provided it is coupled with malpractice reform similar to MICRA), thereby cutting down on their profits and making HMO's and insurance companies more responsive to the needs of patients. The increased cost will be passed along to those who have suffered - but so will the increased likelihood of more responsible health care. I also advocate that patients be given freedom of choice - the right to select their own doctors, as long as the physicians are qualified.
As a physician, I believe this will be a good deal for patients - and I'm on their side in this debate.
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