A FRIEND received a phone call that her 18-year-old son had been in a serious accident. He needed delicate reconstructive surgery on his face.
The Health Maintenance Organization (HMO) that provided the family's health coverage was in financial trouble, and on a "cost-containment" binge. The HMO's "managed care" reviewer authorized the surgery -- but allowed just one night in the hospital.
The son came home, only hours out of surgery, heavily medicated, face wired together, experiencing every bump in the road as excruciating pain. The mother spent the next two weeks away from her job, learning to play nurse.
In psychiatric hospitals, therapists now spend countless sessions on the phone with insurance reviewers. Some reviewers refuse even to consider a patient's psychiatric history or the details of the case. Instead, the reviewer reads from a checklist. Suicidal, yes or no? Violent, yes or no? Unless the patient is deemed "dangerous to self or others" -- the legal criterion for an involuntary commitment -- or so heavily medicated with major tranquilizers as to be in a stupor, no hospitalization is authorized.
To guard against malpractice suits for second-guessing doctors, insurance companies have taken to hiring their own physicians to perform these checklist telephone reviews. An M.D. "utilization reviewer" can justify his annual salary by throwing just 10 or 20 patients out of the hospital.
Insurance companies are also making deals with hospitals. For example, even if the subscriber's policy provides up to 30 or 60 days of inpatient coverage, the insurer makes the hospital promise that actual stays will average far less -- say, 10 or 15 days -- something not disclosed in your policy.
I know of a case in which an HMO on a cost-containment kick abruptly terminated home oxygen service for an elderly patient with a heart condition. The reviewer explained that the company would authorize home oxygen only for emphysema cases.
In another case, Blue Cross terminated home nursing care for a rTC patient suffering a long-term ailment, who had been coping at home for many years. The patient, Blue Cross decided, should go into a nursing home. But wouldn't that be far more expensive? Of course -- but in a nursing home, Medicaid pays and not Blue Cross.
Our medical costs are out of control. But thanks to our patchwork system, the cost-containment instruments are both too blunt and too sharp. They don't restrain the real source of the inflation, while they increasingly deny care to people who really need it.
Instead of rationalizing the system, we allow insurance reviewers to second-guess doctors and nurses.
This brand of managed care actually induces doctors and hospitals to find other ways to maintain their income. While people with acute injuries are being kicked out of hospitals, and oxygen is being denied to cardiac patients, an estimated half-million unnecessary Caesarean sections are being performed yearly, and gold-plated medical technology keeps proliferating.
Insurance companies are schizophrenic on the subject of cost containment. On the one hand, they want to cut down on individual hospitalizations; on the other, they benefit from the overall growth -- and cost -- of the health system as long as somebody (us) keeps paying the premiums.
As Judy Feder, former director of the Pepper commission on health care observes, insurance policies allow for payment based on "medical necessity," a judgment once left to doctors. In the brave new world of managed care, insurance reviewers practice medicine by remote control. But there is a regulatory gap in which nobody systematically reviews the reviewers. If you think your insurance company denied you necessary care the only thing you can do is sue, and good luck.
Dr. Sidney Wolfe, director of the Public Citizen Health Research Group, notes, "In a universal system like Canada's or a well-run HMO like Group Health Care of Puget Sound (in Washington state), they review doctors periodically, but they don't micro-manage every case." Doctors simply live within an overall budget and make their own clinical decisions. Wolfe adds: "People think they have adequate insurance, but de facto they are under-insured because necessary treatment is disallowed."
The tragedy in all this is that a universal system would spend less money second-guessing itself -- and more on patient care. Fundamental health care reform is at last on the national agenda, not because 34 million poor people have no insurance, but because the insured middle class is increasingly and justifiably terrified.
Robert Kuttner is an economist based in Massachusetts.