Some Health Reform Proposals Hurt HMOsWe know that the...


June 11, 1994

Some Health Reform Proposals Hurt HMOs

We know that the people of Maryland have heard from many physicians regarding their views on various health care reform proposals. Many of those views are from the perspective of physicians who seek to protect their fee-for-service practices from the increasing success of managed-care plans.

As one of the health providers that pioneered community rating, preventive care, health education and comprehensive coverage, we are deeply concerned that advancements in medical care delivery may take a frightening backward step because of some proposals currently before Congress.

We are the physicians who provide care to members of the Kaiser Permanente Medical Care Program, the non-profit prepaid group practice health maintenance organization.

As physicians who live and work in the Baltimore metropolitan area, we believe that others may be interested in our unique perspective.

We are deeply concerned about health care reform provisions or amendments that would interfere with the ability of HMO physicians to coordinate care and choose fellow providers based on quality and the needs of our patients.

Such provisions would require HMOs to develop the characteristics of an indemnity insurer. HMOs offer consumers another choice besides fee-for-service and indemnity models. Our patients should not be deprived of the ability to choose coverage under a classic HMO model.

The proposals include:

* "Any willing provider" provisions requiring an HMO to accept providers in a service delivery system.

As a prepaid, group model HMO and a provider of medical care, Kaiser Permanente determines the number and type of providers required to serve the needs of our members based on utilization of medical services by our members.

In addition to limiting the ability of an HMO to control costs and monitor quality, it will force us to develop a claims paying capacity that we do not currently need. It will also make it difficult for us to provide continuity of care to our patients and would compromise our ability to work with providers who match our high-quality standards.

* Provisions requiring HMOs to contract with hospitals affiliated with medical schools and academic medical centers.

These provisions make the incorrect assumption that the quality and range of services provided by such facilities is superior to others. Kaiser Permanente provides excellent, quality medical care through its own facilities and through contracts with other facilities, some of which are academic medical centers.

Requiring HMOs to contract with academic medical centers provides them with a guaranteed source of revenue without making them subject to the competitive forces of the marketplace.

Contracts with other providers for specialty services should be based on demonstrated quality, rather than artificial designations.

The hospitals that we affiliate with also go through our rigorous appraisal. To assume that all academic medical centers offer superior quality and range of services does a gross injustice to us and to our affiliated hospitals.

* Proposals requiring HMOs to offer point-of-service coverage. Organized, integrated health care delivery systems such as Kaiser Permanente should not be required to adopt indemnity-like practices.

By requiring equal or greater coverage than indemnity coverage, the impact of these provisions would be to encourage individuals who never intend to use the HMO's services to select an HMO point-of-service option simply to obtain the lower rate.

The purpose of point-of-service plans in the market today is to introduce enrollees to the advantage of an HMO while providing the security of an out-of-plan option as an alternative. If HMOs are required to offer point-of-service plans, there will be no incentive for an individual to share responsibility for appropriate use of health care resources.

The impact of the provisions we have described above would be to increase our costs -- and, therefore, our premium rates -- by as much as 25 percent.

The millions of Americans who have elected to obtain their health care through HMOs -- and the hundreds of thousands of employers who help them pay the premiums for that coverage -- will feel angry and betrayed should "health care reform" result in such a significant increase in their costs.

We know that other Marylanders will be as alarmed as we are that we could lose the great gains in medical quality and cost-effectiveness that have been accomplished by health care delivery systems like the Kaiser Permanente Medical Care Program and the impressive health care reforms already achieved in Maryland.

Adrian E. Long, M.D.


The writer is physician-in-chief for Kaiser Permanente in Baltimore. Twenty-three other Kaiser Permanente physicians also signed the letter.

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