The Warts, Flaws of Managed Care

April 23, 1995|By VIKRAM KHANNA

As one of its last acts before adjourning nearly two weeks ago, the General Assembly passed major legislation that preserves important choices for health care consumers in the rapidly changing world of health maintenance organizations and managed care.

The bill does two things that HMOs hate, and both of them are good for consumers and for the physicians who care for them.

First, the bill makes HMOs in Maryland provide some coverage and payment for consumers who seek care outside their HMO's closed system of providers. Second, the bill brings into the public light pernicious HMO payment practices that pressure HMO-contracted physicians to undertreat their patients. Both elements of this bill are important consumer protections, and the General Assembly should be applauded.

The legislation was vehemently opposed by the HMO industry. Why is the HMO industry so upset? With these small steps, the legislature is exposing some of the warts and flaws of managed care, and the HMO industry doesn't like having its weaknesses displayed for the consuming public to see and understand.

Both of the bill's major components -- preserving patients' rights to choose a doctor and protecting physicians from untenable conflicts of interest -- foster ideals that are a fundamental part of our culture and markets: freedom of choice and the obligation of licensed professionals to make treatment decisions based on what is best for the patient, without fear of financial retribution.

The bill requires all managed care plans in Maryland to offer a "point-of-service" option. Simply put, this allows a consumer to see the physician of his or her choice, regardless of whether that physician is a contracted member of an HMO's roster of physicians. In exchange for being able to choose a doctor, consumers will shoulder a greater portion of the costs for the doctor's services. So, instead of paying $5 or $10 for a physician visit, the consumer likely will have to satisfy an annual deductible and pay a greater portion of the doctor's fees. The portion that the HMO pays will be determined by the HMO and in many cases will be calculated based on the HMO's payments to contracted physicians for a similar service.

I belong to an HMO with this option, and I pay a $300 annual deductible plus 25 percent of a non-HMO physician's charges to see the provider of my choice. My employer offers only one health insurance plan, so even though I cannot choose between plans, I can at least choose among physicians. The additional costs are a stiff price to pay and not every consumer would choose to do it. But it is important to have the choice because it allows me to see physicians whom I know and trust rather than see someone selected by the HMO.

Point-of-service options are not new, and the HMO industry's complaints about them are disingenuous nonsense. According to the Group Health Association of America -- a national trade association of HMOs -- point-of-service options are one of the most important trends in the marketplace. Nearly 60 percent of all HMOs offer this option. As recently as 1991, only 20 percent of plans offered this option. Clearly, there is a market demand for point-of-service options. Consumers understand that they stand to lose access to trusted physicians in many HMOs and have expressed their unwillingness to do so. All the General Assembly has done is to codify an important market trend and to tell Maryland HMOs that they must compete on a level playing field, one that is consistent with consumers' demands and expectations.

There is no evidence that the point-of-service option will be the death of the HMO industry or its alleged ability to constrain costs. In fact, the industry right now is fairly crowing about new data showing that health care costs in HMOs are slowing dramatically nationwide. It is unlikely that this could have occurred while point-of-service options were spreading like wildfire if the point-of-service options were so costly.

In fact, in the plan I belong to, the health insurance premium has been stable for more than two years. Further, it is far too early to claim that HMOs are the solution to the problem of rising health care costs. There is little credible evidence to show that HMOs can continue their success over the long term, and the data we see now might be only a rest period before costs rise again. We also do not know the impact of HMOs' penurious payments on the quality of the care that is provided to consumers enrolled in HMOs.

HMO "report cards" that purport to show how successful HMOs have become do not evaluate real clinical outcomes but report softer measures of consumer satisfaction. Until HMOs can evaluate patients' outcomes over the long term, their claims of success must be viewed skeptically.

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