classic

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Chapter 6

Classic Managed Care

Since its beginning in 1974 until 1999, 25 years of change have seen the evolution from total implementation of managed care strategies, to softening and change brought about by an enraged public that has and will use legislation and litigation to challenge every illogical and harmful imposition.

That is the case of the "gag-rules".

Initially, managed care concerns used "gag-rules" to prevent physicians from talking to their patients about the shortcomings of their health insurance. Most contracts basically swore the physicians to secrecy about abuses. This led promptly to rebellion, public challenge of the rules, and retrenchment by the managed care companies.

Another example was endless forms that had to be completed by physicians for the benefit of the managed care companies. The forms explored all sorts of information that should be kept confidential and was likely to be used against the patient if made public. Here again there was an enraged reaction that has led to a national debate about privacy.

A third example among many is the use of formularies. The managed care companies produced lists of medications that were "approved" and had to be used, even if other medications had proven to be more effective for a given patient. This abuse has also led to vigorous and often successful litigation and legislation.

Before we talk about the strategies of "classic" managed care, we may remember that the consolidation of the managed care companies has increasingly placed critical care decisions in the hands of total strangers, often people who know little or nothing about the physicians or their patients. Protests about this conspiracy of anonymity have often led to litigation. Though many of the culprits are still at large, their identities are no longer a hallowed secret. When their identities and credentials have been found, the secret has become much more hollowed than hallowed.

In our narrative, "classic" strategies refer to the numerous step-by-step obstacles lying like orderly if devastating mine fields between the patient and proper care.

Five managed care strategies encompass a number of tactics: contracting tactics, pre-treatment tactics, during treatment tactics, pre-payment tactics and post-payment tactics.

Contracting Tactics. The treatment contract is used to severely limit access to care:

1) Limit benefits: this usually includes denial of in-patient care, limited number of outpatient visits, high co-pays, and ever more inventive tactics. One of them is a referral to a clinic located far away from the patient's residence, often in the poorest area of the city. Limitation of benefits has been especially harmful when applied to diagnostic evaluations, pre-existing conditions, and chronic illnesses.

2) Limit coverage: inventiveness here has been limitless. An example is to approve treatment with insulin but deny payment for syringes or blood tests. This precise denial led to a major and successful class-action suit against Medicare HMOs.

3) Limit physicians: The care is approved if given by someone else. Psychiatrists have been denied the right (and obligation) to talk to their patients. Limiting access to physicians has become a sophisticated art that includes the use of complicated credentialing protocols, rejecting physicians because they practice close to other physicians or because the company wants only a few physicians, demanding unacceptable discounts, and delegating all the financial risk to the physicians through the use of withholds, bonuses, package pricing, capitation, and many other inventive ideas.

Pre-treatment Tactics. Three concepts here have accounted greatly for reductions in access to care:

1) "Pre-certification". This allows the company to use "not medically necessary" to deny care. This vaporous managed care judgement means that the company doesn't feel like justifying care for this individual at this time (how do you argue against smoke and mirrors?). Almost any care can be deemed not medically necessary, unless the patient in willing to fight back.

2) The gatekeeper: In its simple form, this clever obstacle calls for the patient who needs a specialist to be forced to obtain permission from another physician. The insurance company can expect that the waste of time and effort may discourage at least a few patients. In a more sophisticated form of gate keeping, the company pays an all-encompassing capitation fee to the gatekeeper. If she refers the patient to a specialist, the costs are defrayed by the gatekeeper. The reader may draw his own conclusions.

3) The Second Opinion: this calls for denying care until another physician, often one working for the company, agrees as to the need for treatment. This arrangement is unlikely to represent the best interest of the patient.

During Treatment Tactics: Three tactics have been among the most common:

1) Concurrent Review: the reviewer may request extensive information on duration and frequency of treatment, type of intervention, effectiveness and reasons. This may lead to comprehensive communications and bitter confrontations.

2) Discharge Planning: sometimes the managed care company has asked for the discharge plan even before the physician has seen the patient. The lack of this plan or its characteristics may lead to denial of care.

3) Case Management: the physician is provided with another person who is supposed to monitor the treatment program. This person usually has much less training and experience than the physician. The reason for this often defies logic.

Prepayment Tactics: This area has been greatly enriched by clever reviewers. They have come up with a number of hindrances that include:

1) Analysis of Appropriateness of Care: it is never impossible to find a new detail or a deviation in care that will lead to payment delay while the case is investigated

2) Pattern Analysis: any reviewer can find treatment characteristics that lead her to postpone payment while further examining all the treatment elements.

3) Procedure Code Review: the physician is paid according to the meaning of the codes he uses, which reflect the intensity and characteristics of treatment. Any challenge of the codes use easily leads to endless postponement of payment.

4) Billing Procedure Review: a careful inspection of any bill may permit an opportunity to ask for clarification, more explanations, verification of dates, and other clever waste-producing ideas that necessarily lead to late payments.

Post-payment tactics. Managed care companies have been extraordinarily creative in this area. The physician who had finally been paid after numerous inquiries and delays, now may find that the money was not hers after all. Among the numerous tactics here, the following are worth mentioning:

1) Billing audits: even if nothing is found that is wrong, the audit is a threatening, time consuming and often embarrassing experience.

2) Medical Records Review: errors and omissions can be used to weaken the physician's right to honestly earned fees.

3) Retrospective Claim Review: new and old claims are combined to try to prove a pattern of poor bookkeeping, faulty records, or unsubstantiated claims.

4)"Fraud" detection: any problem found using the above tactics may lead to a suspicion of "fraud", followed by new investigations.

5) Provider Practice Profile: those seeing the chronically ill, the destitute and the sickest patients may develop an undesirable "profile", leading to a short stay in the program.

6) "Report cards": the ultimate coercion. The company develops information that may have little to do with quality of care but can be used against the physician. The patient can be asked whether the office is close to his home, the secretary smiles or the parking lot is clean. This can be developed into an unfavorable profile for the physician.

The reader who has gone through this chapter should have develop a sense of why physicians are frustrated, but also a sense of admiration for the millions of people who daily help their physicians fight the system.

main | table | intro| 1 | 2 | 3| 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | *

©2000 Munoz and Eist, The People v. Managed Care


main \| table \| intro\| 1 \| 2 \| 3\| 4 \| 5 \| 6 \| 7 \| 8 \| 9 \| 10 \| 11 \| 12 \| 13 \| 14 \| 15 \| 16 \| 17 \| 18 \| *

	Chapter 6 Classic Managed Care

	Since its beginning in 1974 until 1999, 25 years of change have seen the evolution from total implementation of managed care strategies, to softening and change brought about by an enraged public that has and will use legislation and litigation to challenge every illogical and harmful imposition.

	That is the case of the "gag-rules".

	Initially, managed care concerns used "gag-rules" to prevent physicians from talking to their patients about the shortcomings of their health insurance. Most contracts basically swore the physicians to secrecy about abuses. This led promptly to rebellion, public challenge of the rules, and retrenchment by the managed care companies.

	Another example was endless forms that had to be completed by physicians for the benefit of the managed care companies. The forms explored all sorts of information that should be kept confidential and was likely to be used against the patient if made public. Here again there was an enraged reaction that has led to a national debate about privacy.

	A third example among many is the use of formularies. The managed care companies produced lists of medications that were "approved" and had to be used, even if other medications had proven to be more effective for a given patient. This abuse has also led to vigorous and often successful litigation and legislation.

	Before we talk about the strategies of "classic" managed care, we may remember that the consolidation of the managed care companies has increasingly placed critical care decisions in the hands of total strangers, often people who know little or nothing about the physicians or their patients. Protests about this conspiracy of anonymity have often led to litigation. Though many of the culprits are still at large, their identities are no longer a hallowed secret. When their identities and credentials have been found, the secret has become much more hollowed than hallowed.

	In our narrative, "classic" strategies refer to the numerous step-by-step obstacles lying like orderly if devastating mine fields between the patient and proper care.

	Five managed care strategies encompass a number of tactics: contracting tactics, pre-treatment tactics, during treatment tactics, pre-payment tactics and post-payment tactics.

	Contracting Tactics. The treatment contract is used to severely limit access to care:

	1) Limit benefits: this usually includes denial of in-patient care, limited number of outpatient visits, high co-pays, and ever more inventive tactics. One of them is a referral to a clinic located far away from the patient's residence, often in the poorest area of the city. Limitation of benefits has been especially harmful when applied to diagnostic evaluations, pre-existing conditions, and chronic illnesses.

	2) Limit coverage: inventiveness here has been limitless. An example is to approve treatment with insulin but deny payment for syringes or blood tests. This precise denial led to a major and successful class-action suit against Medicare HMOs.

	3) Limit physicians: The care is approved if given by someone else. Psychiatrists have been denied the right (and obligation) to talk to their patients. Limiting access to physicians has become a sophisticated art that includes the use of complicated credentialing protocols, rejecting physicians because they practice close to other physicians or because the company wants only a few physicians, demanding unacceptable discounts, and delegating all the financial risk to the physicians through the use of withholds, bonuses, package pricing, capitation, and many other inventive ideas.

	Pre-treatment Tactics. Three concepts here have accounted greatly for reductions in access to care:

	1) "Pre-certification". This allows the company to use "not medically necessary" to deny care. This vaporous managed care judgement means that the company doesn't feel like justifying care for this individual at this time (how do you argue against smoke and mirrors?). Almost any care can be deemed not medically necessary, unless the patient in willing to fight back.

	2) The gatekeeper: In its simple form, this clever obstacle calls for the patient who needs a specialist to be forced to obtain permission from another physician. The insurance company can expect that the waste of time and effort may discourage at least a few patients. In a more sophisticated form of gate keeping, the company pays an all-encompassing capitation fee to the gatekeeper. If she refers the patient to a specialist, the costs are defrayed by the gatekeeper. The reader may draw his own conclusions.

	3) The Second Opinion: this calls for denying care until another physician, often one working for the company, agrees as to the need for treatment. This arrangement is unlikely to represent the best interest of the patient.

	During Treatment Tactics: Three tactics have been among the most common:

	1) Concurrent Review: the reviewer may request extensive information on duration and frequency of treatment, type of intervention, effectiveness and reasons. This may lead to comprehensive communications and bitter confrontations.

	2) Discharge Planning: sometimes the managed care company has asked for the discharge plan even before the physician has seen the patient. The lack of this plan or its characteristics may lead to denial of care.

	3) Case Management: the physician is provided with another person who is supposed to monitor the treatment program. This person usually has much less training and experience than the physician. The reason for this often defies logic.

	Prepayment Tactics: This area has been greatly enriched by clever reviewers. They have come up with a number of hindrances that include:

	1) Analysis of Appropriateness of Care: it is never impossible to find a new detail or a deviation in care that will lead to payment delay while the case is investigated

	2) Pattern Analysis: any reviewer can find treatment characteristics that lead her to postpone payment while further examining all the treatment elements.

	3) Procedure Code Review: the physician is paid according to the meaning of the codes he uses, which reflect the intensity and characteristics of treatment. Any challenge of the codes use easily leads to endless postponement of payment.

	4) Billing Procedure Review: a careful inspection of any bill may permit an opportunity to ask for clarification, more explanations, verification of dates, and other clever waste-producing ideas that necessarily lead to late payments.

	Post-payment tactics. Managed care companies have been extraordinarily creative in this area. The physician who had finally been paid after numerous inquiries and delays, now may find that the money was not hers after all. Among the numerous tactics here, the following are worth mentioning:

	1) Billing audits: even if nothing is found that is wrong, the audit is a threatening, time consuming and often embarrassing experience.

	2) Medical Records Review: errors and omissions can be used to weaken the physician's right to honestly earned fees.

	3) Retrospective Claim Review: new and old claims are combined to try to prove a pattern of poor bookkeeping, faulty records, or unsubstantiated claims.

	4)"Fraud" detection: any problem found using the above tactics may lead to a suspicion of "fraud", followed by new investigations.

	5) Provider Practice Profile: those seeing the chronically ill, the destitute and the sickest patients may develop an undesirable "profile", leading to a short stay in the program.

	6) "Report cards": the ultimate coercion. The company develops information that may have little to do with quality of care but can be used against the physician. The patient can be asked whether the office is close to his home, the secretary smiles or the parking lot is clean. This can be developed into an unfavorable profile for the physician.

	The reader who has gone through this chapter should have develop a sense of why physicians are frustrated, but also a sense of admiration for the millions of people who daily help their physicians fight the system.

main \| table \| intro\| 1 \| 2 \| 3\| 4 \| 5 \| 6 \| 7 \| 8 \| 9 \| 10 \| 11 \| 12 \| 13 \| 14 \| 15 \| 16 \| 17 \| 18 \| *
©2000 Munoz and Eist, The People v. Managed Care