Wolff, 28, who is now a third-year law student, had read his plan carefully. He knew oral surgery was covered if the need resulted from an accidental injury. He decided to press his claim. Over the span of a year, he wrote six formal appeal letters and kept careful track of the 67 phone calls he made to his HMO. Finally he was granted a hearing. But that consisted of a doctor and a nurse telling him his treatment was dental, not medical. Wolff left the meeting angry and frustrated, convinced he had lost his last chance for reimbursement. Two weeks later, he got a letter from the HMO saying it was “happy to reverse our denials and rule in your favor.” Wolff got back every dollar he had spent, but the reversal baffled him as much as the rest of the process.
Is this what managed care comes down to? A decade ago, when HMOs first became a huge force in health care, signing up millions of people almost overnight, the promise was top-quality, hassle-free care–and, yes, a cap on exploding costs. Now comes the backlash. These days, too many HMO patients have experiences that are at least as painful as Wolff’s. “In the end,” he says, “it was nothing more than settlement through attrition.”
HMOs are only the most criticized part of a health-care system caught in a weird paradox. America has perhaps the best doctors, the best hospitals and the best medical technology, and its health spending is the most lavish in the world. But the quality of care is spotty. While life expectancy keeps going up, studies show that half or more of the eligible heart-attack patients don’t receive the beta blockers that could reduce their risk of another attack. A “substantial” number of cancer patients “do not receive care known to be effective for their condition,” says another study. And each year, 106,000 hospital patients die from adverse drug reactions–wrong dose, wrong drug, wrong patient or wrong mix with other drugs. No wonder people are unhappy with health care. “If the present system is excellent,” asks industry consultant Michael Millenson, “what would be mediocre?”
Beyond cost control, HMOs were supposed to improve care, promote preventive medicine and unleash market forces, giving consumers the ability to shape their own health plans. “It turned out to be the wrong consumers,” says Dr. Paul Ellwood, who helped develop the concept of managed care and coined the term “health maintenance organization.” “The power,” he says, “is in the hands of purchasers–the large employers and Medicare–and they dictated what the system would look like.” Too often, it looks like a contrivance that puts cost ahead of quality. “We have moved from a system where every economic incentive was to provide more services to one where all the incentives are for providing less care,” says Ron Pollack, head of a consumer advocacy group called Families USA.
Not long ago, Dr. Robert J. Raniolo, a surgeon who practices in the suburbs north of New York City, operated on an elderly woman whose large intestine had been perforated by diverticulitis–a life-threatening condition. It was not an easy case; the patient had a history of stroke and coronary artery disease. But after some tricky surgery and two weeks of recuperation, she left the hospital, on the way to a full recovery. Then her HMO said it wouldn’t pay the hospital for treating her. The surgery, it said, was not “appropriately pre-authorized.” “That’s what they do–deny, deny, deny, right from the get-go,” says Raniolo. “Only one thing matters to the HMO, and that’s money.”
And as the red tape piles up, costs are starting to accelerate again. A survey released last week shows health-insurance premiums rising 4.8 percent in the past year. With the population aging and expensive new drugs and medical technologies coming online, many experts anticipate a return to double-digit annual increases. “We’re at a crossroads as far as the role managed care will play in our system,” says Paul Ginsberg, who heads Washington’s Center for Studying Health System Change. For most Americans, there is no going back to the old fee-for-service approach–and no desire to move to a “single payer” system in which government picks up the bills. “We don’t seem to have an alternative,” says Ginsberg, “so we’re talking about changing managed care to remove the elements that people find most objectionable and preserving the potential for quality improvement and cost control.”
The HMOs themselves–many now in the red–admit the system has gone haywire. “The HMO industry is not sitting on a huge bag of money and withholding it,” says Christopher Hamrick, a spokesman for the Illinois Association of HMOs. “A lot of these companies are going out of business–we’re worried about surviving. We’ve tried to do the noble thing by providing health care at a price people can afford. But it’s very difficult to give everyone what they want at a price they want to pay.” HMO executives say patients often don’t know how good their care actually is. “When we move up compliance on beta blockers, the impact on satisfaction surveys is zero,” says George Halvorson, president and CEO of HealthPartners, a nonprofit Midwestern HMO that finished 15th in NEWSWEEK’s Top 100. “So what patients are rating is bedside manner, not quality of care.”
HMO executives complain they’re misunderstood. They say that decisions to deny care are always made by doctors, not by nurses or clerks. But those decisions are often conveyed by someone else, allowing patients and their physicians to think they’ve been turned down by bureaucrats. HMOs insist they do not deny lifesaving care, but the benefits have to be proved, which often rules out experimental treatments that patients see as their only hope. “If it is demonstrated to be lifesaving, plans will pay,” says Dr. Charles Cutler, medical director of the American Association of Health Plans. One problem is that each HMO has its own “practice guidelines” for member doctors–a detailed set of clinical rules and recommendations denounced by critics as “cookbook medicine.” One plan may authorize a Pap smear once a year, while another may recommend a three-year interval. The gynecologist who routinely orders annual tests for every patient may be rewarded by one plan and slapped down by another.
Victoria Doyle, 42, who lives in Tacoma, Wash., describes herself as “a nightmare for the insurance industry.” Ever since her heart transplant in 1991, she has had to take medications that now cost between $1,500 and $2,000 a month. Then, last December, her insurer suddenly told her it would stop paying for the drugs. She lobbied frantically, taking her case to the news media and the state insurance commissioner. Finally, the insurance company said it had all been a mistake. “I had three pills left,” Doyle says. “It was very scary.” Her situation remains scary, because there is a $200,000 cap on transplant benefits paid under her current policy. “My fear,” she says, “is that I will outlive my ability to support myself.”
Is there a better way to manage care? Across the country, a variety of experiments are underway. One modification that’s already well established is the preferred provider organization (PPO), which functions much like an HMO but gives patients greater flexibility and doctors more autonomy–often at a somewhat higher cost to the customer. The appeal of many HMOs has been broadened by a point-of-service (POS) feature that allows patients to go outside the plan’s network of doctors and hospitals, with the HMO footing a portion of the bill. And many doctors have banded together in independent practice associations (IPAs). They contract with HMOs to provide managed care, sometimes reserving medical decisions to the IPA doctors. But many IPAs haven’t worked out financially for their physicians. In California alone, 31 medical groups and IPAs went out of business last year. Their basic problem: in a fierce fight for market share, they were forced to accept managed-care fees they couldn’t survive on.
And then there are the doctors–a tiny but vociferous minority–who want nothing to do with managed care. In Denver, Drs. Jonathan Sheldon and Heather Sowell, a married team of family practitioners, have started an operation called “HMNo,” which has about 700 patients who pay by cash or check. Most of them have health insurance, but they have to file the claims themselves, which spares the doctors reams of paperwork. A similar cash practice based in Seattle called SimpleCare charges an annual membership fee ($20 for an individual, $35 for a family) and low rates for each service. A circumcision costs $100 (compared with the $280 charged by another local provider) and a 10-minute office visit, $35. “If you come in and pay me $35 for a 10-minute visit, I can spend the whole 10 minutes with you,” says Dr. Vern Cherewatenko, one of the two founders. “I don’t have to spend two minutes on paperwork and three minutes figuring out what antibiotic your insurance plan allows.”
Going without a health plan is risky. Carpenter Ben Seagraves, 45, hasn’t had health insurance since he went out on his own seven years ago. Partly to compensate for the lost coverage, he changed his lifestyle, exercising daily and giving up cigarettes, coffee and most meat. He says he’s healthier than ever, and to stay that way he takes precautions at work. “I put on the safety glasses,” he says, “and I am very, very careful.”
While a few patients are opting out of managed care, some experts think it might be better to remove employers from the process of selecting a plan. The American Medical Association has proposed a system in which individuals would choose their own coverage from among all the plans available to them in the marketplace, using their employers’ fringe-benefit expenditures to help pay for the policies. Whatever form financing takes, payment is the sorest subject of all. Overwhelmingly, Americans complain that health care costs too much. But according to the latest figures from the Bureau of Labor Statistics, the average family spends only 5.3 percent of its after-tax income on health care, compared with 10.7 percent for restaurants and entertainment. When it comes to health care, Americans demand the best, but they don’t want to pay the full cost.
And in practice, most of them currently have little choice in selecting health coverage. Employers offer just a few options–if any–and the only alternative is to go without an employer-sponsored plan. Most people cannot sign up with one of the top-ranked HMOs because they don’t live in the right area. At least until a “patient’s bill of rights” becomes law, most people will have only one way out of HMO hell: become smarter, more assertive consumers.
Melanie Salsbury asked for a wheelchair, and when her HMO said no, she refused to accept the answer. The 25-year-old graduate student from Sacramento, Calif., has a painful condition in her hips and legs that makes walking difficult, but the HMO thought she could get by with crutches. She began appealing the decision last April, was turned down in September and has one appeal left. Now she tools around in a borrowed, ill-fitting wheelchair. “I like my doctors, but I hate HMOs,” she says. “They have spent more money fighting me than the wheelchair would have cost.”
“You have to be an advocate for yourself, no matter what kind of system you’re in,” says Millenson, the consultant. Studies show that patients who ask their doctors the most questions get the best care. “People’s lack of understanding of how the system works is one of the reasons there is so much anger,” says Dr. Jason Theodosakis, coauthor of a new book called “Don’t Let Your HMO Kill You.” Informed consumers know what is covered, and if they disagree with a denial, they look at their plans’ “explanation of benefits” to find language supporting their position. Polls show most Americans believe good health care is a right. In the age of the HMO, it’s more like a chore–and a challenge.
