Letter to the New York Times Concerning Robert Pear's July 8th Article, "U.S. Shelves Plan to Limit Rewards to H.M.O. Doctors"
July 16, 1996
Senior Associate for Quality Policy
Robert Pear's July 8th article, "U.S. Shelves Plan to Limit Rewards to H.M.O. Doctors," paints a familiar scene of the current political landscape: industry fighting government regulation with consumers relegated to the sidelines.
The issue in question is the common practice in managed care organizations to establish reimbursement arrangements with physician and physician groups that reward physicians for controlling the use of health care services. Congress and the Clinton Administration decided to regulate the practice by doing three things: make consumers aware of the reimbursement arrangements; survey HMO enrollees to ensure satisfaction with HMO services; and protect physicians from financial loss when the costs of actually providing patient care substantially exceed HMO payments. Yet these steps were called "needlessly offensive and cumbersome" by the managed care industry causing the government to delay the effective date of the regulation.
The sad irony of the Pear story is not so much the government caving into industry pressure but the fact that these regulations represent the "tip of the iceberg" of what is needed to effectively regulate the managed care industry. Lest there be any doubt, the financial incentive inherent in managed care is the quality issue of the day for health care consumers. For the industry to argue to the contrary defies common logic.
No less an authority than the National Academy of Science's Institute of Medicine had this to say about managed care: "...the paradigm shift calls for health plans to provide needed services to a population in the face of stringent resource constraints, and the incentive will likely be to underserve people. These changes make monitoring the quality of care imperative, especially for the sickest individuals and other at-risk populations."
Four additional steps, beyond these quite modest regulations, are needed to ensure that quality patient care will come before profit and revenue margins. First, enrollees in HMOs need access to an independent grievance and appeals system to challenge plans that are withholding or denying needed services. Next week, consumer groups will join an amicus brief in federal district court to compel the Medicare program to adequately inform beneficiaries of their grievance and appeals rights as enrollees in HMOs.
Second, health care utilization rates within HMOs, including referrals rates to specialists and hospitalization rates, should be routinely monitored by independent entities. To institute such a system, HMOs should be required to produce and report minimum data for each patient encounter.
Third, risk adjusted payments mechanisms should be instituted. Without health plan and physician reimbursement better reflecting underlying risk factors of enrollees, we will continue to be beholden to a health insurance system that seeks first to avoid, rather than manage, health risks. Finally, comparative consumer guides are needed to inform consumer selection of health plans. The public release of information on plan performance will also make plans more accountable and attentive to quality improvement.
Consumers are not opposed to managed care. Indeed, managed care systems, by emphasizing integrated/multi-disciplinary approaches to disease management and preventive care have the potential to produce higher quality at lower costs. But do not insult the intelligence of consumers by suggesting that the payment incentives of managed care represent no risk to patient care. It is time for the managed care industry to accept its responsibility as the dominant form of health care delivery and work with the government, consumers and health care workers on meaningful regulation and oversight.
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