AMA Slams Managed Care Even As Leadership Splinters


The wild calls for patients’ rights at the House of Delegates meeting did not prevent the chief executive from suing the board of trustees.

Contributing Editor

Health Secretary Tommy Thompson was playing to a tough Chicago house. His message was simple: Congress needs to soften the legal blows delivered to managed care under any patients’ bill of rights the president would sign. The political homily fell on deaf ears, however.

Thompson’s audience was the American Medical Association’s House of Delegates, drawn from across the country for the group’s 150th annual meeting. The gathering of the AMA clans — representing 167 state and medical specialty societies — kicked off on the eve of the Senate debate on patients’ rights.

The conclave of physicians wasn’t about to let a cabinet secretary steer them off their steadfast support for the Kennedy-Edwards-McCain Bill — which allows lawsuits of up to $5 million against managed care organizations.

Loud cheers

Thompson also had comforting words for the doctors. Assurances of Thompson’s commitment to hack away at the tangle of federal regulations physicians face, along with a homespun vow to keep the rules simple enough for this “simple country lawyer,” drew loud cheers.

“Physicians ate that up,” said Mike Lynch, spokesman for the group. “There was lots of cheering and applause.”

The cheering had just begun. For five days in mid-June, delegates trooped into the cavernous International Ballroom at Chicago’s tony downtown Hilton to shape the political and professional agenda for the 290,000-member AMA.

The annual summit of delegates was meeting to hammer out a common stand on some 200 proposals that ranged far and wide over the health care field. By the time the gavel came down for the final time, they had agreed to push some familiar themes — with patients’ rights a key feature.

“We’re in the home stretch,” said Thomas Reardon, M.D., AMA’s outgoing immediate past president. “Patients and physicians have worked for years to get a bill to protect them from managed care abuses, and this summer we are looking forward to seeing a strong patients’ bill of rights become law.”

At one point, Reardon’s voice was beamed into the meeting as the Senate began its proceedings, hammering once again at the need for “cutting through the HMO smokescreen” on patients’ rights.

The AMA rank and file was on the march, and HMOs once again proved a tempting target. Throughout the ’90s, one of the most frequent targets of AMA anger has been managed care. And the AMA continued the tradition with relish, sparing no effort in portraying big insurers in the worst light possible.

Taking center-stage midway through the meeting, Chicago otolaryngologist John T. McMahan, M.D., described his lawsuit with “big insurance.” McMahan told delegates that years of complaints over downcoding and payment delays were largely ignored until he filed suit against Humana in April of last year.

David vs. Goliath

“Carriers will continue these practices until they’re stopped,” said McMahan’s lawyer, James Marks. The title of the talk: “David vs. Goliath: How One Physician Took on a Large Health Insurer and Won.”

Asked what he thought was the biggest challenge in medicine today, AMA member John McGill, M.D., said: “I terminated all of my managed care contracts. Why should I lose money to enrich for-profit corporations?” The remark was widely circulated to the membership.

Aside from the occasional broadside, though, the AMA’s House of Delegates actually came to reform managed care, rather than to bury it. During the last century, the house has stayed with a democratic tradition — with delegates raising proposals in eight different committees before taking recommendations to the floor for debate and a public vote.

A series of resolutions hammering away at financial arrangements between doctors and MCOs was up for discussion.

Timely payment

New resolutions broadcast the association’s Advocacy Resource Center Campaign to help promote timely payment for services, highlighting state actions to pass legislation that enforces a quick turnaround of invoices. Also, there was more on the HMO agenda:

  • An act advocating that private insurers stop the old practice of “carving out” mental health services — and other exclusions — and begin providing this as a regularly covered benefit.
  • A move to create a clearinghouse for information on disputes with third-party payers to help share ideas on “effective, legally appropriate action” in handling their business relationships.
  • A move to lobby for new rules that allow members of managed care groups to be treated by any physician, and giving patients the option to pay any surplus not covered by the health plan.
  • A requirement that plans pay for “lost” claims discovered beyond the required filing date as long as the physician can prove they were filed in a timely manner.
  • A motion that third-party payers acknowledge receipt of electronic claims within 24 hours — accepting or rejecting them inside of 10 business days.

All the motions gained easy approval. Also, there was more on the AMA agenda than managed care. A smorgasbord of proposed stands on some of the most controversial issues of the day — from drug marketing to medical marijuana and gays in the Boy Scouts — drew the most heated debate. Some proposals didn’t make it out of their committee with all their teeth.

An amendment to ban direct-to-consumer advertising of pharmaceuticals was defeated on First Amendment grounds and replaced by a resolution to push for a disclaimer on the ads that physicians might prefer a drug different from the one being advocated.

The AMA also ducked a call to endorse medical marijuana, instead agreeing to innocuous language endorsing “free and unfettered exchange of information on treatment alternatives.” The AMA braved some angry criticism, however, by advocating that the Boy Scouts of America reconsider its ban on homosexuality.

Early on in the meeting, the leaders of the AMA struck a triumphant chord.

“Not only does the AMA possess a new inner strength, it also commands an expanding outer strength that’s palpable inside the Washington Beltway and perceptible to physicians, patients, and the American public outside the Beltway,” said AMA Chief Executive E. Ratcliffe Anderson Jr., M.D. The AMA, said Anderson, had staunched the flow of red ink that rose to $15 million in 1999. Last year, the organization reported earnings of $2.7 million.

Still, the AMA enjoys its political clout as much, if not more, than cash. And Anderson was quick to trot out the AMA’s ranking as one of the most powerful lobbying groups in the capital.

“It hasn’t been easy,” said Anderson. “But the results have been excellent. As we all know — no pain, no gain.”

Still, Anderson wasn’t finished with his prescription for pain.


A day after basking in the glow of 547 approving delegates, Anderson threw the meeting into turmoil. His lawyers filed a lawsuit in Cook County Circuit Court, claiming the association’s board of trustees had blocked him from firing the association’s lawyer, Michael Ile, because Ile had protected the board from the heated criticism leveled at the 1997 endorsement deal that was worked out with Sunbeam Corp.

The Sunbeam deal cost five employees their jobs, including P. John Seward, M.D., the AMA’s chief executive at the time.

A torrent of criticism was unleashed by the Sunbeam deal, which the AMA walked away from after many questioned the ethics of the arrangement. The association was later forced to pay Sunbeam $10 million to settle a breach-of-contract suit.

For his stance, the indignant Anderson, a retired Air Force general who flew combat missions in Vietnam, says the AMA’s board of trustees “unleashed a series of assaults on my office.”

Anderson also took direct aim at board member Timothy Flaherty, accusing the trustee of making derogatory remarks about the CEO’s $500,000 compensation package.

“Many important issues face physicians and their patients, and our focus and energy are on helping this house address those challenges and advance the core purpose of the AMA,” the association fired back. Two weeks later, the board of trustees would fire him. The association characterizes his allegations as frivolous.

The damage was done, however. Even as delegates pushed to close ranks behind another round of public campaigns to shape the nation’s health care agenda, another damaging internal squabble was threatening to tear their work apart.

The AMA has been struggling to remain a political powerhouse. Grappling with losses, Anderson’s three-year tenure has concentrated on cleaning up the mess. Staff was trimmed by 188 jobs — 14 percent — last year and the downward spiral leveled out.

But not all the numbers have been pointing up.

Membership declines

Last year the AMA lost 3,000 members from its rolls, continuing a slow, steady erosion and costing more than $4 million in lost dues. Overall, membership has slid to 290,000, down from 300,000 10 years ago. And that decline occurred while the ranks of physicians swelled to 800,000. Anderson was painfully aware that the House of Delegates is less and less reflective of mainstream doctors.

“What I see when I look out from this podium is a group that is predominantly white, middle-aged — and older — men,” he told the faithful. “If the AMA is to survive throughout the 21st century, the view from here should be of a potpourri of races, colors, ages, and genders — to fully represent the medical profession as it appears today. And the AMA needs to figure out ways to attract that brilliant diversity.”

With Anderson and the board squaring off for a long court fight, the biggest threat to much of their agenda was another long, internal wrangle by opposing factions.