Why Managed Care Is Getting A Bad Rap

Open a newspaper or magazine or turn on your television these days, and you’ll soon see a report that casts an HMO in a bad light. Here are 10 reasons for managed care’s current run of bad publicity.

A headline decries kicking new mothers out of hospitals. A TV talk show bemoans gagging doctors. A magazine offers advice on getting the most from your HMO as if readers must be on their guard against victimization. These days managed care seems to lurch from one negative news report to the next. The fact that it has done what many experts said was impossible without a complete overhaul of the health care system — dramatically slowed the growth of medical spending — has been lost in the din of scandals and scares.

Whether bad publicity shapes public opinion or taps into pre-existing views is hard to say. A Kaiser Family Foundation/Harvard School of Public Health poll conducted last summer found that roughly one out of five Americans thought it would be a “bad thing” if they received their health care through a managed care plan. Last September, thirty-three percent of respondents to an NBC News/Wall Street Journal poll thought the trend toward heavier use of HMOs was a “change for the worse” nationally, and although a heftier 40 percent called the change positive, that 33 percent plainly represented more than a few grumblers or horror-story victims.

What’s behind the current trashing of managed care, by the media and to some extent by the public? There are genuine abuses, of course. And ignorance adds fuel to the fire, along with a rosy recall that tends to ignore the problems that long plagued fee-for-service medicine. Debate will rage over how much of managed care’s bad rap is an unavoidable cost of bringing change to American medicine and how much is needlessly self-inflicted. But any inventory of the bad rap’s causes must touch on these 10 points:

1. Managed care means the spree is over. The sky seemed to be the limit with medical care in post-World War II America. And the combination of low costs, indemnity insurance and, later, Medicare coverage made paying for it relatively painless for many patients. “We had everything we wanted and someone else paid for it,” notes John Kralewski, director of the Institute for Health Services Research at the University of Minnesota. Now the party is over. To some extent, whatever came next was bound to feel like a hangover by comparison.

2. Physicians face new pressures — and patients know it. TV’s Marcus Welby never had to call anyone for an authorization. One of medicine’s most appealing aspects is the physician’s ethical duty to do the utmost for the health of the patient, and one reason managed care organizations are under attack these days is that many Americans worry — sometimes with some justification — that their doctors’ judgment has been affected by new incentives to limit expense.

“It is important that patients understand why they are not getting an MRI,” says Carrie Gavora, a health policy analyst for the Heritage Foundation, a Washington-based conservative think tank. “Is it because the doctor doesn’t believe they need it? Or because their plan is limiting MRIs for financial reasons?”

Controlling costs is not an unpopular idea in the abstract. But a personal experience with the new boundaries on spending can infuriate patients, their families and their doctors. And that anger is often directed at those in the business of setting the limits — managed care organizations. “Everyone agrees that the cost of medical care must be managed, but nobody wants the cost of their care to be managed,” says Paul Bluestein, M.D., senior vice president and chief medical officer of ConnectiCare Inc., a 190,000-member, not-for-profit managed-care organization with headquarters in Farmington, Conn.

Obviously, good managed care organizations let physicians practice good medicine that puts the patient’s health first. At the same time, Bluestein says, let’s be honest: Physicians are not as free as they once were to decide by themselves what is best for the patient. Utilization review, capitation and other cost-control mechanisms have added lots of gray to what once seemed a black-and-white picture.

3. Practice guidelines sometimes seem stingy. Few things have generated as much ill will for managed care as treatment guidelines. Postpartum guidelines, for example, became such a conspicuous target of criticism that the politicians stepped in. Last year, a federal mandate gave new mothers at least 48 hours in the hospital.

Ophthalmologists fumed about the Milliman & Robertson-generated guideline that restricted cataract surgery in older people to one eye. When Blue Cross/Blue Shield in Rhode Island and Mutual of Omaha went with the one-eye approach, there were howls of protest, and both plans backed away from it.

In 1995, ConnectiCare came under sharp criticism for using a set of guidelines that classified radical mastectomy as an outpatient procedure. Yet Bluestein says guidelines are widely misunderstood. They are supposed to be a target for what treatment should be like, not a hard-and-fast rule. “They are a tool, like a hammer or a screwdriver. They are neither good nor bad. What’s important is how they are used.”

Managed care organizations have to explain guidelines better, he says. At ConnectiCare, after the mastectomy fiasco, the organization’s front-line case reviewers have been told to use precise language when talking to physicians. The response “I cannot authorize this” is not supposed to be synonymous with denial, Bluestein stresses, and the opportunities to “climb the ladder” of authority, to a case manager and ultimately the medical director, need to be spelled out.

Bluestein says he has also learned the hard way that a set of guidelines cannot deviate too much from standard practice in a region, even if a body of research shows the guidelines to be far superior to the standard.

4. Patients often don’t get famous-name care. For generations in Texas, if you had cancer there was only one place to go — the M.D. Anderson Cancer Center in Houston. When the Texas legislature attempted to put “centers of excellence” language into wide-ranging managed care legis- lation a couple of years ago, the final version mentioned only one hospital: M.D. Anderson Cancer Center. And when the legislator who was at the center of that bruising legislative battle hears constituents’ gripes about managed care these days, getting access to M.D. Anderson is often the problem. That legislator is Rep. John Smithee, an Amarillo Republican who chairs the lower house’s insurance committee. “The most common complaint is about denying access to specialists, particularly cancer cases,” he says.

Bluestein asserts that managed care organizations don’t save money by denying care, but rather by changing where care is given. That means, of course, reducing utilization of hospitals, by far the most expensive place to provide care. But Texans aren’t alone in equating high-quality medical care with quick and easy admission to a hospital and, depending on the disease, often a well-known hospital. Little wonder, then, that some of the strongest criticism of managed care has come from people with chronic illnesses — the people who have the greatest perceived need for access to those institutions and doctors that are widely viewed as the best.

Rep. Smithee understands what many patients don’t — that for most conditions fame doesn’t necessarily indicate significant superiority. “For most breast, lung and other common cancers — even in life-threatening cases — the treatment is fairly routine,” he says. “It is the extraordinary cancers that need to go to M.D. Anderson.”

5. For-profit health care sparks controversy. In many places where managed care is relatively popular — the states of Washington, Minnesota and Massachusetts, for example — it grew gradually and was often dominated by not-for-profit organizations such as Kaiser Permanente and Harvard Community Health Plan. The rapid growth of aggressive, for-profit HMOs in recent years has turned managed care into a big business and made it vulnerable to attacks that profit, not patient care, is what the industry is all about.

George Anders, a Wall Street Journal reporter who has done an impressive job chronicling the rise of managed care during the last several years, concludes his recently published book Health Against Wealth with the observation that the HMO/managed care industry deserves credit for bringing about a much-needed change — dampening medical spending — but that the big profits, humongous executive compensation packages and high living of some industry executives could be seen away from Wall Street as “uncomfortable hypocrisy for an industry that publicly preaches the virtues of austerity.”

6. Some managed care organizations have blundered. In Tennessee, managed care companies competing for the state’s Medicaid business reduced payments to doctors so drastically that in some areas of the state immunization rates actually dropped. In Florida in 1995, almost half of the 29 Medicaid managed care plans were fined for rule violations. In New York, state health investigators posing as people seeking appointments had difficulties arranging for prenatal care and immunizations, the very preventive health services that managed care organizations are supposed to excel at providing.

Dozens of similar stories about corner-cutting and foolish penny-pinching have appeared in newspapers and magazines. Medicaid, where the margins are narrow, has been an especially fertile ground for misdeeds. Efforts to weed out the bad apples and the recent spate of regulation designed to rein in the excesses of the industry may be the best things that ever happened to managed care.

“Managed care is a wonderful thing,” says Texas state Rep. Smithee. “But the situation now is just like the beginning of this century, when mass production of food started. Food became more affordable and accessible then, but you had to have some controls to ensure it was safe and healthy.”

7. Prevention isn’t sexy — or even easy. Even managed care’s critics say that for some preventive services, such as Pap smears and mammograms, it does a better job than old-style fee-for-service medicine. “HMOs are a lot better on that basic stuff,” says Thomas Bodenheimer, M.D., a San Francisco-area primary care physician who wrote well-argued critiques of managed care last year for two leading medical journals. But as Bluestein points out, “Prevention isn’t very exciting.” The press, he says, is more likely to dwell on a patient’s discharge from the hospital shortly after delivery than the fact that many people didn’t get the flu because they got flu shots.

Then there’s the confusion factor. It’s not always simple to decide who should get preventive services and how often. Take mammograms. The National Cancer Institute says women shouldn’t get annual mammograms until age 50, though that recommendation is currently under review. The American Cancer Society says regular mammograms should start 10 years earlier. If an HMO goes with the NCI recommendation (which is based in part on the underappreciated problems associated with false positives) it’s an easy target for charges of skimping.

Finally, even if all the recommendations agreed, the individualistic approach many Americans take toward their medical care would cause problems. Some people are going to want to have a no- or low-risk test or a screening just to be the on safe side, even if on a population basis it doesn’t make any sense. “You don’t care about the population,” says Joseph M. Heyman, M.D., an obstetrician and president of the Massachusetts Medical Society. “You care about what is best for you.”

8. People don’t like being told what to do. Remember how effective the insurance industry’s “Harry and Louise” television ads were in turning public opinion against the Clinton administration’s health care plan? They played upon apprehension about a faceless government entity limiting health care choices. Part of their success was due to people’s distrust of government, but another part stemmed from simple resistance to any kind of dictate from above. For many people, an employer’s imposition of a managed care plan can seem just as odious, says Robert Blendon, Sc.D., of the Harvard School of Public Health, an authority on public opinion in health care.

Blendon offers an automotive parallel. What if a company did a study and found that Volvos were the best and safest cars, then gave employees financial inducements to drive only Volvos? How might they react? Some might be grateful for their company’s good advice. Some might already drive Volvos. But many would resent interference in their choice even on virtuous grounds.

Managed care saves employers money, but few if any employees get a specifically designated “managed care” bonus at year’s end. Here, as with preventive services, managed care’s strength is shown by a negative: If insurance premiums had continued to rise the way they were rising a few years ago, says Bluestein, many employers might have dropped health coverage altogether.

9. Measuring quality is fraught with hazards. As envisioned by HMO theoretician Paul Ellwood, M.D., one of the HMO’s chief benefits was supposed to be the development of objective measures of the quality of care. But this has proved to be philosophically contentious, technically difficult and politically delicate. Satisfaction surveys only tell so much. And the organization set up to measure the quality of care given by managed care plans, the National Committee for Quality Assurance, has come under attack from Ellwood and others for not being independent enough.

The Health Plan Employer Data and Information Set (HEDIS) standards that NCQA uses have been widely disparaged by physicians for tallying up easy-to-administer tests rather than getting at core issues of medical care. Heyman’s opinion is typical. “I think the way they measure the quality of managed care is ridiculous,” he says. “They’re not measuring quality. They’re measuring the number of Pap smears.”

Also, some quality-of-care measurements have come back to haunt managed-care plans. In October, the Wall Street Journal’s Anders documented how managed care plans in New York have steered heart patients from more expensive hospitals to lower-cost ones — even though adjusted, hospital-specific mortality data showed that for heart care, the more expensive hospitals were superior. The take-home message of the story was a real black eye for managed care: Given a choice between lower cost and higher quality, some health plans chose the former.

10. Finally, bad news begets bad news. A free, independent press is an important watchdog. But like all canines, the press is a pack animal. And managed care became one of the stories of 1996 in newsrooms around the country. It seemed that every self-respecting newspaper or magazine from the New York Post to Glamour ran some sort of story on managed care malfeasance.

Besides moving in groups, pack animals tend to sort themselves into leaders and followers. The same is true of the press. The top dog, The New York Times, reported aggressively on managed care, particularly as the system made rapid gains in the New York City market. Bob Herbert recently wrote two columns based on a government report critical of managed care formularies. And Anders’ reporting at the Wall Street Journal set the pace for critical coverage of the industry.

It may seem that managed care plans can do no right these days in the eyes of the press, physicians and government regulators. But recently exceptions to the doom-and-gloom stories have been popping up, suggesting perhaps the beginnings of a backlash to the backlash. On Dec. 23, the lead editorial in the Boston Globe, titled “Quality Care in Massachusetts,” gave an upbeat appraisal of the managed care in the state and warned against regulatory overkill (while also expressing strong misgivings about the conduct of companies it considered too aggressive).

A few days later, a Connecticut legislative committee released a glowing report on HMOs, which it said were the target of only 19 percent of the complaints received by the state’s insurance department in the past year. The report credited HMOs with lowering health care costs, generally satisfying customers and allowing longer hospital stays than those previously cited by critics.

If these developments are portents, 1997 may see the rise of a fuller understanding of managed care on the part of press and public alike. Still, for the 10 reasons cited above, critics will always be quick to spot the warts.