Articles

The Cancer of Managed Health Care

by Edward M. Ricci and Theodore J. Leopold

Health Maintenance Organizations - managed care companies - care more about profits than patients health. They routinely deny necessary lifesaving benefits when they are most needed and trick policy-holders into accepting coverage decisions made by bureaucrats whose pay is determined, at least in part, by the healthcare they deny.

Before managed care, a clear distinction existed between doctors and nurses who practiced medicine and insurance adjusters who paid claims. Managed caremerges the two functions and flips the principle of healthcare on its head. Economics replaces clinical judgment. Medical decisions are made not by physicians, who are bound by the Hippocratic oath to serve their patients best interests, but by corporate managers who serve stockholders interests. The deliberative process of deciding how best to care for a patient is replaced by financial guidelines and statistical models.

A Few Cases in Point

Documents made public in a lawsuit against Humana Health Insurance Co. of Florida, revealed that to improve its bottom line, the giant HMO had deliberately removed more than 100 chronically and catastrophically ill children from "medical case management," a program the HMO had promised would provide special services for the catastrophically and chronically ill with no required deductibles or co-payments.

For example, the family of one boy, who had been comatose for 14 years, was told he had improved and no longer qualified for medical case management. Denied respiratory and physical therapy, he repeatedly had to be hospitalized for pneumonia and parts of his body fused together because of a lack of exercise.

During trial it was revealed that several other patients terminated from the medical case management program were placed back into the porgram after their partents threatened to notify the media or file a lawsuit. In fact, the parents of a 5-year-old boy, who is quadriplegic, blind, suffers from cerebral palsy and is spastic, were notified by Humana that his ventilator would be removed. After threatening to notify the media, Humana acquiesced. Many similar incidents were exposed at trial.

Behind the ERISA Shield

How can managed care companies make such arbitrary determinations? Largely because they operate without meaningful ethical, legal or safety restrictions. A 1974 federal law, the Employee Retirement Income Security Act (ERISA), permits policy-holders to recover from insurers only those benefits they were originally entitled to receive. For example, if a patient is denied a test that would have diagnosed cancer, and then dies for lack of treatment because the cancer was not discovered in time, the patients family can sue only for the cost of the test, not for the loss of a loved one. Protected from serious financial risk by this ERISA shield, managed care companies have devised several sophisticated ways of denying medical care.

Profit-Management Strategies

A Florida lawsuit by Caitlyn Chippss parents finally drew back the veil that conceals HMO "care management" from public view. Internal Humana documents (which came to light only after a judge found Humana in default for failing to produce them as required) showed how managed care companies make their healthcare decisions:

1. "Medical Necessity." HMOs tell policy-holders they are covered for "medically necessary services" when the "symptoms are appropriate with regard to standards of good medical practice." In fact, coverage is based on undisclosed, cost-based criteria and financial incentives unrelated to "medical necessity."
2. Financial Incentives. Direct cash bonuses and other financial incentives are given to reviewers to induce them to deny claims or limit hospital admissions and stays regardless of "medical necessity." In 1995 and 1996, Humana, Inc., also started giving bonuses and incentives to case managers, nurses and physicians if they discharged patients from hospitals earlier than what the treating physician recommended.
3. Disease Management. Companies pay third parties to review claims for some medical conditions. The contractors use undisclosed criteria that are more restrictive than those of "medical necessity." For example, in the case of a woman with cervical cancer who had been denied a hysterectomy, it was learned at trial that it was the policy of Humanas contractor, Value Health Services, to deny one of every four requests for a hysterectomy, regardless of the patients medical condition. Value Health estimated it saved insurers $67.5 million a year.
4. Carve-out Companies. HMOs also pay subcontractors to care for high-cost patients, the catastrophically ill who require continuous care, expensive treatments and long hospital stays. These "carve out" companies impose ceilings on the care and treatment they provide.
5. Shifting Resources to Profit Centers. If high-cost patients are closely monitored, treatment costs will go down and profits will go up. However, managed care companies increase the monitoring of one group of patients at the expense of others, without adding staff.
6. Fine Print. Accounting firms are hired to recommend how notice requirements can be made more difficult. For example, language requiring quick notification when emergency services are needed is buried within the policys fine print and later invoked to deny payments.
7. Hospitalists/Interventionists. For-profit caregivers hire physicians to oversee patients care in local hospitals, nursing homes and rehabilitation centers. Their primary purpose is to discharge patients as early as possible. These "hospitalists" or "interventionists" make these decisions without seeing the patients.
8. Delayed and Refused Payments. The systematic delay or outright denial of payments to providers for treatments that were approved enables health care companies to pocket substantial profits by retaining and investing the millions of dollars they owe to hospitals, nursing homes and doctors. Evidence in the Chipps trial showed that Humana often waited as long as three to six months or more to pay for treatments provided its catastrophically ill or injured policy-holders.

Jury Fury

Given these profit-driven practices of sacrificing human health on the altar of corporate greed, it is little wonder that juries are reacting with outrage and awarding mega-verdicts to managed cares victims.

• In January 1999, a California jury awarded $120.5 million to the widow of a man who died of stomach cancer after Aetna U.S. Healthcare denied treatment his doctor had requested.
• A year later, in the Caitlyn Chipps case, a Florida jury awarded the family $79.6 million. "It's not about just one family," one juror remarked afterward. "It's a case about Humana's conduct toward many people they insure. We wanted to send a message."

Conclusion

Studies show that the aim of managed care companies is not to manage care, but to grow profits: reduce hospital admissions, shorten hospital stays, use fewer subspecialty services and provide fewer laboratory, radiology and other technological services. The tragedy is compounded by the fact that the industry does not study the health consequences of its decisions, nor is it trying to determine when the line between unnecessary and necessary care is crossed. Managed cares patients are its victims.