DOCTORS GET FINAL SAY; HMO RELINQUISHES VETO POWER OVER PATIENT CARE.

Byline: Milt Freudenheim The New York Times

United Health Group said on Monday that it was giving decision-making power over patient care back to physicians, breaking with a longstanding element of managed care that has infuriated many doctors and frustrated their patients.

United, one of the nation's biggest managed-care companies, said that a patient's doctor, not the insurance company, would now be able to decide without interference whether to admit health plan members to a hospital or provide other treatment.

That does not mean the company is giving up cost controls. A United official said the company already relied primarily on analyzing the actions of doctors and other providers of care after the fact, determining averages and urging those who do not conform to obey guidelines. If persuasion does not work, the ultimate sanction, which United says is rarely used, is dismissal from the company's networks, thus forcing patients to transfer to another physician.

Like other companies, United also negotiates discounts on payments to doctors and hospitals. And it tries to minimize expensive hospital stays by reminding members with chronic ailments like asthma, diabetes and congestive heart failure to take their medication and closely follow their doctors' orders.

United, which insures 14.5 million people, including 8.7 million in health maintenance organizations and other managed-care units, said the new rules were being phased in nationally.

With the decision, United gets a chance to smooth relations with doctors and patients, attract more customers and perhaps avoid some future legal liability as health plans battle a backlash against managed care in Congress and the states and a series of class-action lawsuits. Those suits generally contend that managed-care companies misrepresent to customers that they are getting the best possible care when in fact, the suits say, the cost of care is the determining factor.

The announcement by United is one of several changes by insurance companies that analysts attribute to the backlash. United, Aetna Inc. and several Blue Cross plans have separately offered their members the right to appeal denials of care to an independent panel outside the company. The panels would be required in the congressional measures and are already required in 30 states.

And several big nonprofit HMOs, like Kaiser Permanente, based in California, and Harvard Pilgrim in Boston, have long relied on doctors to decide when care is considered medically necessary.

Physicians and consumer advocates hailed the move by United on Monday.

``It's a response to the consumer and political backlash,'' said Ken Jacobsen, a health care expert in New York at the Segal Co., a consulting firm. ``This is a big, significant step.''

Explaining its decision to stop requiring doctors to get prior approval for care, United said it was ``no secret that state and federal lawmakers want to put an end to much of this practice.''

But officials of the American Association of Health Plans, a managed-care trade group in Washington, disagreed that the changes being made by health plans were prompted by developments like the ``patients' rights'' legislation that is awaiting action by a Senate-House conference committee. Provisions include the right to sue health plans for medical malpractice, the right to appeal denials of care to independent review panels and guaranteed access to specialists.

Susan Pisano, a spokeswoman for the trade groups, said the United announcement was ``the next stage in the evolution of health care, the edge of a wave of change.''

John Stone, a spokesman for Rep. Charles Norwood, R-Ga., who sponsored the House bill, said that managed-care companies that turned over medical decision-making to physicians would not be liable to medical malpractice lawsuits under the bill.

Republican leaders in the House and insurance company lobbyists have argued that the right to sue the companies would increase costs for health plan members. But Norwood said in a statement on Monday that his bill would ``very likely result in lower costs.'' He said, ``the best care in the long run is less expensive than cutting corners.''

``This action is historic,'' said Dr. Thomas Reardon, president of the American Medical Association. He said it was ``a long overdue victory for American patients and the care they receive.''

Health care experts and critics of managed care said the prior review system had outlived its usefulness and was actually costing the companies more than they saved. ``This is a confession that HMO bureaucrats cost more than they save,'' said Jamie Court, a spokesman for the Foundation for Taxpayer and Consumer Rights, a California-based advocacy coalition.

Wall Street investors reacted to the news by driving United Health Group stock up $2.375, to $54 15/16, Monday on the New York Stock Exchange.