Pull The Plug.

Why HMO rearm can never really work

IN SUNDAY MORNING, DECEMBER 1, 1996, Joseph K., an 80-year-old Minneapolis man insured by an HMO named Medica, slipped on some ice while feeding birds in his yard and cracked a rib. He died Friday morning, December 6, from what the Hennepin County Examiner's Office described as "cardiopulmonary complications" of his fall. Although Joseph had been getting kidney dialysis for four years, he was a healthy man. He played golf regularly and drove himself anywhere he needed to go. According to two doctors who reviewed Joseph's medical file at my request, Joseph was probably killed by an undetected infection that got out of control.

Joseph's HMO doctors had plenty of time to diagnose him correctly. He was examined immediately after his fall in an emergency room, the fractured rib was detected, and Joseph was told to see his primary care doctor the next day, Monday. But on Monday, Joseph's regular doctor was not available. According to Joseph's records, the substitute doctor merely listened to Joseph's lungs to confirm that they were clear. Although Joseph complained about severe chest pain and weakness in his legs, the doctor did not, according to Joseph's medical records, take Joseph's temperature or his blood pressure. He sent Joseph home with the suggestion that he see his regular doctor "later in the week."

By the time Joseph saw his regular doctor on Thursday, he was in a wheelchair, had signs of a serious infection, and was deteriorating rapidly. He was hoarse, vomiting, suffering from terrible diarrhea that his wife had to clean up because he could not move unassisted, and had a temperature so high he refused to wear a coat in the dead of Minnesota winter on his trip to his doctor's office. Joseph's wife harbored the reasonable expectation that her husband would be hospitalized as soon as his doctor took one look at him.

That did not happen. Joseph was not even sent to a nursing home. Instead, his doctor sent Joseph home with the instructions (as his medical records put it) to "call or return to the office if not improving." When Barb Herold, Joseph's daughter, called her 81-year-old mother to find out how the appointment had gone, her mother was nearly beside herself at the seeming indifference of Joseph's doctors. Barb called Joseph's doctor immediately and asked why he had not been hospitalized. His answer was that Joseph might have "the flu" and just needed rest.

When Barb begged for nursing home care at a minimum, the doctor replied that he would authorize a "nurse evaluator" to go out to Joseph's house the next day, Friday. Why another professional had to make an additional evaluation when the doctor had just seen Joseph was not explained. Joseph died at 6:30 Friday morning, 14 hours after his doctor told Barb that Joseph had the flu. Medica never sent Barb or her mother an apology or an explanation. The Minnesota Department of Health, the agency responsible for regulating HMOs, claims to have investigated Medica in response to a complaint Barb filed with the Department, but refused to tell Barb what it found.

HMO Abuse

The abuse of Joseph K. is only one example of the widespread abuse of patients by HMOs that has generated what the media correctly calls an "HMO backlash." The extent of the abuse is difficult to determine, but there can be little doubt that it has worsened as enrollment in HMOs has risen. A July 1999 survey of physicians by the Kaiser Family Foundation and the Harvard School of Public Health found that 72 percent of physicians thought "HMOs and other managed care plans have ... decreased ... quality of health care for people who are sick." Protecting patients from HMO abuse exploded into a political issue in 1996. That year, a thousand pieces of legislation attempting to regulate or weaken HMOs were introduced in state legislatures.

Congressmen have responded to this backlash by debating "patient protection" legislation. On October 7, 1999, the U.S. House of Representatives voted by a surprising margin, 275-151, in favor of a patient protection bill sponsored by Rep. Charlie Norwood (R-Ga.) and Rep. John Dingell (D-Mich.). Supporters of the Norwood-Dingell bill, which must now be reconciled with a weaker Senate bill passed last summer, say it will empower patients and lead to improved quality of care. House Minority Leader Richard Gephardt (D-Mo.) said the Norwood-Dingell bill would deliver "much-needed patient protections" and "return control of medical care back to where it belongs, to doctors and patients."

Comments like these create the impression that legislators can stop or substantially reduce HMO abuse of patients. That is simply wrong. Patient protection legislation will be as effective at ending HMO abuse as orders of protection and lawsuits against wife-beaters will be at ending domestic violence. All decent people should support an abused woman's right to a protective order and the right to sue. Similarly, decent people should support the Norwood-Dingell bill. But we should be under no illusion that patient protection legislation can end patient abuse by HMOs.

The truth is that as long as HMOs exist, patients will be abused. HMOs are under immense pressure to keep premiums down, and the only methods they have to do that cause rationing--denying necessary services or providing inferior services. The cost-control devices available to HMOs are utilization review (second-guessing of physicians' orders by HMO employees), rewarding physicians with financial incentives to deny care, and raising workloads on doctors, nurses and other providers. All three of these strategies can inflict harm--sometimes lethal harm--on patients.

According to HMO advocates, HMOs only cut back on unnecessary medical services. This is hokum. Utilization review, financial incentives, and overworked professionals are incapable of distinguishing necessary from unnecessary medical care with anything resembling precision. Using these HMO tools to eliminate unnecessary care is like using a lawnmower to weed a flower garden. Yes, the weeds get mowed down, but so do the flowers.

Nightsticks

Utilization review is a blunt instrument because reviewers never lay eyes on patients. Reviewers may learn a lot about patients by commandeering their files from their doctors and questioning the doctors over the phone, but it is impossible for absentee reviewers, even reviewers with M.D. and R.N. degrees, to outperform doctors who see and touch patients and who monitor and test them personally. Not surprisingly, the few studies available on utilization review indicate that it operates like a remote-controlled quota system. A 1996 study of a national HMO published in the American Journal of Psychiatry reported that psychiatrists who sought to hospitalize their patients asked for a median of 19 days in the hospital but utilization reviewers pre-approved a median of 6.9 days regardless of diagnosis. The authors concluded, "[U]tilization management appears to rely on standardized treatment protocols that do not include consideration of individual patient or clinical factors ..."

Like utilization review, the typical financial incentive more closely resembles a nightstick than a scalpel. By definition, financial incentives pit physician self-interest against the welfare of the patient, and doctors, being human, too often cave in to self-interest. Financial incentives include explicit incentives spelled out in HMO contracts which enrich doctors when they deny care, as well as include the implicit threat that an HMO will refuse to renew the contract of physicians who order "too many" services. Financial incentives used by HMOs fall into three categories: (1) capitation (which means the payment is a set amount per enrolled patient per year that doesn't change regardless of how much care the patient needs); (2) bonuses given to doctors who keep referrals and other services down; and (3) firing doctors who insist on giving patients what they need (in the HMO business, this practice is called "deselection").

The third cost-control tactic--increasing the work loads of doctors, nurses and other providers--is the bluntest of the three HMO cost-control tools. HMOs raise workloads directly on the providers they employ, and indirectly on the providers who work in clinics and hospitals with which HMOs have contracts. If an HMO employs its own doctors, the HMO simply instructs its doctors to increase the number of patients they see per day. In 1994, Minnesota's largest HMO instructed its mental health providers to increase the number of patients they saw per week by 30 percent, an extraordinary increase in workload for an already overworked staff--and an increase that led to such a decrease in morale that, in one clinic I investigated, several members of the 18 member staff quit after the new requirements took effect.

Clinics and hospitals seeking contracts with HMOs have increased the workloads of their employees in order to keep their bids low and in order to finance the large increase in paperwork imposed by HMOs. The most visible and frightening consequence of this effort to please HMOs has been the reduction in nursing staffs. According to a 1996 study published in Health Affairs, U.S. hospitals cut their nursing staffs by seven percent between 1981 and 1993, and increased their administrative staff by 47 percent. According to a recent survey of registered nurses, the quality of care has been damaged by hospitals' efforts to contain costs, especially by cuts in medical staff. A hospitalized patient who, for example, develops an infection because the nurses on his floor were too busy to change his bandages is as much a victim of rationing as the patient who is told by his HMO that a referral ordered by his doctor has been vetoed.

Harsh Consequences

Among the provisions of the Norwood-Dingell bill, the most important ones require HMOs to reimburse providers who treat patients for conditions patients reasonably believed were emergencies; allow women to see ob-gyns without prior approval from their HMO; outlaw "gag clauses" (clauses in physician contracts with HMOs that prohibit physicians from discussing all treatment options with patients); allow patients to appeal denials of care to experts outside of the HMO; and permit patients to sue HMOs for malpractice. These provisions are directed primarily at utilization review and gate-keeping activities of HMO employees. Because these actions are relatively visible, they are also relatively easy to police and punish. But the Norwood-Dingell provisions do little to address the invisible rationing tactics that doctors and nurses are induced or forced to use in response to financial incentives and rising workloads.

Consider the case of Linda Harris. In March 1998, Linda developed an infection in the salivary duct in her right cheek that eventually caused excruciating pain, nausea, swelling of the right side of her head so severe she could not turn her head, her right ear was pinched shut, and her lower jaw was shoved leftward. During the three days before she was finally allowed to be hospitalized, she was unable to work and vomited periodically through a slit she managed, with great pain, to create between her teeth. When Linda was finally hospitalized, she required four days of intravenous antibiotics to overcome the infection.

In the month leading up to this nightmarish denouement, Linda had tried to get her ear-nose-and-throat doctor at Park Nicollet Clinic (Minnesota's second largest clinic after the Mayo Clinic) to "do something," as she put it--do a CAT scan, take a blood test, something to determine the nature of her infection. Under pressure from Linda, the doctor finally took a CAT scan, which suggested Linda's infection was caused by a stone in the salivary duct. But the ENT doctor refused to hospitalize her, claiming that was the responsibility of her primary care doctor. The combination of the ENT doctor's reluctance to take a CAT scan and his refusal to hospitalize extended Linda's hellish pain by perhaps a week.

No Day in Court

The Norwood-Dingell bill does little to address the less visible, more subtle forms of rationing visited upon Joseph and Linda. This is true even of the strongest (and the most controversial) form of patient protection in the bill--the right to sue HMOs for malpractice. It is very difficult today for the average patient injured by physician malpractice to bring lawsuits and prevail, and patients injured by HMOs--especially patients injured by the subtler forms of rationing induced by financial incentives and increased workloads--will find it very difficult to sue HMOs successfully, even if Norwood-Dingell becomes law.

When Joseph died of complications arising from his rib injury, his daughter Barb seriously considered a malpractice suit against her father's doctor and HMO. But two obstacles barred her way. First, Minnesota has a law that prohibits patients from filing malpractice suits until they get a statement from a physician indicating the physician has read the patient's record and believes the patient has a legitimate claim. According to an attorney I spoke with, Barb's family would have to write him a check for $2,000 to cover the cost of getting a physician to examine Joseph's records, and the attorney said he could not guarantee that a physician would agree to write the requisite statement. Barb (who runs a small health-food store with her husband) and her widowed mother did not have $2,000 to gamble with. They declined to cough up the check.

Secondly, the attorney would not promise to sue, even if he got a physician to endorse the suit, because of Joseph's age. He said a large portion of the damages awarded to patients in negligence suits are damages for lost years of employment. He said he could not risk sinking $20,000 to $40,000 into developing Barb's case because the award would probably not cover his costs.

Attorneys were even less interested in suing for Linda than they were for Joseph. Two attorneys I spoke to agreed Linda had suffered outrageous pain, but, they said, she suffered no lasting harm, which means the damages would probably fail to cover court costs.

According to a study conducted by scholars at the Harvard Schools of Law, Government, Medicine, and Public Health, these examples of patients failing to sue for malpractice are the rule, not the exception. The study, published as a series of articles for the New England Journal of Medicine, concluded that only 2 percent of patients clearly harmed by physician error sue. To phrase it a little more dramatically, only one out of 50 patients who can clearly show that they were harmed by negligence ever bring their cases to court.

Big Steps Not Baby Steps

This isn't to say that the right to sue an HMO will be useless to all patients. Some patients who are not elderly or terminally ill, who suffer death or injury, not "mere" pain, and who can present compelling evidence that HMO employees were directly involved in the malfeasance that caused the injury or death, will benefit. Jimmy Adams, a seven-year-old boy who sat on the floor of the House of Representatives while Congressmen debated the Norwood-Dingell bill, is a good example of someone who will be helped by the right to sue HMOs. When Jimmy became very sick, his parents were told by his HMO (according to news accounts) that they had to drive to an approved emergency room on the other side of Atlanta. En route, they passed three hospitals, but, before they reached the approved emergency room, Jimmy's heart stopped. By the time he was treated, gangrene had set in, and Jimmy's legs and hands had to be amputated.

But for patients like Joseph K. and Linda Harris the right to sue, and the other rights proposed in the Norwood-Dingell bill, will mean little. If we want to protect all patients, we are going to have to do much more than sign a patients' bill of rights. We need fundamental reform of the health-care system. We must return HMOs to the margins of the system from whence they came.

But if we do not control medical costs by putting HMOs in charge of reducing the volume of medical services, how will we control costs? Answer: by putting the government in charge of controlling the price at which medical services are sold. America is the only industrialized country in the world that attempts to control health-care spending primarily by cutting back on the volume of medical services as opposed to the price of those services. The rest of the industrialized world, and traditional Medicare in this country, focuses primarily on price. Shifting from cost-control based on volume to cost-control based on price will require shifting to a single-payer system--a system in which one payer (the government) reimburses doctors and hospitals at rates set by society, not by doctors, hospitals or HMOs. Most importantly, because single-payers control price, they do not need to use the blunt instruments of managed care--utilization review, financial incentives, and huge workloads--to bludgeon down volume. They do not, in other words, have to interfere in the doctor-patient relationship.

The Norwood-Dingell bill contains some of the toughest patient protection language one can imagine. But the toughest patient protection bill imaginable will be insufficient to stop all or even most patient abuse at the hands of HMO bureaucrats and HMO providers. The incentives under the current system to commit or permit abuse are just too high, and the methods by which patients can be denied good care are just too numerous and subtle. Members of Congress who really want to "return control of medical care back to doctors and patients," as Rep. Gephardt says, should support legislation to create a single-payer system in America.

KIP SULLIVAN is a freelance health-care reporter whose articles have appeared in The Washington Monthly, the New England Journal of Medicine, The New York Times, and the Los Angeles Times, among others.