REACTION MIXED ON DOCTOR-LED HMO; CRITICS SAY IT WON'T CHANGE LEVEL OF CARE.

Byline: Chris Sieroty and Jason Z. Cohen Staff Writers

United Health Group's decision to give doctors, and not health plan administrators, decision-making power over patient care received mixed reviews Tuesday from doctors, HMOs, and Wall Street analysts.

Dr. Ataoliah Kashani, whose Reseda-based practice works with Blue Cross of California, said he didn't believe the change in United's policy would improve patient care. ''These people (HMOs) are only there to line their pockets, they don't care about patients,`` he said.

And William S. McKeever, a health care industry analyst with Paine Webber in New York, said the change in policy is more of a marketing tool than anything else. ''This is a United story, rather than an HMO story,`` he said.

Such is the cynicism and mistrust of health maintenance organizations and the managed-care industry. And reactions like that put into context United's announcement Monday that it would now let doctors have the final say in everything from admitting patients to hospitals to ordering diagnostic tests.

United, which insures 14.5 million people nationwide, including 800,000 in California, said the new policy would go into effect for most patients on Monday.

The Minneapolis-based company will still ask doctors to justify such decisions as ordering surgery or expensive diagnostic tests and reserves the right to remove a doctor from its approval list if the doctor's costs continue to be higher than similar physicians.

Jay Silverstein, the company's chief marketing officer, said the change was a dollars-and-sense decision: It'll save the company an estimated $25 million each year on staffing administrators for its medical reviews.

Foundation Health Systems spokeswoman Lisa Haines said her company puts the decision making in the doctors' hands by paying groups of doctors a pre-determined amount of money based on the expected number of patients and procedures that will be performed by those doctors.

By giving doctors the money upfront in a process that's known in the industry as capitation, the doctors decide what's medically necessary while still within budget.

''Capitation puts the final decision in the physician's hands,`` said Haines, who's Woodland Hills-based company is the nation's fourth-largest HMO. ''That's a situation that we've had in place in California for a number of years. It's something we strongly advocate, and something we're doing already.``

But J.C. Pickett, president of the California Medical Association, a doctors' lobbying group, said that what capitation really does is encourage doctors not to see their patients.

''The doctor receives a certain amount of money per month for every patient he has on his rolls. The less he sees these patients, the better off he is,`` Pickett said. ''I'm against it.``

He said a better system would be to pay doctors a discounted rate based on actual services performed. The idea of involving physicians in decision making is a good one, but Pickett said he will reserve judgement until he knows the specifics of United's plan.

Dr. Francis J. Crosson, executive director of Kaiser Permanente, the nation's largest nonprofit HMO, said his health maintenance organization has been allowing doctors to make the final decision for years. Kaiser is a unique in the managed-care industry, however, since most of the doctors it works with are actually on Kaiser's payrolls and working in Kaiser-owned hospitals.

Dr. Marvin V.H. Kanter said United's decision to change its policy may be in response to several class-action lawsuits against others in the industry that allege improper denial of benefits by health maintenance organzations.

Kanter is chief executive officer of Calabasas-based Progressive Healthcare Systems LLC, which provides management services for medical groups and independent doctors. ''Anything that puts decision making back into the hands of doctors can only be a good thing for managed-care,`` Kanter said.