- The Withhold
- Deselection
- Practice Guidelines
- Precertification
- Gatekeepers
- Capitation
- Private Practice Partnerships
The Withhold
The most direct of these penalties is the Withhold. Used primarily with doctors in "reduced fee-for-service" HMOs, this involves withholding a portion of each payment to the doctor until the end of the year, with the understanding that the physician will only get that money back if he keeps the costs to the HMO associated with the care of his patients below a certain level. Because it is such a blatant incentive for doctors to withhold medical care from patients, many state legislatures have outlawed this practice.
Actual Quote from a Managed Care Contract: (Empire Blue Choice, Incentive Formula 1991)
WITHHOLD FROM PAYMENTS TO PHYSICIANS. Physicians will be paid during the course of the year on a fee-for-service basis as services are rendered. EBCBS will withhold 20% of each amount payable to each Empire Blue Choice Physician (italics added).
RETURN OF WITHHOLD. After the close of each calendar year, EBCBS shall determine whether to return all or part of the amounts withheld based upon its consideration of a number of factors. These factors may include a) comparative utilization; b) patient satisfaction; c) compliance with utilization review, referral and other administrative procedures. The Physician's utilization experience will be given the greatest weight in making the return of withhold decision so that cost containment efforts can be recognized. (italics added).
Deselection.
Another direct form of pressure placed on HMO physicians is deselection. In plain terms, deselection means that if your doctor orders too many tests, too many consultations, expensive medications, or makes other treatment choices for patients that have a negative impact on the HMO's bottom line, he can be fired (deselected) without recourse. In other words, physicians practicing within the managed-care system must deal with this threat every time they act in a patient's best interest. This can be an extremely chilling and effective deterrent to your receiving the care you need, particularly if your managed care plan represents a significant part of your physician's practice and income.
Practice Guidelines
In addition to placing financial pressures on participating doctors, HMO contracts require them to restrict their care plans so that they fit within the company's practice guidelines. The guidelines are one-size-fits-all formulas for practicing medicine in the most cost-effective manner from the HMO's perspective. If your doctor disagrees with the guidelines or formula for your particular medical problem, and attempts to offer you a treatment that is tailored to your needs, but violates that guideline, he or she will be subject to one or more of the financial pressures and penalties discussed above.
FACT: In a survey of managed care providers conducted by researchers at the Henry J. Kaiser Family Foundation at Harvard in 1999, 87% of almost 2000 providers said they had had a recommended treatment denied by their HMO. Fifty-two percent had had denials of specialist referral, and more than one-third had had patients' conditions worsen because of prescription drug denials.
Actual Quote from a Managed Care Contract: (CHUBB, mid-1990s)
COMPLIANCE WITH COMMITTEES. PHYSICIAN agrees to cooperate with, abide by and render services to Members in accordance with the procedures, protocols, and policies of: (A) The Utilization review Committee of PLAN, whose function is to assure the delivery of quality health care services to Members in the most cost-effective manner (italics added).
MEDICALLY NECESSARY...The final determination of whether a service is Medically Necessary, for purposes of coverage only "shall be made by CHUBBHEALTH" (italics added).
Actual Quote from a Managed Care Contract: (PHS, mid-1990's)
Compliance with PHS Rules. Physician agrees to cooperate in and be bound and abide by all the programs, rules and regulations set forth in the Office Manual Physician shall comply with all determinations rendered in connection with above programs (italics added).
Precertification
Under HMO practice guidelines, virtually all expensive procedures and hospitalizations require precertification (ie, pre-approval by the managed care company). Sometimes, like practice guidelines, precertification prevents your physician from using his best judgment in determining your care, but much of the time it is simply a bureaucratic stumbling block placed in a doctor's path that gives the HMO the opportunity to make arbitrary decisions about paying for care and services, and may discourage your doctor from spending the managed care company's money on your care. Needless to say, all non-emergency care that is not precertified, and all emergency care that is not certified within a short period of time (usually 48 hours) is not paid for at all.
Gatekeepers
Another method of keeping expensive medical procedures to a minimum is to limit access to the specialists who perform them. Used extensively by HMOs, the primary care physician as the gatekeeper has to authorize any visit to any specialist. This tends to serve as a money-saving roadblock, both because of the bureaucratic delay involved and because most primary care gatekeepers find themselves locked into HMO contracts that use one of the methods described above to penalize them financially for making too many referrals to specialists,
FACT: Based on a 1998 study of 318 HMOs nationwide, 97% of enrollees were required to choose a gatekeeper, of whom 86% were required to have gatekeeper approval for a specialist referral. Most importantly, only 15% were allowed to have a specialist be in charge of their care in case of serious illness .
Capitation
In response to the great outcry about HMOs "micromanaging" and restricting medical care, some have adopted an entirely different, subtler, but even more disturbing approach. Claiming that they were getting totally out of the business of controlling doctors, in this form of managed care, instead of paying by the service or episode of treatment, the HMO pays each physician a monthly fee for every enrolled patient who selects her or him as a primary care provider. The physician is paid this same amount whether the patient is seen once (or not at all) or one hundred times during the year. If that patient should become ill, the physician is responsible for providing and coordinating all of the patient's care without requesting any additional funds from the HMO. In its most extreme form, the physician is also responsible for paying for diagnostic testing, consultations and prescriptions out of this same monthly stipend.
This type of fee arrangement puts doctors in the remarkable position of sacrificing their own incomes every time they do anything for a patient that costs either time or money. As bad as the Withhold is because it sets a ceiling on care, capitation is even worse because it penalizes the doctor for any and all care dispensed.
Private Practice Partnerships
Because it is so obvious to patients that restrictions like gatekeepers and the Withhold system are not in their best interests, and that capitation systems, once understood, are equally discouraging to optimal medical care, the Oxford Insurance Company has developed a new form of cost control call the Private Practice Partnership (PPP). Its primary virtue, Oxford tells physicians, is that the effects of this system are invisible to enrolled patients. Under the rules of Private Practice Partnerships, Oxford pays a group of physicians, who might be otherwise unrelated, to provide all of the primary care (and most forms of specialty care) to Oxford enrollees. Oxford then pays the partnership a monthly fee which represents whatever net fees Oxford receives for the enrolled individuals, minus 22% (which goes to cover the HMO's profit and overhead), 2% (for a re-insurance fund for patients with renal disease or AIDS), and another 4% (for patients who consume more than $50,000 per year in health care costs). Out of the remaining funds, which represent 72% of the premiums paid, the physicians of the partnership are expected to pay for all laboratory testing, hospitalizations, surgery, consultations, preventive care, and pharmaceuticals. If the doctors in the partnership do this in such a way that there is unspent money left at the end of the year, they get to split those profits with Oxford. If they spend more, Oxford advances them the needed funds, but the company then deducts the money from the partnership's compensation for the coming year.
As should be obvious, this is actually an extreme form of capitation with a new name. And like all other forms of capitation, because It places a potential limitation on every aspect of treatment --- consultations, laboratory tests, hospital stays, elective (but often beneficial) surgery, and many superior drugs --- it pits the financial interests of the managed care doctor directly against the welfare of the patients who are insured under this system.
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