Paying a Price for Cost-Conscious HMOs : Medicine: There is no clear evidence the system of rewards for doctors hurts care. But worrisome anecdotes abound.
Many health maintenance organizations attract patients with promises of low fees and broad coverage, but they fail to point out one financial detail: Their doctors can often fatten their pay by skimping on care.
In fact, at many HMOs, a simple rule of economics prevails: The less their doctors do, the more money they make.
“Many physicians have run across situations where pretty horrifying things happened because it looked as though a doctor was withholding service because of the HMO financial incentives,” said Dr. Douglas F. Levinson, a psychiatrist at the Medical College of Pennsylvania.
Payments vary dramatically among these popular medical plans; not all offer strong rewards for miserly care. For instance, some of the nation’s biggest and oldest hire full-time staffs and pay them straight salaries. Their financial inducements to hold back treatment are usually relatively slight.
But many that started during the 1980s have made financial incentives their centerpiece. These HMOs contract with individual doctors who see HMO customers along with private-practice patients.
To keep doctors from spending too lavishly, HMOs typically pay flat monthly fees for each patient, no matter how often the doctor sees them. Bonuses and penalties depend on how frugal or free they have been with tests, referrals to specialists and hospital admissions.
HMOs’ supporters say the result is cost-conscious medicine that is better for everyone, since it helps avoid unnecessary and potentially harmful tests and treatments. Indeed, some believe too much medical attention is as dangerous as too little.
However, others worry the financial rewards are so strong that even ethically minded doctors will be tempted to err in favor of doing too little in situations where the correct course of treatment is unclear.
No one has studied the medical fate of people who join HMOs with strong financial rewards and penalties. So there is no clear evidence this potential conflict of interest is harmful. Nonetheless, troubling anecdotes abound.
Dr. Denise Hart, a kidney specialist in San Antonio, remembers a patient with kidney failure who went to a hospital one Sunday night in urgent need of dialysis treatment.
The emergency room doctor wanted to call in Hart to see the man. But when he called the patient’s HMO primary-care doctor--the “gatekeeper” in HMO terminology--for permission, the physician refused. Instead, Hart said, the patient stayed overnight in the hospital without dialysis. As a result, he suffered cardiac arrest and spent a week on a respirator.
“I think it was greed,” Hart said of the HMO doctor. “He tried to squeak by without getting stuff done that absolutely needed to be done. The system is set up so there is a strong incentive for these things to happen.”
The patient recovered, and nothing happened to the doctor. Elsewhere, however, HMOs’ financial incentives to limit care have figured in malpractice suits.
According to court papers, a Saginaw, Mich., HMO patient with vaginal bleeding was given antibiotics for five months before her doctor sent her to a gynecologist. The specialist checked her for venereal disease, found nothing and told her to return in a month. However, her primary-care doctor refused to approve a second visit. Eight months after her initial visit, she went to an emergency room where doctors performed a biopsy and discovered she had cervical cancer.
The HMO had set up financial pools to cover patients’ specialist appointments, tests and hospital care. Money left over at the end of the year was split between the doctor and the HMO.
“The result was that the fewer referrals a doctor made and the fewer hospitalizations he ordered for his patients, the more money he made,” Circuit Judge Robert L. Kaczmarek wrote in a ruling on preliminary pleadings. The case is scheduled for trial in January.
When a Greenville, S.C., man with a long history of manic depression joined an HMO, his new physician halted treatment by a psychiatrist and took him off medication. Dr. Iverson Brownell, the psychiatrist, strongly disagreed with the doctor’s contention that a specialist was not needed.
“I wrote him that this was completely unsatisfactory,” said Brownell, adding that “financial considerations had to be” one factor in the doctor’s decision.
The patient eventually suffered a psychotic episode and could no longer work, his attorney said. A suit against the HMO physician was settled out of court.
When a 22-year-old woman in Wilmington, Del., went to her HMO physician complaining of a breast lump, she was told not to worry about it, according to her attorney. Her gynecologist recommended she go to a surgeon for a biopsy, but the physician rejected the request. A year later the woman was found to have spreading cancer. She sued and reached an out-of-court settlement with her physician and the HMO.
Her lawyer, Randall Robbins, said the plan’s system of bonuses and penalties deterred visits to specialists. “Why else would one doctor question another’s request for consultation with a specialist unless there was some type of incentive involved?”
HMOs’ promotional brochures rarely mention the financial incentives that may spur doctors to limit their care. Instead, they dwell on the advantages: HMO clients pay flat monthly charges that are usually lower than traditional health insurance. In exchange, the HMO agrees to give womb-to-tomb care for every conceivable physical ill.
However, patients usually cannot see specialists unless their primary-care physician approves. The same doctor makes most important decisions about tests and hospital care.
Nearly half the nation’s 607 HMOs use a method called capitation to pay their doctors. For a flat monthly fee, doctors provide all their patients’ routine office care. One industry survey found that in 47% of capitation arrangements, the fee also covers tests. In 22%, it covers specialty referrals, and in 9% it also pays for hospital care.
Such plans, along with bonuses and penalties, put doctors at risk of personal loss of income if they are unfortunate enough to have a few very sick--and very expensive--HMO patients.
Depending on the expense of their patients, doctors in some HMOs can raise their pay--or lower it--by 20%.
“Incentive plans may offer such strong financial incentives to physicians to reduce utilization that quality of care could be adversely affected through the withholding of needed services,” concluded a report by the U.S. General Accounting Office.
One of the country’s largest HMO organizations to use capitation is U.S. Healthcare, which operates plans with about 1 million customers in the Northeast. Their doctors get bonus checks each month if they send fewer than the expected number of patients to specialists or to hospitals.
Dr. Neil Schlackman, U.S. Healthcare’s medical director, defends incentives as long as quality of care is also figured into the basic payment formulas.
“If you are in first grade, a gold star may help,” said Schlackman. “But in a physician’s office, the only thing that really gets the attention of the physician is the incentive of increasing payment for better quality cost-effective care.”
Dr. Lorna Stuart of Phoenixville, Pa., gets about half of her patients from U.S. Healthcare. While she said she is not tempted by the incentives, she is not so sure about her colleagues. Some family doctors may be tempted to avoid specialists’ fees by trying their hand at tasks for which they are unqualified, such as taking on the plastic surgeon’s job of repairing facial cuts, she said.
“If a doctor’s ethics were not golden, they might say, ‘I can sew that up myself,’ and the patient would be left with a second-rate repair job,” she said. “But the doctor would not have that consultant’s charge taken out of his pool.”
Many doctors say they care for HMO patients just as well as they do those with private insurance. However, evidence is building that the care, while perhaps as good, is different.
In a recent study, doctors at Virginia Commonwealth University compared the way 17 doctors performed checkups. Forty percent of their privately insured patients received four or more tests, compared with 11% of their HMO patients.
In another study, Dr. Alan L. Hillman of the University of Pennsylvania found HMO doctors who were at financial risk for their patients’ hospital bills also tended to see patients in their offices less often. He interpreted this as “scheduling less visits in order to use less services.”
“We all believe that most doctors will do what’s in the patient’s best interest when it’s obvious what to do,” said Hillman.
Hillman said crooked doctors may blatantly hold back care just to make more money. More often, however, doctors honestly disagree about what’s needed. In those situations, some physicians may consistently decide against tests and procedures because they are subconsciously swayed by financial reasons.
“In my opinion,” he said, “there are at least a few HMOs that are at the extreme end of the incentives, and we need to find out which those are.”
However, Dr. Donald Berwick, vice president for quality of care measurement at the Harvard Community Health Plan in Boston, said traditional medicine gives doctors financial motives to provide too much care, rather than too little.
“I am worried by systems that really place physicians greatly at risk for the consequences of their clinical judgments, as I am worried about systems that place physicians’ interest greatly in accord with doing lots of procedures,”.
