Quest for HMO Balance

HMOs became the chief providers of health care in the United States because Americans and their employers believed they could balance cost and quality. But a San Diego jury’s award of $1.75 million last week to a veteran physician who said he had been fired for spending too much time and money on his patients is just the latest sign of a deep erosion in that public trust. HMOs and state legislators should view the verdict as underscoring the need for sharper oversight of HMOs and better protection for both consumers and their physicians.

The California Assn. of Health Plans, the HMOs’ trade group, claims that the public’s “very negative” opinion of managed care is the “result of a couple of stories being repeated over and over.” But stories like the San Diego physician’s are increasingly common. This week, for example, a PBS “Frontline” television documentary poignantly depicted the managed care pressures on Ralph Holmes, a plastic surgeon, also in San Diego, who was born with malformed ears and has devoted his skills to correcting gross birth defects in children. Because many managed care plans do not pay for the multiple operations it takes to fix birth defects, Holmes has been forced by hospital economics to spend most of his time marketing his services to well-heeled face-lift and liposuction clients.

Of course, this sort of anecdotal evidence would be a lot less important to the argument over HMOs if consumers had unfettered access to real data on the quality of their medical treatment. But the HMOs do not allow existing data--especially on outcomes of various treatments--to be made public. The organization that rates managed care companies for large employers has said it will start making some quality-of-care data public next year; that information will be belated but surely useful. Prying more such data loose should be a priority for Congress.

California state legislators could help restore public trust by mandating review boards to which patients could appeal if they were denied treatment recommended by their doctors.

On Wednesday, the state Senate Insurance Committee approved precisely the wrong kind of review legislation, a bill sponsored by state HMOs that would allow a health plan to select the reviewer, exclude from review any treatment that cost less than $2,000, not require the HMO to pay for treatments recommended by the reviewer and exclude Medi-Cal and Medicare recipients. That evasive and spineless bill is now before the Senate Fiscal Committee, which should reject it for a better bill by Sen. Herschel Rosenthal (D-Los Angeles) that endorses a process closer to the “unbiased, third-party review” recommended earlier this year by Gov. Pete Wilson’s managed care task force. An honest, independent review board would help protect doctors as well as patients.

Consumers, and again their employers, won’t get this improvement free. Some HMOs have already hiked premiums as the pendulum swings back a bit from pure cost-cutting, and more increases can be expected. But there’s no question that movement toward better care is needed. The trick will be finding the right balance point, the notion that led Americans to accept managed care in the first place.