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HMOs Versus Physicians: And The Winner Is…
Nobody! Insurance companies and doctors continue to duke it out
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Business New Haven
5/13/2002
By: Denise D'Onofrio
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Physicians have fought long and hard against HMOs and insurance companies, and the battle continues to brew. But the issue has just about reached its peak, as physicians are banning together to take a stand and test just how far they can draw their arrows before the bow snaps.
So what can be done? And whose responsibility is it to take action?
Information is power in this saga. Group practices and doctors can only do so much and then the people or the insured need to take control.
KJ Lee M.D. of Southern New England Ear Nose and Throat Group of New Haven, is quick to clarify his position in the battle by pointing out that this is not a war between physicians and HMOs. “We have a good healthcare system and have to work with the HMOs,” he says. Lee won't argue that the system is perfect but instead admits that the system needs fixing, which can be achieved by aligning the system and building trust between the payer and the doctor.
“Most importantly, we have to get the message out,” states Lee, who hopes to organize a Million Patient March. “Not to fight the insurance companies, but to work with the insurance companies and doctors.”
Though Harold Kaplan M.D., Internal Medicine Associates in Wallingford, wishes Lee luck, he doesn't think the issue will invoke enough patient involvement. “These are not issues that patients get worked up over unless these problems impact personally on them or their families.”
Kaplan says that the Connecticut Hospital Association and the Connecticut State Medical Society both have some of these problems on their agenda. “Education and lobbying of legislators about how serious these issues are and the potential deleterious impact on healthcare delivery to the general public is the most productive way to go,” voices Kaplan.
Ironically, people are paying HMOs to dictate to them what the most effective way to manage their own healthcare process is. Steven Wolfson, M.D., Cardiology Associates of New Haven, PC, says: “The HMOs and insurers contribute nothing to patient care, but extract profits anyways. They 'sew not. Not do they spin…' and it is gradually getting worse.”
Even with power and knowledge to fight for their patients, doctor offices know when too much is too much.
Neither group practices nor solo doctors have the clout for an effective advocacy role when it comes to HMOs. Though group practices can succeed in advocating for physicians with fee-for-service providers, HMOs simply don't care. It is such a big network that the HMOs have survived by the divide-and-conquer method and the doctors are still the little players compared to the HMOs.
HMOs will defend their position and perhaps sometimes rightfully so as all HMOs don't have a take-it-or-leave-it stance with physician groups. While the legal restrictions groups face vary under state law, some HMOs do strive to work with physician groups and want to maintain as broad a network of physicians as is possible for its members.
Playing the role of peacemaker, Lee tries not to place the blame on the HMOs. “No single person or industry holds the problem,” he says. “We have now lengthened our lives by the technology which leads to more costs. All good things come with a cost.” Lee prefers to refer to the physician-HMO tug-of-war as a crisis. “But a crisis is an opportunity and we have to figure out how we can preserve and still keep costs appropriate,” he says.
Lee backs up his words with a paper entitled “Universal Healthcare: A Bold Proposal,” which he co-authored with Mark Lee. The paper was presented at Healthcare Solution Workshop/Conference in April 2000.
In the paper, Lee calls for a plan that “places fiscal responsibility on physicians while at the same time establishing s system of checks and balances to ensure that patients are protected and well cared for.”
A model for spending wisely, Lee believes the plan would benefit, and therefore be embraced, by all parties - physicians, other healthcare providers, employers, insurance companies, the government and the American public.
Breaking it down to the very basics, Lee's article calls for the insurance companies to continue the actuary data for doctors but places the pot of money in the hands of the doctors. The doctors must spend wisely as they will be held accountable for the certain amount of money allotted for each patient and their care. This plan would also allow the patient to switch doctors at any time if their healthcare isn't being managed properly or to their satisfaction. Of course, the patient would bring with them to the new practice the remainder of their assigned monies.
Kaplan believes that the problems with HMOs and other payers have not gone away but that the emphasis has shifted.
“Most payers are now more reasonable, although still not entirely rational,” he says. “I think they found they were wasting more time, manpower and money on the process then they were saving with denials.”
The problems, he points out, persist with sometimes rigid and irrational “formularies” which restrict choices of medications for patients, and with fees for services. These fees, according to Kaplan, are sometimes discounted to the point where the cost of providing the service meets or exceeds the reimbursement.
As if physicians didn't have enough work to occupy their schedule, there is also the administrative aspect that must be calculated into the equation.
According to Wolfson, physicians are tired and need help. “Specialists are dealing with the problem by hiring staff to deal with the insurers, thereby increasing overhead,” he says. “Primary care physicians lacking the staff are dropping the poorly paying insurers such as Medicaid, Medicare and the HMOs.”
No skin off these companies' backs, but the patients will ultimately suffer.
Administrative costs have always been higher in Internal Medicine than in other specialties, and the problem continues to worsen for the system as a whole. According to Wolfson, administrative costs are 20 percent or higher for most insurers, as opposed to eight percent for Medicare. Costs for a doctor's office can range from 50 percent to 60 percent, depending on the specialty.
“Increasingly, regulatory requirements, privacy and confidentiality concerns, the costs of information systems and the increasing load of paperwork and communications has pushed overhead [exclusive of physician income and benefits], in most internal medicine practices to over 50% of collections,” claims Kaplan.
The Balanced Budget Act of 1997 put cuts in Medicare reimbursement and physicians are currently lobbying to reverse this action. It is significant that Medicare reduced overall physician reimbursement rates by 5.4 percent this past January under a formula approved by Congress. Prior to this, Medicare reimbursement rates had been static for years. Further cuts in the Medicare fee schedule are planned for the next few years.
Physicians are also suing the major insurers because of their delaying and obfuscating tactics around reimbursements.
“We are also lobbying to extend state and federal aid to our uninsured and underinsured patients,” says Wolfson, “and we are struggling to deliver care in an increasingly unfriendly environment.”
Problems with HMOs and other payers aren't the only issues doctors must deal with in addition to patient care. A crisis in malpractice coverage is smacking physicians in the face.
Physicians and hospitals are facing enormous increases (35 percent to 50 percent per year) in malpractice premiums, independent of any prior adverse experience. “Even if you have practiced for decades and never been sued, your premiums are skyrocketing,” says Kaplan who believes it is a reflection of outrageously high and ridiculous malpractice awards which have pushed many insurers out of the malpractice business.
Cardiology Associates of New Haven tracks payments daily, communicates frequently with the Insurance Commission and with the State Ombudsman. “At times, we have had to go to legal action to obtain reimbursement for services rendered,” says Wolfson. “Meanwhile, our malpractice costs have gone up 50 percent because of difficulties in that industry, and our own health care premiums have risen.”
Kaplan refers to this as a good example of the vise physicians find themselves in as a business. “We have no ability to increase our income as we're maxed out on volume, doing pretty well on efficiency and unable to raise fees, but there is no cap on our expenses,” he says. “Unlike other businesses, we cannot pass our increased cost of doing business onto our customers.”
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