"HMO Epiphany?"

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"HMO Epiphany?"

United Healthcare's announcement that it was returning medical decision-making to doctors was met with cheers. But will HMOs really let you call the shots?

by Gil Weber, MBA

Adapted with permission from Ophthalmology Management
© Copyright, 2000. All rights reserved.
May 2000


Late last year, United Healthcare (UHC) received national media attention for a stunning announcement: It was returning medical decision-making to doctors. With few exceptions, the announcement sparked favorable comments from the physician and public interest communities and fostered a sense that sanity was returning to managed care.

But the enthusiasm may have been premature. On the surface the move seems to be a step in the right direction, but time may prove it to be more problematic than most could imagine.

Epiphany or public relations?

UHC announced that an internal data review had revealed no significant cost savings from its long-standing pre-authorization and utilization review protocols. Therefore, doctors would now be in control of the covered services provided to their patients, and various forms of preauthorization and approval, at the heart of managed care since the 1970s, would no longer be used as a means of cost containment.

Some regarded this as an epiphany. Others, knowing that United and its competitors have had the confirmation data for many years but chose not to reveal it, are taking a more cynical view. They view UHC's policy change as little more than hollow and self-serving public relations timed to deflect the increasingly hostile public perception of HMOs and the growing turmoil inside the Washington, D.C., Beltway. So why the announcement, and why now?

HMOs at risk

HMOs are under the gun. They're looking at the possibility of losing enrollees as the public reaches the breaking point with horror stories of care denied or care unreasonably limited. They understand that when the patients lose their patience, employers may also consider dropping certain health plans. And when the public and employers both complain loud and often enough, health plans know that legislators may finally feel pressure to act in ways that might not be HMO-friendly.

And so, in a time of increasing hostility toward HMOs, calls for patient protections, and demands for the right to sue health plans, some see UHC's actions as little more than proactive steps positioning the company to avoid paying out potential litigation settlements. Critics note that UHC could now point to the doctor and say "It was the doctor's decision, not ours. Sue him. Sue her."

Between the lines

UHC's turnabout might look good to practitioners frustrated with the second-guessing and paperwork hassle of managed care. But those doctors are in for a disappointment if they believe that medical decision-making won't be questioned and that they're now free to do whatever they please, whenever they deem it appropriate.

Why? If read carefully, UHC's announcement reveals some important caveats. Despite saying it's all up to the doctor, UHC still intends to look at each provider's practice patterns. Rather than using preauthorizations, UHC now will use retrospective review. The HMO will counsel doctors whose utilization seems off a norm determined by UHC. And it also reserves the right to drop any provider if the counseling doesn't produce the change UHC deems appropriate.

This is ominous and should concern all surgically conservative physicians. It should also concern those physicians who, by virtue of superior reputation with primary care physicians, optometrists, and other physicians, do more surgery or more complex, costly surgery than most of their colleagues.

The former group may find themselves under increased pressure from patients to provide procedures that they may not deem necessary or appropriate at the time. Because the patient knows that UHC has announced it won't reject any covered procedure recommended by the doctor, that practitioner will be caught between a rock and a hard place. If the physician relents to patient pressure, his utilization rates and practice patterns will rise from previous benchmarks — and UHC will notice the changes.

And doctors in the latter group, the surgical gurus already at the high end of the utilization (and cost) scale, may find that their numbers only go farther into UHC's "red flag" zones and prompt additional scrutiny and counseling. As a self-protection measure to avoid deselection, some physicians may have to cut back on procedures. That could be a lose-lose scenario for patients and providers. And that's only a sampling of the problems hidden inside this Pandora's Box.

Confounding capitation

Consider what could happen in the case of networks that now hold master capitation agreements with UHC and subcontract with ophthalmologists and optometrists. UHC may have announced that it won't question the doctors, but will its networks who are at risk for a finite pool of dollars also be precluded from putting appropriate utilization and cost controls on network doctors?

It's hard to imagine any network saying to its participating providers: "You're free to do whatever you want, whenever, and we'll pay for it." To give up that oversight and review power condemns any capitated entity to a fatal hemorrhaging of its monthly funds.

The convoluted scenario is nothing short of a nightmare because to refuse service to a patient when that patient knows UHC has declared the doctor is "in control" suddenly makes the doctors (the network) the "bad guys." No longer is the HMO wearing the black hat. And that critical perceptual change drops enormous collateral damage and financial pressure onto risk-bearing groups and networks.

Recent news

Despite the "kinder and gentler" announcement, United has experienced little other than bad news since the beginning of this year. A sampling:

  • A former vice president in United's Florida operations filed suit against the company alleging that he was fired after voicing concern that UHC was deliberately delaying or denying claims. His suit also contends that the company improperly and routinely reduced claims payments (downcoding)
  • A lawsuit filed in Mississippi in February names United in an action alleging racketeering.
  • The American Medical Association sued United in March, alleging that the HMO used invalid data to determine reimbursement rates
Positive points

To UHC's credit, the provider agreements it's offering this year are a bit less onerous than previous ones. That's not to say they're physician-friendly in every sense. These agreements still contain plenty of issues physicians need to negotiate. But the agreements are getting somewhat better. Here are some specific examples:

  • The influence of newly enacted prompt payment laws is obvious in new UHC contracts. In those states with such laws, you'll now find wording stating that claims will be paid within the statutory limits. And, though not an exact, clear definition of "clean claim," you'll also find some language detailing the basic information necessary for prompt processing of your claims.
  • Termination provisions in the new agreements are more flexible than in the past, and include a relatively painless "out" clause for physicians who are presented with unacceptable mid-term amendments.
  • And, in an obvious response to bad press regarding "gag clauses," new UHC provider agreements contain the following: Plan encourages Provider to discuss with Members treatment options and their associated risks and benefits, regardless of whether the treatment is covered under the Member's Benefit Contract.
Will other HMOs follow?

It will be interesting to see where things go in the next 18 to 24 months as other plans look at United, at their own systems and public images, and then react to happenings inside the Beltway. No one should be surprised if Aetna, Humana, Pacificare, Blue Cross/Blue Shield or any of the other players suddenly have similar "epiphanies."

To an extent, everyone seems to agree that physicians should be in charge of the care that they decide is in a patient's best interests. But it remains to be seen if any healthcare plans actually take the steps necessary to make that an effective and viable reality.


Gil Weber, a consulting editor to Ophthalmology Management, is a nationally recognized author, lecturer and practice management consultant to the managed care and ophthalmic industries and has served as Managed Care Director for the American Academy of Ophthalmology.

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