Grass roots send warning to HMOs: Ignore us at your peril

Watch for more patient-, provider-friendly insurer efforts

Lost the battle but winning the war. That’s how proponents of defeated Propositions 214 and 216 — the managed care backlash proposals in California — say their campaigns to increase regulation of managed care are stacking up.

The two propositions failed to pass on election day, but the proposals had an impact before the votes were even counted, proponents say. Beyond California’s huge ballot-based managed care initiatives, all sorts of legislative and regulatory changes are afoot across the country. Managed care organizations nationwide are swiftly positioning themselves to fend off the thorny issues raised by Props 214 and 216, as well as other public policy changes at the state and federal levels.

As a result, by the end of the first quarter of 1997, you’re likely to see interesting behavioral changes by managed care czars to appease some of the fears showcased during California’s highly publicized fall campaigns.

Some of the issues that came up during the discussion are part of a larger issue: Namely, the public is not yet comfortable with managed care, says Jay Thorwaldson, director of public affairs for Palo Alto (CA) Medical Foundation, a 165-physician multispecialty group practice. "There is a suspicion about managed care that says, ‘Am I getting the kind of care I should be?’ We [physician practices] need to demonstrate to patients what good managed care is," he asserts.

Thorwaldson says the key to allaying those kinds of concerns is not through legislation like Props 214 and 216, but through outcomes measurement systems such as HEDIS (the Health Plan Employer Data and Information Set). HEDIS measures health plans on quality indicators such as mammography or prostate cancer screening rates, and patient satisfaction surveys that address such elements as appointment waiting time and physician communication skills.

Resulting from activities in the bellwether state of California, more insurers are likely to respond to issues raised by the California referenda, despite their failure electorally.

Several large insurers have begun voluntarily disclosing information about their compensation methodologies in a move to avert controversy and prevent lawsuits alleging conflict of interest between payment incentives and patient care. Below are two examples of how insurers are handling this situation:

Medica Health Plans of Minneapolis. This month, Medica beneficiaries will receive a "Certificate of Coverage," which spells out in lay terms how Medica pays physicians and other providers for health care services.

HMO-physician relationship revealed

"This new information is intended to allay concerns by patients that their physicians may be withholding treatment or not referring them to a medical specialist because of the mechanisms by which physicians are reimbursed by the health plan," stated David Strand, Medica’s president, in a prepared statement for the press.

The certificate makes clear the relationship Medica has with its physicians, whether the payments are made on a fee-for-service or capitated basis. "We believe that our members are entitled to full disclosure, and that access to this information will help them become better informed, more active health care consumers," Strand said.

Medica already has what officials call a "tell all" clause, a response to the heated "gag clause" controversy. In the tell-all clause, Medica’s contracts with physicians explicitly encourage physicians to discuss with their patients all medical treatment options, regardless of whether the treatment is covered, as well as financial arrangements physicians have with Medica.

While the tell-all clause is useful, Strand said, the added disclosure certificate gives consumers enough information to enable them to ask educated questions regarding the health plan’s incentives for physicians.

Medicare and Medicaid HMOs. The Health Care Financing Administration (HCFA) has announced its intention to publish a final rule on several controversial requirements for insurers. The regulation will limit how much of a physician’s income can be put at risk in a managed care contract, and it will require stop-loss insurance (which physicians still will have to pay) if risk reaches certain high levels. Also, HCFA will require insurers to disclose capitation payment arrangements with their providers.

HMOs required to report certain data

In North Carolina, legislative artillery aimed at gag rules is firing away in the form of new laws that require physicians to fully disclose medical options to their patients. Also, laws in a number of states now require HMOs to report other kinds of data, such as physician-patient ratios, waiting periods for appointments, and credentialing requirements. Texas, too, has adopted numerous patient-friendly requirements for patient grievance processes involving managed care decisions that beneficiaries view as egregious.

Many more legislative moves are on the horizon, points out Robert J. Blendon, professor of health policy at Harvard University in Cambridge, MA. (See related story on specific congressional proposals, p. 3.)

During election fever in California, merely reading each proposition was no easy task — five pages or more each — which suggests the proposals may have been crushed beneath the weight of their own complexity. The health campaigns were hard for voters to understand or get excited about, particularly amid other simmering voter ballot issues, such as California’s controversial affirmative action proposition.

The language of the health-related propositions was wrapped in highly charged, manifesto-like wording. Here are some excerpts:

• "It is not fair to consumers when health care executives are paid millions of dollars in salaries and bonuses while consumers are being forced to accept more and more restrictions on their health coverage."

• "The quality of health care available to California consumers will suffer if health care becomes big business that cares more about making money than it cares about taking good care of patients."

• "This [proposed] law is written in plain language so that people who are not lawyers can read and understand it."

In brief, here is a summary of the two propositions’ key recommendations:

• added taxes upon HMO executives who earn more than $2.5 million a year, as well as added taxes on large health care organization mergers and acquisitions;

• disclosure of HMOs’ overhead costs, including marketing and advertising costs, as well as compensation and incentives for high-level HMO executives;

• requirement of a second opinion prior to any denial of care;

• prohibition against HMOs from preventing physicians, nurses, or other clinicians from informing patients of any information relevant to their care;

• adoption of a consumers’ "bill of rights" and establishment of a citizens’ managed care watchdog agency;

• allowance for clinicians to be patient advocates without fear of retaliation from HMOs;

• prohibition of any conflicts of interest that force doctors and other clinicians to choose between their pay or giving patients medically appropriate care;

• prohibition against denial of medical care based solely on cost;

• required publication of all criteria for authorizing and denying care;

• safe physician and nursing levels in health care facilities.

All together, the requirements amounted to excessive regulation, opponents argued. "Without competition from managed care, California’s health care system would effectively return to nearly unlimited fee-for-service health care, and to the accompanying double-digit health care inflation experience during the 1980s," wrote Richard C. Carlson, chairman of Spectrum Economics, a research firm in Palo Alto. Spectrum’s report, issued just prior to election day, predicted a cost of $5 billion per year if the propositions passed, due to increased reporting requirements, staffing levels, and litigation.