THE CONCEPT OF MANAGED CARE AND ITS PRACTICAL IMPLICATIONS
2. QUALITY OF CARE IN MANAGED CARE
According to opponents of managed care, the change from the fee-for-service environment to a health care system driven by managed care has negative consequences for patient care (Council on Ethical and Judicial Affairs and the American Medical Association 1995; Rodwin 1993). On the basis of their experiences with managed care practices, they have argued that the system is an
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abhorrent development that deprives patients of needed care and fails to make a significant contribution to improvements in access or reductions in the cost of health care. The frustrations of most consumers about managed care are often associated with the denial of coverage for medical services or products. Although most people would agree that managing the patient’s care (i.e., providing the appropriate medical services) should be appreciated as a rather laudable activity, frustrations come into play when the reasons for a denial of care do not necessarily pertain to the medical appropriateness or inappropriateness of the medical service or product. In fact, if managing medical care is synonymous with providing patients with the care they need, both qualitatively and quantitatively, then all care rendered in a professionally appropriate manner should theoretically qualify as (well-) managed care.
Within the managed care environment, however, decisions about access to care are not necessarily made solely on the basis of individual assessments of a patient’s medical needs. Authorization for services depends on the content of contractual agreements between health plan and enrollee, as well as on the interpretation of the term needed services specified by each MCO. Health plans vary widely in the type and number of medical services and products they cover. Although this variation in levels of coverage certainly contributes to product diversity and allows consumers to choose an affordable product, its mere presence demonstrates that both the quality and the quantity of health care services are subject to the individual patient’s ability to pay the cost of insurance premiums.
The morality of unequal care based on one’s ability to pay is an intriguing issue in itself, but that discussion falls outside the scope of this book. What has been even more frustrating about managed care for many people is the absence of accountability when care is denied, the lack of adequate avenues for challenging such decisions, and the widespread public belief that authorization decisions about medical care are systematically made primarily with corporate profit objectives in mind. A widely held belief that decisions about denying health care services to individual patients are not made solely with the best interests of the patient at heart has caused some to describe managed care as a repugnant health care system (Council on Ethical and Judicial Affairs and the American Medical Association 1995; Rodwin 1993).
2.1 Fairness in Managed Care
Extensive public discussion has focused on the validity of the concept of fairness in distributing health care services within the structure of managed care as it has operated since its inception. This interest in the fair distribution of health care is not a new phenomenon and certainly not unique to managed care. When the fee-for- service system was the main way to access health care, many people voiced concern about the lack of widespread accessibility to health care. In particular, indigent persons were unable to buy health insurance.
With the introduction of managed care, the concerns of the general public appear to have concentrated not only on the historical problem of access but also on the problem of achieving fairness and justice in the distribution of health care services
THE CONCEPT OF MANAGED CARE AND ITS PRACTICAL IMPLICATIONS 35 within the arena of managed care itself. Since the early 1990s, whether MCOs were behaving fairly and justly toward plan enrollees has been a focus of concern. As a result, there has been a steadily growing number of federal and state regulations implemented for the purpose of improving the protection of the interests of individual health plan members.
who were awarded millions of dollars. For example, in a 1995 case, a jury found an MCO guilty of medical negligence in managing the treatment of meningococcemia in a couple’s baby boy, which led to the amputation of both his hands and his feet Foundation Health Plan of Georgia, Inc. State Court of Fulton County, C.A.F.
93VS79895 [1995]). In its early stages, meningococcemia is certainly manageable and, when it is treated properly, gangrene can be prevented. However, the jury decided that Kaiser’s inflexible attitude of staying with its own restrictive treatment policies and procedures, and allowing a deviation from these policies only after a long battle by the plaintiff with the company’s bureaucracy, was sufficient reason to award the boy $45.5 million on the grounds of medical negligence.
At the national level, the U.S. Congress has worked for many years on legislation to set standards and protections for patients with health insurance. In 2001, two different U.S. Senate versions of the Patients’ Bill of Rights (the Bipartisan Patient Protection Act) “to protect consumers in managed care plans and other health coverage” were introduced by U.S. Senator John McCain of Arizona (S.
872; S.1052) and were heavily debated among Democratic and Republican senators.
That same year, the U.S. House of Representatives was negotiating its own version of the bipartisan patients’ health care bill (H.R. 2563). Both political parties and both houses of Congress tried to ensure that patients would be reimbursed for emergency room services, and both sides intended to put an end to the practice among primary-care physicians of denying access (at the behest of insurance companies) to specialists in the plan. They also agreed to ban insurance companies from discussing treatment with a patient for the purpose of cutting costs for the plan.
The biggest point of conflict, which ended up derailing a full-blown agreement, was whether patients had the right to sue their health plan. Proponents argued that health insurance companies should be held accountable for malpractice by the same standards that physicians were held accountable for malpractice. Opponents countered that the involvement of trial lawyers would push up the cost of premiums and leave open the possibility that even employers would be sued eventually. In July 2001, the U.S. Senate passed the Patients’ Rights Bill. In August, the U.S. House of Representatives passed a different version of the bill that included a newly added compromise allowing limited lawsuits against MCOs. A federal cap would limit punitive damages and money for pain and suffering to $1.5 million. Legislators then had to reconcile the differences between the House and Senate versions of the bill.
However, that same year, the bill stalled in the conference committee. As a result, the 108th Congress failed to pass any national patients’ rights legislation.
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In many of the cases that went to court, juries decided in favor of the plaintiffs,
because of gangrene (James Don Adams, Jr., and Lamona K. Adams, et al. v. Kaiser
2.2 Public Distrust
The public trust in the practice of distributive justice by MCOs has been further challenged by the fact that managed care, while operating largely on a for-profit basis, has become the epitome of cost-containment in health care. Inherent in the switch to a managed care system is the assumption that the economic goals of lowering costs can be achieved through the mechanism of competition in a free- market environment. Proponents of the current managed care practice argue for simply allowing the market to operate freely.
Theoretically, a highly competitive market will create and nurture the desired proper environment of economic forces, thus reducing overutilization of medical services and, at the same time, lowering the cost of such services. In other words, the market will adequately restrict the wants satisfaction of consumers, limit the greediness of providers, and ultimately define the term medical necessity. Anyone who has reservations about the integration of health care into a competitive free- market environment insists that the application of these market forces may reduce the cost of health care but that the conversion might be more complicated than desirable.
Indeed, market forces have been proven over time to possess the ability to reward efficiency and profitability. This influence holds true, particularly in a society such as that of the United States, which has great appreciation for the principles of the free market, as well as for characteristics such as individualism, noninterference from government, and short-term returns on investments. Whether market forces could eventually also produce the highest quality of health care for the lowest price is a question that has not yet been fully answered. Donald Light (1997), for instance, has pointed out that competition may have a less obvious downside.
One does not hear about the cases of competition producing dislocation, waste, higher prices, inefficiency, deception, or inferior quality. (p. 53)
To better understand the key concerns raised by the change from the traditional fee-for-service system to a distribution and delivery system guided by the concept of managed care requires some basic information on managed care. The intention here is not to submit a comprehensive overview of the managed care product. Rather, this information serves merely to highlight the main principles, expectations, operational procedures, financial structures, and criteria that govern the distributive decision- making process. Ongoing controversies about managed care indicate that the change from the traditional fee-for-service reimbursement system to a managed care environment is more than simply a modification of the payer system.
The following brief overview of the history of managed care in the United States includes a description of some of the more common practices of the 1980s and 1990s. To this purpose, managed care has been characterized as a distribution system of health care that 1) has been integrated into a free-market environment and is ruled by the same economic principles of competition and profit motivation that drive other industries, 2) has been based on the premise of the sufficiency of market justice in distributing social goods fairly, and 3) has had the unique integration of financial and distributive authority within a single entity. Also of note are some of
THE CONCEPT OF MANAGED CARE AND ITS PRACTICAL IMPLICATIONS the reasons why the practice of managed care is stirring up so much controversy and generating so much conflict.
In the end, all the conflicts come down to disagreement on one core question:
Who is responsible for what in health care? In trying to answer that question, we find that the root cause of the problems in health care is the absence of a single definition of responsibility shared by all parties who have particular interests, that is, those who have a stake in health care (i.e., the stakeholders). In reality, however, health care businesses, health care professionals, policy makers, and individual patients all find themselves committed to different and often incompatible definitions of responsibility.