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Read Making a Killing

home / healthcare / in the media

Los Angeles Times
Nov 09, 1999

by Sharon Bernstein

Key Health Plan Halts Reviews of Doctor Decisions

Action by United HealthCare, Which Covers 800,000 Californians, Would Eliminate Pre-Authorizations For Patients
In a dramatic sign that health plans are moving away from the tight controls and bottom-line incentives that have characterized much of managed care over the last decade, the nation's second-largest health insurer said Monday that it will quit interfering with doctors' decisions about patient care.

Minneapolis-based United HealthCare said it will no longer require doctors to obtain authorization when choosing courses of treatment for their patients. Such a policy would swiftly move United out of the path of government regulators and irate consumers, who have for years decried the practice of allowing corporate medical directors to deny care that a doctor has recommended.

The change is one of many sweeping the managed-care industry at a time of financial turmoil and a rush to make new federal and state regulations. These health plans' actions mark the early steps of a move away from the severe cost-cutting and tight controls that have dominated managed care since the late 1980s, when for-profit companies used a combination of competition and strict controls on medical care to wrench down prices.

Such policies allowed millions to receive good care for low prices, but there were also incidents in which ill patients were denied care and health plans faced staggering legal costs as a result. Overwhelmed by consumer and regulatory backlash--and faced with a presidential campaign in which managed care reform is a front-burner issue--the industry is beginning to change.

United HealthCare, which covers 14.5 million people nationwide and 800,000 in California, was actually spending more money screening physicians' requests and issuing authorizations than it saved by denying treatments, said William W. McGuire, chairman and chief executive of United HealthCare's parent, UnitedHealth Group of Minneapolis.

"The American public is looking for a greater level of control," McGuire said.

By taking away the requirement that doctors ask for permission before ordering tests or admitting patients to the hospital, he said, "we're making sure that we don't have any of the barriers or perceived barriers to the best outcomes for patients."

It is unclear whether other large insurers will go as far as United HealthCare--at least in the short term. But many have already taken some steps in that direction.

Some health plans, for example, have stopped reviewing the decisions of certain specialists, such as neurologists whose orders for CAT scans are rarely overturned, or obstetricians whose recommendations for Caesarean sections have not been questioned over a given period.

Other insurers, particularly in California, are moving away from paying doctors a set fee every month for each patient, no matter how much care the patient needs. The practice, called capitation, has bankrupted dozens of physician groups and endangered patients, whose care might be delayed or denied by a group that is in financial trouble.

United HealthCare's decision is possible in part because the company, whose policies have always been more liberal than those of its competitors, is one of the few large health plans that has succeeded using computers to track the behavior of doctors and compare costs and patient outcomes. The company plans to use its data to encourage physicians to prescribe appropriately, and to develop "report cards" based on quality and cost, but that will not deny care or payment for covered benefits.

"It's a brilliant idea," said Thomas Prince, professor of health services management at the Kellogg Graduate School of Management at Northwestern University in Chicago. "It takes the initiative away from Washington . . . and gives consumers and doctors more say over what happens in managed care."

Under United's new policy, doctors who believe that their patients need to be hospitalized will no longer be required to phone United HealthCare for authorization. Similarly, doctors who wish to order tests or treatments, or to perform minor surgery on the spot in their offices, will not have to request permission.

The insurer will continue to track treatment decisions, however, and it asks that doctors notify the company when a patient is hospitalized. The company will still refuse to pay for treatment that is simply not covered under a patient's plan.

The policy goes into effect Nov. 15 for most patients. Implementation will take up to a year for about 90,000 members in California, however, because the health plan must negotiate the changes with the physician groups that provide most of the HMO-related care in this state.

"This shows that there is now going to be some competition based on quality in the market," said Jamie Court, a consumer advocate and author whose new book asserts that health-maintenance organizations routinely endanger the lives of patients' by denying care. "This company is trying to set a new standard."

Other companies have taken smaller steps.

Aetna U.S. Healthcare, for example, allows physicians to perform many common or time-sensitive procedures, such as breast biopsies and excisions, without prior authorization.

WellPoint Health Networks, which covers 2 million people in HMO plans in California, has passed the responsibility for authorizing treatment to the physician groups with which it contracts.

"It's an adjustment of the role that managed care plans play vis-a-vis physicians and patients," said Clifton Gaus, executive vice president for health-care programs at WellPoint. "Prior authorizations have, at least from our perspective, never been the source of economic savings, and they haven't really improved quality that much."

The evolution away from strict control is a sensible one, said Oliver Goldsmith, medical director of Kaiser-Permanente's Southern California division. At Kaiser, a nonprofit managed-care pioneer with 6 million members in California, administrators rely on the organization's powerful internal culture, not financial incentives or authorization review, to encourage doctors to prescribe and treat patients in a cost-effective way, Goldsmith said.

Administrators at United HealthCare hope to cultivate similar attitudes among their doctors, McGuire said, by keeping track of costs and medical outcomes--and by trusting physicians to do the right thing.

Medicine has changed so much since the advent of managed care, McGuire said, that most doctors have internalized what managed care once sought to impose from above: control of costs and assurance that physicians are guided by the best evidence when making decisions about treatment.

"This is a recognition that the gains that have been made in our health-care system," McGuire said. "And it is appropriate to evolve even further."


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