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HMOs now serve Americans of all ages. Photograph by FPG/Ron Chapple
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Some headline writers have portrayed managed care as a monster from a B-grade
horror movie: "Americans Are Doomed: No Choice of Doctors, Poor Quality
Care." Others have embraced it like the promise of eternal youth: "Everyone
Guaranteed Coverage: Better Care and Cheaper, Too." Most Americans
are somewhere in between: they aren't very familiar with managed care, they
don't know what to believe, and they are unnerved by the prospect of having
to choose one of these newfangled plans.
The noisy, often vituperative national debate over health-care reform has
obscured the fact that the system has already been transformed without a
scrap of legislative help. Like it or not, health maintenance organizations
(HMOs) are everywhere-and they're here to stay.
Change was inevitable because traditional indemnity coverage caused
a tug-of-war between doctors and insurance companies and put consumers in
the middle. Under the familiar fee-for-service system, physicians had a
financial incentive to overtreat because they were compensated for
every office visit, test, or procedure. Insurance companies, on the other hand,
wanted to minimize their financial risk by paying as few claims as
possible.
Insurers seek to control their expenditures in many ways: denying coverage
for certain conditions, shortening the list of what is covered, raising
premiums, or "cherry picking"-which means insuring mostly young,
healthy people who use fewer and cheaper services.
As a result, many who are older, less healthy, or afflicted with hard-to-treat
diseases have been left out in the cold. Some have settled for catastrophic
coverage (which kicks in only after a deductible of $1,000 to $5,000 has
been paid); about 37.4 million people have ended up with no health coverage
at all.
Although managed care is an unfamiliar concept for many Americans, this
approach has actually been around since 1929, when doctors first contracted
with businesses to care for their workers in exchange for a monthly fee.
The idea spread, research showed that it did no harm to people, and since
1973, companies with 25 or more employees have been required to offer a choice
between traditional insurance coverage and HMO membership.
HMO enrollment has soared from 6 million people in 1976 to more than 50
million in 1995. This boom has been driven primarily by large corporations,
which saw their insurance costs skyrocket during the 1970s and 1980s, when
indemnity plans dominated the marketplace. They see managed care as a way
of clamping down on those costs, and the federal government has followed
suit by encouraging Medicare beneficiaries to sign up for HMOs instead
of purchasing Medigap insurance. Insurance companies have responded by gradually
phasing out indemnity plans in favor of managed care.
The Dilemna for Consumers
Now that nearly 600 hmos are vying for business in the United States, one
might expect consumers to be big winners. But concerns abound. Continuity
of care, for example, can be a problem for employees who find themselves
switching HMOs every two or three years, as they're forced to select one
of the two or three lowest bidders picked by their company. In some cases,
they're stuck with only one option.
And anyone, regardless of age or employment, can be overwhelmed by the
task of choosing the right health plan. It would be easier if high-priced
plans were always best and if low cost always correlated with poor quality
or service. In fact, price differences are usually determined by what benefits
are covered, with a deluxe plan generally costing more than a basic model.
Marketing brochures provide general information about a plan's benefits,
but these are advertising tools and shouldn't be relied on for an unbiased
assessment.
Although there's no magic formula for selecting the right HMO, there are
prudent ways of doing research and making an informed decision.
Managed care is defined as a system that encompasses both the delivery
of health care and payment for those services. Instead of simply paying
claims submitted by independent physicians and hospitals, HMOs and other
managed-care organizations enter into formal contractual arrangements with
these providers, set policies for what doctors and hospitals can and can't
do, and keep a close watch over them.
One feature that sets HMOs apart from traditional fee-for-service care
is an institutional emphasis on prevention and on the early detection of
disease. In theory, an HMO that is paid a set amount for each member will
be motivated to keep people well because a healthy person consumes fewer
resources (office visits, medications, etc.) than a sick one.
Some HMOs do little except hand out brochures about quitting smoking, starting
an exercise program, or eating a low-fat diet. But topnotch organizations
take a more active role, reminding members when it's time for a mammogram
or cholesterol measurement and providing these key screening tests without
the copayment required for other visits. Some plans offer free or low-cost
classes or have discounts with exercise studios, diet centers, and the like.
Managed-care organizations have elaborate systems for monitoring both the
quality and costs of care. For example, they use a formal authorization
process to control referrals to specialists, cut down on what they regard
as unnecessary procedures, and reduce expenditures for prescription drugs.
In fee-for-service health plans, a patient could consult a specialist, arrange
for a hospital stay, or have a procedure done at will-even if his or her
primary-care doctor advised against it. In an HMO, members have unrestricted
access only to their primary-care doctor; everything else must be authorized
in advance.
In some HMOs the primary-care doctor acts as the gatekeeper to referrals;
in others, a utilization-review nurse or even a committee, usually made
up of medical specialists and administrators, gets involved. Patients and
their doctors are sometimes surprised when their request is denied because
the utilization committee views the procedure they wanted as experimental
or unnecessary or believes that a less expensive treatment would be just
as good.
HMOs also rely on a process called utilization management to determine
whether members are receiving care that is consistent with practice guidelines
adopted by the organization. These are standardized diagnostic and treatment
protocols designed to eliminate unnecessary procedures, uninformative tests,
and costly treatments that may work no better than less expensive or less
invasive ones. However, critics charge that HMOs, by emphasizing only the
cost factor, may cause their patients to miss out on useful tests and procedures.
First, Know Thyself
People who must choose a managed-care plan should consider how their needs
might change in the future. Although this is often the last thing that occurs
to prospective HMO members, in fact it is the best way to avoid dissatisfaction
later. Answering these questions can help: Do you have a chronic ailment?
Do you see a specialist? Are you overweight? Are you physically active?
Do you smoke? Do you want to change your lifestyle? Do you need dental coverage?
Mental health services? Do you want a plan that covers chiropractors, acupuncturists,
or other providers of complementary therapy?
The best HMOs make a concerted effort to promote healthy habits among their
members and to provide good preventive care. Before signing up with an HMO,
you may want to make sure that it offers:
Wellness programs such as exercise, nutrition counseling, stress
and weight management, and smoking cessation.
Routine screening for hypertension, high cholesterol, and common cancers
such as those of the breast, prostate, and colon.
Chronic disease management aimed at preventing or reducing complications
due to conditions such as asthma or diabetes.
Psychotherapy services and self-help groups.
Rehabilitation programs designed to minimize disability following heart
attack, stroke, or another major event.
Go to Part II, or see The ABCs of Managed Care
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