Debate: Do Managed Care Plans Practice Medicine?

FORT LAUDERDALE, Florida—When managed care companies deny reimbursement for care decided upon by the physician and patient, have they crossed the line from managing medical care to practicing medicine? A panel of physicians, lawyers, patient advocates, and representatives from managed care held forth on this issue at a roundtable held during the Fifth Annual Conference of the National Comprehensive Cancer Network (NCCN).

Moderator Clifford Goodman, PhD, of the Lewin Group, a Washington-based health care consulting firm, posed the question and further asked if managed care companies should be held liable for their decisions in a court of law.

Robert C. Young, MD, president of Fox Chase Cancer Center, believes they should be held liable. “When a patient and physician determine that a certain intervention is the best medical care and another set of physicians in an insurance company decides that it isn’t, then the insurance company is practicing medicine,” Dr. Young said, adding that, if this is the case, “they should be subjected to the same liability risks that physicians have when they practice medicine.”

Gail Agrawal, JD, MHA, professor of law, University of North Carolina at Chapel Hill, agreed that if a physician makes a medical decision, that physician is practicing medicine, “whether the decision is made in a doctor’s office, a hospital office, or an insurance company.” But she considers questions of regulation and liability a separate issue, one that is complicated by the fact that regulation of medicine falls to the states. “This is why we have 50 different laws governing managed care,” she said.

Stephanie W. Kanwit, Esq., of Washington-based Epstein, Becker & Green, added that “on top of the various state regulations, we also have a federal regulation system under ERISA (Employee Retirement Income Security Act).”

ERISA, she said, was passed by Congress in 1974 to regulate employer-sponsored pension plans and health care benefit plans. “The basic concept was to impose uniformity, so that a national company such as Xerox could have one standard for its employees across the 50 states,” Ms. Kanwit said.

However, in 1974, only about 4% of the population was enrolled in plans subject to ERISA regulations; now that figure is close to 80%, with the majority enrolled in managed care plans. ERISA regulation of managed care is often at odds with state regulations on such issues as liability and utilization review.

Nancy Davenport-Ennis, of the Patient Advocate Foundation, said that the problem, from the patient’s viewpoint, is that policies are often written with ambiguous language, and when a treatment is denied, the patient has nowhere to turn, with ERISA plans, short of going to federal court, which can take an average of 18 months.

Grace Powers Monaco, JD, director of the Medical Care Ombudsman Program, in the Washington area, said that managed care plans are commercial entities that cannot practice medicine. “We should instead be talking about responsibility,” she said, not only the responsibility of the insurer not to deny needed care, but also the responsibility of patients and their lawyers not to bring irresponsible lawsuits, and perhaps even of the insurer not to pay for unproven treatments, except in the setting of a clinical trial.

Ms. Monaco agreed with Ms. Davenport-Ennis that most problems stem from misunderstandings of the contract language. When treatment is denied, she emphasized the importance of a speedy internal review and, if needed, an external review by an independent panel of physicians, “to add another layer of fairness to the system.”

Lawrence J. Rose, Esq., a private practice attorney in San Francisco who represents health plans and provider groups, said that for insurers to enforce the provisions of their coverage policies “is not the practice of medicine,” even if it means that reimbursement for certain treatments is denied.

He said that the principal areas of friction between health insurers and oncologists now are less with denial of big-ticket items such as bone marrow transplants and more with, for example, denial of CT scans and other diagnostic tools as not medically necessary.

Lee N. Newcomer, MD, of United-Health Group, argued that insurance must remain affordable. “For every percentage point that we’ve raised premiums, 300,000 people drop out of insurance, so there is a constant balancing act about what to cover.”

He pointed out that many potentially useful things are specifically excluded from contracts, such as air conditioners for patients with allergies and most cosmetic surgery. If experimental treatments are specifically excluded, he said, “the insurer is not practicing medicine when it makes that decision.”

Ms. Davenport-Ennis pointed out that when the employer selects a plan for its workforce, “it may want a Ford policy and not a Cadillac policy. When the employee needs something that isn’t covered in the plan, such as speech therapy for a child, he or she blames the insurance company.”

Dr. Newcomer noted that some employers have approached UnitedHealth-care about dropping maternity coverage, to avoid premium increases.

Ms. Monaco and Ms. Davenport-Ennis both suggested the need for a uniform area of basic coverage “that is always guaranteed,” with consumers having the opportunity to purchase additional coverage.

A Red Herring

Although some plans offer financial incentives to physicians or physician groups for keeping costs down, Ms. Kanwit called this a “red herring.” She cited a case of appendicitis misdiagnosed as an ovarian cyst. The patient received a malpractice settlement from her physician, who clearly had made a mistake; then she sued her health care plan, citing its cost-containment mechanisms as contributing to the misdiagnosis.

Ms. Kanwit pointed out that care of the patient, who developed peritonitis because of the misdiagnosis, ending up costing the insurer many thousands of dollars more than an appendectomy. “That any doctor in his or her right mind would leave a patient with appendicitis untreated, because he or she was more interested in earning a bonus, strikes me as really absurd,” she said.

Dr. Newcomer argued that the panel was discussing “the wrong issue.” The real issue, he said, is “how do we make the health care system better? How do we ensure that medical decisions get made more rationally?”

UnitedHealth Group has taken the lead in giving physicians and patients more autonomy in making decisions. The company has agreed to pay for patient care expenses for cancer patients enrolled in clinical trials, and has abandoned the concept of medical necessity. “We found that we only overturned the physician’s decision about 1% of the time,” he said.

Instead of reviewing what it considers questionable medical decisions on a patient-by-patient basis, the company is using physician profiling to determine patterns of care that merit a closer look and a possible need for physician education about their practices.

Dr. Newcomer cited studies of cardiologists showing that treatment decisions are incorrect two thirds of the time. “If you have a heart attack, they forget to give you beta-blockers 42% of the time,” he said. So the question, as he sees it, is not who makes the decisions, but “how do we make the decisions better?”

Ms. Monaco agreed that lack of up-to-date medical knowledge rather than pressure from insurers is more often at the root of poor medical decision making. “We need to have the medical community, in concert with the health plans, police their own doctors,” she said.

She also emphasized the need for consumer education. “We need a curriculum that starts at the grade school level in science that makes our kids informed medical consumers,” she said.

With the problems of managed care clearly delineated, Dr. Goodman turned to possible solutions. “How do we get out of this mess?” he asked the panel.

Dr. Newcomer said that he hoped that other insurers would follow United-Healthcare’s example in doing away with medical necessity clauses and agreeing to reimburse patients for clinical trials. He also commented that plans, including those under ERISA, should be obligated to give a timely response when patients challenge their decisions. He suggested an internal appeals process taking no more than 30 days, followed, if needed, by an external appeals process to be done within 10 days.

Dr. Newcomer agreed with the patient advocates that insurers need to make their contract language and explanations of denials more “consumer friendly.”

Several panelists said that insurers, which can be sued under some state laws, need to be protected from punitive damages. Some kind of “harmonization” is needed to overcome the “hodgepodge of state initiatives,” Ms. Monaco said.

Dr. Goodman summarized the main suggestions as follows:

Better education, not just of consumers but also of clinicians.

More open policies toward paying for clinical trials, and greater efforts to enroll patients in clinical trials to get evidence-based information about what works and what doesn’t.

Turning decision making back to physicians and trying to separate medical decisions from fiduciary and other managed care pressures.

Ensuring that plans make a timely, cogent, and material response to treatment requests.

Availablity of independent external appeals processes.

A uniform basic coverage package to serve as a starting point from which consumers could purchase more extensive coverage.