Health Maintenance Organization

The early Health Maintenance Organizations, like the Kaiser-Permanente Foundation, were based on a certain assumptions. They thought that if cost barrierswere removed, people would use much more preventive medicine and thus lowerhealth care costs. They also thought that people would get earlier care whenthey did get sick, resulting in prompter, less expensive cure. Thus the name"Health Maintenance Organization," which implies care aimed at keeping you healthy, not care which begins after you're ill.

Until then, the traditional pattern of health care in the United States was based on fee-for- service payment. If you got sick, you went to the doctor, who examined you, treated you, and sent you a bill. But as medical costs spiraled upwards (sometimes reaching hundred of thousands of dollars for care), patients needed more and more help with paying the bills. Many of them bought health insurance from companies which collected monthly premiums from people and paid their bills when illness struck. Then the government got into the act,with Medicare providing health insurance coverage for the aged and Medicaidproviding it for the poor.

People who would never rob an individual have very little qualms of conscience about gouging an institution. Hospitals have long used that principle in conserving their equipment: Suppose they find that Kelly clamps and other instruments which can prove useful in anyone's household are disappearing from theward. They realize that people can't identify any one person as being damaged by these thefts, so conscience isn't operating. So they make the ward nurseresponsible, and take the cost of disappearing instruments out of her pay. Instantly instruments stop vanishing.

Third party payment by insurance companies and government agencies operated the same way on doctors and hospitals. Pockets seemed to be bottomless, and almost everyone's conscience is inactive in dealing with an institution. So health costs soared astronomically.

The Health Maintenance Organizations (HMOs) seemed to offer a possible solution to the problem. The preventive and early care aspects of their operation had not proved splendidly successful in cutting costs, but the fact that theyoffered total care in a contractual package had considerable appeal. The authorities felt that the best way to contain health care costs was to establishcompetition. The only way to do that appeared to be to have total care organizations. Only such organizations can offer comparable products in the healthsphere, so HMOs became vehicles for price competition.

Most people now join HMOs through their workplace. According to NBC News, 87%of adults who receive health coverage through their employer are members ofan HMO. Also the Balanced Budget Act of 1997 permits people covered by Medicare to elect HMO coverage rather than fee-for-service. Attracted by the extraincentive of coverage for prescription drugs, many people switched from fee-for-service coverage to HMOs. Over 30% of Medicare-covered people in California had joined HMOs by December of 1997 and national enrollment has progressedrapidly ever since. One recent estimate claimed 64% of the population were HMO members.

HMO members, or subscribers, receive comprehensive medical care through paying a fixed monthly fee, or premium. Some get total care from the HMO, others use it as a way of covering serious illness while getting care for minor ailments elsewhere. There are several types of HMOs. Network HMOs contract with two or more group practices of physicians to provide care to members. Group HMOs contract with independent physician groups; some HMOs contract with individual practices, which makes them an independent practitioner association, or IPA. Or, HMOs may hire physicians as staff doctors at their own clinic or hospital (the staff model).

Although the early HMOs were mainly non-profit organizations, a great many such organizations are now operated by for-profit corporations. The profits seem to be considerable: in 1997 the 25 highest paid executives in 15 top companies averaged $5,100,000 annual income, plus stock options worth about twice that amount. For-profit HMOs have reached a substantial market share mainly byaggressive promotion rather than by delivering a totally satisfactory product. A substantially larger proportion of subscribers voluntarily leave for-profit plans than leave non-profit ones. But enough remain to make their subscriber total very substantial.

Availability of HMOs, and particularly of enough different ones to offer muchchoice, varies sharply across the country. Rural areas are particularly prone to lack HMO facilities. A 1999 study showed that 248,892 rural residents infive states (Arizona, Connecticut, Delaware, Maryland, and Rhode Island) hadno access to any HMO. Rural residents only had a choice between two or moreHMOs in 22 of the 50 states. Even in larger towns or cities, choice may be severely limited. Coverage is infinitely better, though, in populous areas.

In an HMO, each member has a primary care physician, or a "gatekeeper." ThisPCP sees the patient for all his or her health needs. The PCP can be a familypractitioner, a pediatrician, an internist, a general practitioner, or a obstetrician-gynecologist (OB-GYN). In many ways, the PCP serves the same function as the old-time family doctor did. The PCP can prescribe medicines, give physicals, answer questions, and diagnose ailments--and in the case of the OB-GYN, deliver babies.

In an HMO, the primary care physician has an extra responsibility: He or sheis the one who decides whether a patient needs to see a specialist (such as adermatologist), is admitted to the hospital, or needs special tests or procedures. Usually, subscribers choose their primary care physician from the HMO's list of member doctors; in some cases, the PCP is the choice of the HMO. Inmany cases, subscribers may find that the doctor they have already been seeing is a member of the HMO; physicians can be part of several HMOs at once. However, it is not guaranteed that a person's physician will be part of a plan,so before switching from a traditional health insurance plan to an HMO, he or she should check with the physician to be sure.

Subscribers usually pay a small amount at each visit to the doctor (a "co-pay"), which usually amounts to five or ten dollars. In some cases, such as forobstetric care, the co-pay is waived. HMO executives are fully aware that thepregnant woman who makes regular visits to her doctor is less likely to haveexpensive complications, so they lean over backwards to encourage such care.

Although HMO subscribers are not discouraged from seeing their primary care doctor, the extent of preventive care varies sharply in different HMOs. Some emphasize preventive care and encourage annual physicals, Pap smears, mammograms etc. The more common practice is to provide these things if requested, butto make no active effort to encourage them.

An interesting point to investigate when choosing an HMO is the ease of actually seeing your primary physician. While most HMOs emphasize the fact that patients are not limited in the number of visits they can make, many actually have you see a nurse-practitioner initially rather than your physician if youcome in without an appointment. Since the waiting time for appointments witha specific doctor may be weeks or months, this means that you will not see your primary physician first with most illnesses or injuries if that policy isin force.

Before choosing an HMO, one thing to investigate is coverage you will receiveif you become ill when away from home. Most HMOs will pay for emergency service, but often at the rates prevailing in the home community. You might haveto pay substantially more than that. For example, one member of a Tennessee HMO required the care of a Retinologist when visiting in Florida. The standardrate for the service she received was $75 in Tennessee, $150 in Florida. Soshe really only had half coverage for her care.

Another question to raise is coverage of mental disorders and of substance abuse. Most HMOs impose rigid limits on these services. They take advantage ofthe fact that most people either don't think they'll need such services or are afraid to admit (even to themselves) that they might. Particularly if yourfamily history suggests the possibility, it is a good idea to seek out planswith adequate coverage.

HMOs have been criticized for affecting the quality of care that patients receive, and for taking the decision-making about health care out of the hands of the physicians. It is true that HMOs have sometimes balked at providing patients with expensive or experimental treatments. In many cases the question revolves around the issue of need: the HMO often assumes the power to decide whether an operation or treatment a patient desires is "necessary."

One common source of conflict is the exclusion of "cosmetic" procedures. Is awoman whose disproportionately large breasts seem to be causing backaches entitled to plastic breast reduction surgery? Does a child who is harmfully self-conscious about a facial birthmark deserve laser treatment to remove it? Issurgery or laser treatment which relieves a near-sighted person of the needfor glasses be regarded as cure of eye disease or as a frivolous attempt to improve appearance? In all such cases difference of opinion is justified. There is no pat answer.

Another source of conflict relates to surgery or therapy related to lifestyle. Most HMOs have rigid policies regarding need for certain procedures. They may specify that a person is entitled to cataract surgery when vision impairment reaches a certain level, like 20/40 or 20/50. But what if the patient is awatchmaker who needs keen vision for his work? HMOs may specify that a person needs a hip replacement when flexion is restricted to 110 or rotation to 20. But what if the patient practically lives for his games of golf? They maydeny coverage for mild carpal tunnel constrictions, but what if the patientis a concert pianist for whom that condition is totally disabling?

Another area of conflict relates to accessory benefits of one treatment vs. another. Probably the best example of this occurs when complaints relate to the female organs. In many cases the possible choices involve one which sparesthe uterus and one (usually more expensive) which removes it. The patient mayhave a strong preference for removal, either because of a strong family history of uterine cancer or because of a desire to eliminate the possibility offuture pregnancy. The HMO may wish to settle the issue on the basis of the presenting complaint only -- perhaps excessive bleeding or prolapse -- which can be treated in some other way.

One other major area of conflict concerns "experimental" therapy. On one handpeople with incurable disease tend to grasp at straws. They want to try anything which might possibly help regardless of cost. On the other hand, the chances that a treatment which has had insufficient trial will prove helpful often does not justify the cost. But who is to say when trial is "insufficient"?Who is to say how many dollars a 1% chance of cure of any given disease is worth? For example, take the use of certain embryonic tissue to help Parkinson's disease victims. Only limited amounts of material are available, and costsare immense. Even though published results seem favorable, the treatment canhardly be regarded as "standard" because of the controversy surrounding useof embryonic tissue and its near-unavailability. You can easily see why a patient might want this treatment, and the HMO deny it.

The laws governing HMOs vary from state to state, and the HMO may be requiredby law to pay for a procedure. For example, Massachusetts law requires thatHMOs pay for infertility treatment and for the birth and newborn care of thebaby that results, even in the case of a multiple birth. Such procedures caneasily exceed $150,000 total, making it unlikely that a couple outside of anHMO, who would be paying almost of quarter of that amount themselves under traditional insurance, would pursue infertility treatments. In other states, this procedure might not be covered.

Coverage varies from HMO to HMO. Some cover vision care and eyeglasses or contact lenses (or at least some part of their cost), and even dental care. Somewill also offer discounts on wellness programs to their members, such as fitness center memberships. Many offer discounts on safety equipment like childcar seats.

For practical purposes, you have several ways of getting all you are entitledto from your HMO. First, try to get the best primary physician available. Don't just take whichever one has the most vacancies on his list. Inquire abouthis qualifications and his thoroughness. (See Health Care Systems, p.00, fordetails.)

Second, get to know your primary physician and get him on your side. Perhapsthis shouldn't matter, but it does -- if your doctor knows and likes you he'smore likely to fight for you when a dispute comes up.

If a dispute arises, you may be inclined to disenroll. That is generally notyour best course. You, or your employer (or the government) have paid for anyservice you're entitled to. Determine what that amounts to instead of getting angry and quitting.

Finally, use all available channels of appeal. Almost every HMO has appeal procedures. Go through the appeal procedure, even if you think an internal bodywill be too prejudiced to do you any good. If that fails, take the matter upwith Consumer Protection agencies in your state. That can usually be done without cost. If even that fails, consider a law suit, but consider it carefully -- even if done on a contingent fee basis, a suit costs time and money. Youneed reasonable assurance that you're right and that the amount involved isworth the hassle.

Being a member of an HMO has its advantages and disadvantages. Patients who are on traditional plans can choose any doctor and go to any hospital withoutpre-approval from anyone. They will pay about 20% of the doctor's or hospital's fees out of their own pockets, which may make them less likely to visit the doctor with an apparently minor ailment or a health concern. Patients on anHMO may face limited choices and curtailment of certain tests and procedures, but can enjoy many benefits that will go toward keeping them healthy. It isa decision that needs to be made with care and consideration.

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