2 March 1999 Rev. 14 March 2000
-- 1,800 words

Sue HMOs? Change ERISA?
Debate over "incremental" reforms,
no plans for 43 million uninsured

NEW YORK--This was not a great debate.

Columbia J-School organized a debate over one of the current controversies in health care, "Should patients be able to sue their HMOs."

Ron Pollack, Executive Director, Families USA, opposed Richard I. Smith, VP, Public Policy and Research, American Association of Health Plans. Martin Gottlieb, New York Times, moderated, on 2 March 1999 at the Columbia Club.

The debate was choreographed like professional wrestling. Neither side really went for the kill. "Rick and I largely agree," said Pollack, a former law school dean. "We disagree on the margins."

Neither side had any solution to help the 43 million Americans who are unable to afford medical insurance (Donelan et al., "Whatever happened to the health insurance crisis in the United States? Voices from a national survey. JAMA 1996 Oct 23-30;276(16):1346-50 ).

They agree that HMOs should have internal procedures to appeal decisions, and external procedures for further appeals. They agree that doctors should provide care following medical guidelines derived from good scientific studies of effectiveness.

ERISA's restrictions

But the ERISA law now prevents most managed care patients from suing HMOs for more than the value of services denied. The AAHP would like to keep it that way. "There are far better ways to resolve these disputes," said Smith. It's better to have "review of medical disputes by medical experts immediately, rather than years later," in the courts, he said. The threat of litigation makes it difficult to implement good medicine, and promotes unnecessary defensive medicine.

Families USA thinks patients should be able to sue. "There has to be recourse to litigation when other things fail," said Pollack. "There are a fair number of rotten apples" among managed care providers.

(A medical malpractice lawyer later put it more succinctly: "If there weren't policemen, how many more of us would be speeding?" said Steven Mackauf, of Gair, Gair, Conason, Steigman & Mackauf, New York.)

This debate falls along Republican-Democratic lines. The Republican reform bills would follow AAHP. The Democratic bill would follow Families USA.

"This is one of the sexiest stories in health care," said Gottlieb, and one that divides people politically. There are horror stories of HMOs denying care, like the prostate cancer patient forced to undergo castration. There are horror stories of apparently foolish multi-million dollar jury awards, like Smith's example of a $13 million judgment against a plan that offered a cervical cancer patient a conization, the treatment of choice, rather than a hysterectomy. And there are wonk-type debates with battling studies, over how many people are likely to sue, how much it will cost the insurance companies, how much it will raise insurance premiums, and how many more people will be unable to afford insurance as a result.

(But it's also an issue that won't affect too many people. Few patients bring medical malpractice claims. Medical malpractice takes roughly 3-4% of the health care dollar. In contrast, managed care administrative expenses and profits takes about 25-30% of the premium dollar.)

Internet resources

Pollack has been debating the AAHP on this issue for years, and you can find the entire debate on the Internet, including most of today's handouts, by searching Yahoo! for "Families USA" (with the quotes). The Newshour with Jim Lehrer has a concise overview of the debate, with links to the Families USA and AAHP sites.

Another of today's handouts on the Internet is Trudy Lieberman's Columbia Journalism Review resource guide, "Covering Managed Care". Lieberman, health policy editor of Consumer Reports, gave an annotated list of about 100 organizations. Managed care is extremely complex, so anything to help you figure it out, like her sidebar of "Selected Readings," is even more useful. Unfortunately, the sidebar is missing from the web site (CJR is supposed to have its entire contents since 1992 in full text), so here it is. Lieberman recommends:

Milliman & Robertson

But my favorite CJR piece is Lieberman's 1995 article on Milliman & Robertson.

M&R is a consulting firm whose looseleaf guidelines are sold to health care providers to determine accepted medical practices, and they are responsible for some famous HMO horror stories, like the outpatient mastectomy. Much to the indignation of the American Academy of Ophthalmology, M&R concluded that, when a patient has cataracts in 2 eyes, both eyes need not be treated unless the patient has an occupational or recreational need for binocular vision. M&R refused to let the AAO review the substantiation behind that standard, which was later changed.

Lieberman explained how M&R cooked up a study which claimed that 500,000 people lost their health care when New York State adopted community rating (i.e., charging the same rates for everyone in broad groups). The report was widely reported by newspapers and magazines (including Consumer Reports), which accepted it as proof that community rating had failed, and didn't disclose that it was paid for by companies with a clear financial interest in the outcome, notably Golden Rule Insurance Co., which sells medical savings accounts and contributes heavily to Republicans, who in turn promote MSAs. The New York State Insurance Department called the M&R report a "lie."

(In March 2000, University of Texas pediatrician Thomas Cleary sued Milliman & Robertson for using his name without permission on their pediatric guidelines, whose recommendations, he said, were "pulled out of thin air." "Cost-cutting guide used by HMOs called 'dangerous,'" Houston Chronicle, March 3, 2000

Consumer representative

Pollack is the only consumer representative on President Clinton's Advisory Commission on Consumer Protection and Quality in the Health Care Industry. Clinton praises Families USA and vice versa, so Pollack is unlikely to criticize Clinton, or step outside the bounds of polite discourse.

Families USA strongly emphasizes that we must have universal care. But they don't have a strategy for getting there.

What is Familes USA's position on a Canadian-style single-payer system, I asked Pollack. Families USA doesn't necessarily endorse it, he said (though Douglas Fraser, former president of the United Auto Workers, a single-payer supporter, is on their board). They're exploring many options, he said.

I pressed Pollack. What are those options? What do you propose to do for those 43 million uninsured [many of them freelance medical writers]?

"It's very difficult," he said. "We're working on incremental approaches."

So, I asked, what are you going to tell those millions of people who aren't covered by the incremental reforms over the next few years? "Tough luck"?

"I didn't say that," said Pollack, and changed the subject.

The uninsured have a 25% increased death rate (Franks et al., Health insurance and mortality. Evidence from a national cohort. JAMA 1993 Aug 11;270(6):737-41).

Better outcomes with managed care?

Smith lightened his burden of proof by first tossing out the many managed care horror stories that didn't hold up upon cursory fact-checking, and he warned reporters do the same.

Smith's strongest argument was that HMOs provide patients with care that is "comparable to, or better than, care provided in indemnity plans," and they can even maintain this quality while cutting costs. This is documented on their web site in an AAHP Research Brief, "Quality of Care and Health Plans," which summarizes articles in peer-reviewed journals such as the NEJM, AJPH, JAMA, and Health Affairs. The Research Brief says that this result was found in 1994 and continues to hold true today. Similarly, the AAHP study, "Health Plans and the Low-Income Population," says that low-income populations in managed care do better on quality indicators than in fee-for-service.

(It all depends on how you frame the debate, though. This doesn't help the uninsured low-income population that earns too much for Medicaid but not enough to afford private insurance. Those same journals also published studies which found that Canadian care is equal to U.S. care.)

[However, David Himmelstein et al. concluded that most--but not all--studies found worse outcomes for seriously ill, mentally ill, and poor patients in managed care than in fee-for-service.

The studies with worse outcomes were (1) Ware JE Jr, et al., Comparison of health outcomes at a health maintenance organisation with those of fee-for-service care. Lancet. 1986 May 3;1(8488):1017-22. (2) Miller RH, et al., Does managed care lead to better or worse quality of care? Health Aff (Millwood). 1997 Sep-Oct;16(5):7-25. (3) Shaughnessy PW, et al., Home health care outcomes under capitated and fee-for-service payment. Health Care Financ Rev 1994 Fall;16(1):187-222 (4) Ware JE, et al., Differences in 4-Year Health Outcomes for Elderly and Poor, Chronically Ill Patients Treated in HMO and Fee-for-Service Systems JAMA 1996; 276(13):1039-1047 (5) Rogers WH, et al., Outcomes for adult outpatients with depression under prepaid or fee-for-service financing. Arch Gen Psychiatry. 1993 Jul;50(7):517-25. (6) Hellinger FJ, Arch Intern Med 1998 Apr 27;158(8):833-41 The effect of managed care on quality: a review of recent evidence. (7) Lee-Feldstein A, et al., Treatment differences and other prognostic factors related to breast cancer survival. Delivery systems and medical outcomes. JAMA 1994 Apr 20;271(15):1163-8 (8) Retchin SM, et al., Outcomes of stroke patients in Medicare fee for service and managed care . Journal of the American Medical Association JAMA. 9 July 1997;278(2):119-124

The studies which found no differences in outcomes were (9) Greenfield S, et al., Outcomes of patients with hypertension and non-insulin dependent diabetes mellitus treated by different systems and specialties. Results from the medical outcomes study. JAMA 1995 Nov 8;274(18):1436-44 (10) Yelin EH, et al., Health care utilization and outcomes among persons with rheumatoid arthritis in fee-for-service and prepaid group practice settings. JAMA 1996 Oct 2;276(13):1048-53

Himmelstein also examined a standard data base and found that investor-owned HMOs had poorer results in all 14 indicators of care, particularly in prescribing beta-blockers after myocardial infarction, and giving eye exams to patients with diabetes mellitus. Quality of Care in Investor-Owned vs. Not-for-Profit HMOs, JAMA, 14 July 1999;282(2):159-163

Separately, Silverman et al. found that per capita Medicare spending was ere greater in areas served by for-profit hospitals than in areas served by not-for-profit hospitals. The Association between For-Profit Hospital Ownership and Increased Medicare Spending, N Engl J Med 1999;341(6):420-6 and related editorial]

Tort reform

For many years during the "tort reform" debate, doctors and their insurance companies have claimed that doctors practiced "defensive medicine," using procedures that were not medically necessary, just to cover themselves against malpractice suits. I've always asked the tort reformers to cite a specific procedure, and they couldn't do it. But Smith cited an article by 2 Stanford researchers, Kessler and McLellan, which found that doctors treating heart attacks used more services in those states where liability laws were more favorable to the patient, with a 5-9% difference in cost but no difference in outcome. (I couldn't find it on Medline, though.)

Isn't there a benefit to the tort system? I asked Smith. In the 1960s, automobile trauma was responsible for 50,000 deaths a year. Yet, you couldn't buy an American car with seat belts. As Ralph Nader described it in Unsafe at Any Speed, American manufacturers arbitrarily decided not to provide many basic safety features. Then, in the case Larsen vs. General Motors (391 F.2d 495, 8th Cir. 1968), the automobile companies were held liable, and they immediately installed safety features that cut the death rate in half. Maybe the threat of lawsuits would encourage better HMO practices.

"There is no relationship between quality and tort liability," Smith reiterated. Beta blockers are under-prescribed for heart attack patients. "If the tort system worked we would have more patients on beta blockers."

"Would you encourage lawyers to bring malpractice lawsuits against doctors who don't prescribe beta blockers?" I asked.

"I wouldn't encourage lawsuits against anybody," Smith said.

(Mackauf said that there are very few malpractice suits involving beta blockers.)

Outcomes studies: How valid?

Managed care advocates claim to be marching under the banner of evidence-based medicine: the leading researchers do outcomes studies, publish them in leading medical journals, find what works and what doesn't work, educate the neighborhood doctors, and the one best way will be disseminated through the world.

But most of the guidelines aren't published or open to review. As the consumer advocate on the President's Advisory Commission, "I have tried for years to see what these guidelines say," said Pollack. "Most of the health plans say that these protocols are proprietary information." He suspects that the guidelines were developed for patients who were otherwise healthy except for one condition. Typical patients may have multiple problems, and therefore a guideline for a hospital stay, for example, may be too restrictive.

Pollack was concerned that guidelines would create an "irrebutable presumption" that a hospital stay of "X days" was appropriate for a particular situation. We should "take cognizance" of the guidelines, but "don't become slaves to it." The attending physician should be able to manage the treatment decision, he said.

--Norman Bauman