Managed Care Part 2

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Understanding Managed Care:

Part Two

Printed by the Coral Gables Gazette

In a previous article we discussed the foundations of managed care, how the risk of financial loss has been shifted to the doctors and hospitals, and how managed care regulates covered treatment by principles often referred to as LEPAT-Least Expensive Professionally Acceptable Treatment. We finished with a comparison of LEPAT versus the traditional BAT-Best Available Treatment.

CAPITATION

Chances are that your medical health is insured through an HMO, or Health Maintenance Organization. Most managed care in this country is practiced through HMO’s. Almost all HMO’s pay their doctors and often their hospitals via a method of reimbursement called Capitation. Meaning "by the head", capitation pays the doctor a flat monthly fee per each patient who is signed up for that doctor. If none of those patients show up that month for treatment, then all of that money is profit for the doctor. If all of the patients present for treatment, then the doctor loses a lot of money, as the capitated payments are or should be based on actuarial risks as measured in the community. This is how the managed care companies have negated their risk and placed it all on the doctor or hospital.

You ask, "How does the managed care doctor earn money, then?". This is an excellent question, and one that you should ask every time you present for treatment with a managed care doctor. If you haven’t yet deciphered the situation, the managed care doctor makes more profit when you don’t present for treatment than when you do. This is exactly the reverse of traditional business, where people make money for providing a service. This is like paying farmers not to grow crops. In medicine and in dentistry, your managed care doctor is obligated to treat you but loses potential profit every time he or she does.

This author feels that this system is warped, and that it creates an ethical conundrum under which your doctors must function. When you do show up for treatment, ethics and profit are in opposite corners, and only you can judge how your doctor manages that dilemma, and how he or she allowed themselves to be in such a position.

That position is nearly ubiquitous in medicine, and is increasing exponentially in dentistry. About 80% of physicians are involved in managed care, and about 40% of dentists. The percentage of insured patients with managed care basically reflect those percentages as well. Forty percent of physicians are actually employees now, employed by third parties or hospitals. At this point in history, physicians need to participate in managed care to survive, so don’t be too hard on old Dr. Trustworthy. But, continue to demand Best Available Treatment; it’s best!

GATEKEEPING

Let’s be a patient on a visit to a managed care medical office. You just signed up for your first HMO plan and you were asked to pick a primary doctor from a list. Depending on the plan and your circumstances, there is a very good chance that your previous doctor is not on that list.

In insurance parlance, your HMO primary doctor is usually a Gatekeeper. This doctor is responsible for your flow through the managed care system. Often these gatekeepers are offered Provider Incentives which are basically bonuses calculated on how low the gatekeeper can keep the utilization of medical services of his or her practice. These bonuses are on top of the capitation payment and serve as a financial carrot to the doctors. These provider incentives are based on keeping specialist referrals to a minimum, keeping hospital admissions low, and keeping laboratory and radiology tests to the lowest acceptable level. Some managed care organizations dictate thresholds for referrals and tests, and if utilization is over that threshold, money is actually removed from the gatekeeper’s monthly capitation or incentive check.

REFERRALS

Referrals are a hot issue today in the discussion of managed care. Understanding the gatekeeper concept will help you to understand why you may have had such a hard time getting referred to a specialist for common but stubborn presentations like a sinus infection, chronic cough, an outbreak of dermatitis, or chronic gastric upset. Those referrals are truly hard to come by and generally go to the "squeaky wheels". Referrals or the lack thereof are a common source of the so-called "managed care horror stories" that are surfacing in the media and on the internet. Of course you may choose to see a specialist without a referral, but then all of that doctor’s fee is your responsibility.

GAG RULES

The final concern in the primary doctor’s office, whether medical or dental, is with so-called Gag Rules. Many managed care contracts with doctors stipulate that you don’t receive a discussion of all treatment alternatives that are available to you, only the ones deemed acceptable by the HMO! So far with few exceptions these rules are only prohibited for patients covered under Medicare or Medicaid, and this only recently. To their credit, many states have pending legislation outlawing this practice.

In today’s managed care world, you must decide for yourself how you want to be treated, and by whom.

Next month we will confront the difficult and controversial issue of determining quality in health care.

K. Randall Groh, DDS is a private dentist in Coral Gables
and Acting Director of the American Independent Dentist’s Association

K. Randall Groh, DDS
Acting Chair
The American Independent Dentist’s Association
2745 Ponce De Leon Boulevard
Coral Gables, FL 33134
E-Mail feeforserv@aol.com
March 21, 1998

© K. Randall Groh, 1997

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Last Update03/22/98