Originally, managed care and HMOs (Health Management Organizations) were implemented to provide necessary medical attention at a reasonable cost to a wide range of patients. Unfortunately, these health care plans have deteriorated from a productive system where physicians make decisions based on medical necessity, to an industry where the bottom line takes precedence over the patient’s welfare. Although HMOs and other managed care plans have been effective in reducing inappropriate and unnecessary health-care measures and procedures, there is considerable concern that they may overstep their prerogative by cutting back or eliminating certain activities that may be necessary for the patient’s care. HMOs goal in cutting costs may jeopardize patients’ well-being.
Denied Medical Care
Managed care companies tell participants that health coverage is based on “medical necessity” and medical necessity services are provided when the symptoms are appropriate with regard to standards of good medical practice. Statements from HMO member handbooks claim that HMO will provide “all your medical needs” and “comprehensive high quality service.” While patients are promised benefits “to the extent that it is medically necessary,” HMOs define “medically necessary” in a manner that no clinician would support, leaving patients who have been denied medical care to suffer not only physically but emotionally.
Undisclosed Criteria used to Deny Necessary Medical Care
For some medical conditions managed care companies hire third-party disease management businesses to review claims. These third-parties use more restrictive, undisclosed criteria than HMOs disclosed “medical necessity” criteria. Undisclosed criteria used by managed care companies and HMOs in making coverage decisions may deny necessary treatment regardless of the patient’s medical condition.
In fact, in the 2001 case In re Managed Care Litigation, the plaintiff became a participant in a health management plan and was supplied a description of the benefits by Humana. The description stated that coverage under her Humana Health Plan would be provided when her medical claims satisfied the “Medical Necessity” definition set forth in her policy. Unbeknownst to the plaintiff, Humana used additional, more restrictive standards than what was disclosed in her policy to determine when coverage would be approved and provided.
Furthermore, during a trial involving a woman with cervical cancer who was denied a hysterectomy, it was found that Humana paid Value Health Services, a third party company, to review claims. Evidence presented to the jury revealed Value Health Services had a policy of denying one of every four requests for hysterectomies regardless of the patient’s actual medical condition.
Treatment Caps and Staffing Restrictions
Medical care companies also hire third-party businesses to care for high-cost patients who are seriously ill and require expensive treatments, continuous care, and extended hospital stays; these third-party companies cap the care and treatment of high-cost patients. Managed care companies believe that by closely monitoring high cost patients, the cost of treating them will go down while profits go up. While this may be true, no additional staff is added to closely monitor high-cost patients; personnel are therefore shifted away from other patients who are then left to suffer. These treatment caps and staffing restrictions result in substandard medical care of patients.
In Humana Health Ins. Co. of Florida, Inc. v. Chipps, Humana terminated over one hundred catastrophically ill or injured children out of its Medical Case Management program in an effort to save the company over $78.5 million and allow case managers to turn their attention and care to costlier children who remained in the program. In this case, Humana disregarded patients who still needed additional care in order to focus on costlier children and save funds.
Difficult Notice Requirements
Managed care companies also use accounting firms to recommend ways to make notice requirements trickier so care can be denied. Some managed care companies require subscribers to obtain advanced approval for emergency care or to call a toll-free number within twenty-four hours of receiving emergency care. These “notice requirements” are usually buried deep in the policy where people can’t find them so they can be invoked by the managed care companies to deny coverage when it otherwise should be provided. These complicated notice requirements make it harder for patients to get necessary medical care.
Use of Specialists to Deny Care
Managed care companies often deny care to patients and control costs through the use of specialists. Specialists employed by for-profit managed care corporations often oversee patients in nursing homes and rehabilitation centers. Although licensed physicians, HMO specialists have a primary goal of discharging patients as soon as possible in order to save money and increase managed care corporations’ profits. When the acute care of patients is transferred to specialists, insurance often denies payment keeping patients from necessary treatment. Additionally, the use of specialists for the purpose of controlling costs erodes the longstanding tradition of the doctor-patient relationship because specialists have no prior contact with individual patients and primary care physicians no longer direct the care and treatment of their patients.
Delayed Insurance Payments
Managed care organizations engage in a variety of practices to control health care spending and create incentives that cause physicians to take cost effective approaches to medical care. A managed care organization may require pre-certification of proposed treatment as a condition of payment, restrict coverage to services it deems “medically necessary,” or use reimbursement strategies intended to shift the financial risk of the patient to the caregivers.
Managed care companies protect their bottom line through refusal to pay insurance claims: a tactic known as slow-pay/no-pay. At the expense of patients’ health, insurance companies regularly delay payments to physicians, therefore causing doctors to deny further treatment. The systematic delay or denial of insurance payments allows health care companies to reap substantial additional profits; instead of making timely payments to hospitals, nursing homes, and doctors, they keep the funds and invest the money for additional gain. While managed care companies profit, unrelieved insurance payments to physicians may result in a disastrous impact on the patient’s health.
HMO’s and managed care organizations not only underpay doctors and deny patients optimum care; they give incentives to physicians to provide less care rather than more. Physicians are offered financial incentives and their course of treatment is based off of those incentives. Risky financial incentives discourage inpatient (or more expensive) procedures and tests; physicians are rewarded for not ordering tests or treatments and for concealing the existence of incentive programs from participants in the managed health program. Doctors are rewarded for minimizing referrals, while they are docked fees when they make too many; limiting the type of care available for patients. Furthermore, reviewers who deny claims or limit hospital stays and admissions regardless of medical necessity may receive direct cash bonuses or other financial incentives through HMOs internal policies and procedures. Programs such as these cut corporate costs and increase profits, but endanger the health of individuals.
In fact, in the June 2000 United States Supreme Court Pegram v. Herdrich, the plaintiff went to her primary care physician with complaints of abdominal pain. The doctor decided to schedule a diagnostic procedure eight days later at an HMO-staffed clinic rather than do it sooner at a non-HMO facility. Before the procedure could be done, the plaintiff’s appendix burst and she contracted peritonitis. By failing to refer the patient, the HMO physician placed the health of the patient in great danger.
Victim of Managed Care Abuse?
Physicians and patients in Florida are often compelled to file lawsuits against HMOs as a result of their HMOs’ refusal to authorize or pay for medically necessary services. In some cases, the HMO refused to pay for procedures at all. In other cases, the HMO set the payment for the procedure so low that it became cost-prohibitive for doctors to perform the procedure. If you have been denied care that was medically necessary, your HMO failed to pay you timely (slow-pay / no-pay), you were forced to use an HMO Specialist known to deny care to patients and control costs and would like to learn more about your legal rights, please contact the Dolman Law Group. Call today: 727-451-6900.