Challenging Dogma - Fall 2007

...Using the social and behavioral sciences to improve the practice of public health.

Monday, December 10, 2007

Managed Care: The Role Of Deception In Health Outcomes – Jason Silver

Introduction: Managed Care
As renowned philosopher and ethicist Sissela Bok once wrote, “Trust and integrity are precious resources, easily squandered, hard to regain. They can thrive only on a foundation of respect for veracity.”(1) Although this statement serves as a valuable lesson that permeates everyday life, it transmogrifies into a grave warning when associated with the business of modern healthcare. This paper will explore the initial intent and subsequent failure of managed care as a public health intervention. Throughout the storied history of healthcare, there have been few interventions quite as controversial as the advent and implementation of managed care. While its roots take hold in the latter parts of the 19th century, managed care migrated to the forefront in the early 1990’s; it represented a response to an astronomical inflation of medical costs by proposing practices such as managing health care cases, implementing reviews assessing the medical necessity of services, and generating selective contracts with health care providers. However, managed care did not always have these goals in mind. A precursor to managed care, prepaid health services emerged in 1929, due in large part to the needs of countless rural residents and workers. This particular demographic lacked comprehensive health services despite the hazardous nature of their professions; the majority worked in lumber, mining, and railroad industries. The product, spearheaded by managed care pioneer Dr. Michael Shadid, was a rural farmers’ cooperative health plan in Elk City, Oklahoma in 1929; the members paid a predetermined fee and Dr. Shadid rendered his patient care. (2) As the novelty of affordable, comprehensive care moved west, a Dr. Sidney Garfield began providing similar prepaid services to roughly 5,000 aqueduct construction workers – by far the largest group of enrollees to this point. Garfield’s particular program was an evolutionary step forward from prior plans in that workers were now covered from possible accident cases as well as general care. With his success, Dr. Garfield extended his services five years later to the workers of the Grand Coulee Dam under Henry J. Kaiser. Kaiser became so enthused by the care his workers received, he expanded the idea further by setting up an additional two medical programs to provide comprehensive health services to workers in shipyards and steal mills during World War II. As the conflict came to an end, Kaiser opened his plans to the public in hope of reorganizing medical care to provide comprehensive, prepaid care that was also affordable. Within ten years, what was now known as the Kaiser Permanente Health Plan consisted of nearly half a million enrollees while boasting a growing network of hospitals and clinics throughout the West Coast.

Since then, many other prepaid group practice plans have developed and more recently have given way to what we know as the modern HMO Plan. By the 1990s, however, the makeup of healthcare changed dramatically, sprouting many new needs and organizational issues. For example, the cost of health insurance had increased dramatically. At the same time, health insurance had shifted from a traditional role of excellent fringe benefit to a new role of necessary entitlement. The aging of the population, more and better preventative medicine, new and expensive technology, administrative costs, significant numbers uninsured, and inefficient use of facilities and equipment all came together to create new, formidable obstacles to managing health care access and health care cost. (2) Now playing a new role in a more modern arena, managed care became the answer to uncontrollable cost increases and irrepressible inefficiency within the health care system. Despite the “shared commitment to comprehensive and coordinated healthcare” (3) that propelled the first ideas of pre-paid care, the modern revival of managed care as a public health intervention has not only failed to solve any of the current complications healthcare faces today, but has also led to a serious and steep decline in quality of patient care by way of unscrupulous, financially-bound ideals. One integral aspect of this misguided intervention that has caused much controversy is the fiscal relationship between providers and third party payers.

A Conflict of Interest and a Question of Ethics
When a particular system is flawed, it is always inevitable that those whom the system applies to will find ways to exploit its failings; in the case of managed care, “deception may be a symptom of a flawed system, in which physicians are asked to implement financing policies that conflict with their primary obligation to the patient.” (4) In fact, in recent studies, results have shown that a substantial proportion of physicians [reported] that they had deceived or would deceive third-party payers. (5) With these facts in mind, it is important to explore what exactly makes this system of payment bad enough to cheat. When asked why managed care settings are so difficult to deal with, the majority of physicians asked responded that “quality of health care is compromised by limitations in length of hospital stay and choice of specialists [among others].” (6) In other words, the care of any given patient is so micromanaged by limitations that oftentimes very little of what is necessary to care for them is unavailable. Further, what may be available becomes a long process of inefficient pre-authorizations due to administrative excess. Even more troubling is the complexion of the people behind the paperwork that makes managed care payments function; very few of those whom review patient cases have actual clinical experience beyond that which a textbook can provide. For this reason, relatively inexperienced personnel make judgments on access and subsequent reimbursement for thousands of patients and providers each year. These processes are direct results of growing desires to curb the cost of care by creating a system of checks and balances to providers. In fact, we find that physicians are being stripped of their authority to dictate proper care for their patients. Over the past few decades, the freedom enjoyed by physicians to judge and choose the ends of work has been increasingly challenged by both consumerism and managerialism, i.e., by the twin demands of competition and efficiency as embodied in the rise of managed care. (4) This increased interest in preserving cost at expense of care has left doctors with few options when negotiating the now complex course of care for their patients.

In a recent study analyzing physicians’ relationships with third party payers, it was noted that the dissonance between care and financing rules has become so severe that physicians see lying as the only way to do their jobs. (4) In fact, more and more physicians are finding more ways to deceive payers into approving what is perceived by providers as necessary care, a method called “gaming” the system. However, these manipulations do not reside in the realm of what we know as white lies. Physicians’ decisions about what services to offer their patients affect almost 80% of all health care expenditures and have enormous influence on health care quality. (7) Many small nuances oftentimes have a significant affect during any given provider-patient interaction; in fact, recent studies have shown that physicians regularly exaggerate the severity of their patient’s condition, alter diagnoses for billing purposes and even report symptoms that their patient may not have. Manipulations can be as discrete as changes in wording in medical records such as using “rule out cancer rather than screening” or as significant as creating nonexistent symptoms such as suicidal ideation to obtain a psychiatric referral. (8) This trend may lead to a better understanding of the reasoning behind this supposed deceit.

Morality in Deceit?
When physicians are asked to provide justification for what seems to be amoral behaviors, their answers reveal a desperate and failing attempt of the preservation of integrity within a system that is defined by deceit; some argue that manipulative or deceptive tactics can be justified by unfair or illegal rules and by burdensome paperwork while others insist that their deception stems from the unreasonableness of insurance companies and the strength of the physician’s obligation to patients. (9) It has even been suggested that some insurers are ‘gaming’ patients and physicians – tricking them into paying for covered services by routinely denying coverage but then approving services that are subsequently appealed, knowing that the time and other constraints will prevent some appeals. (5) In fact, just three years ago, a federal appeals court upheld a class-action lawsuit on behalf of physicians who charged that their patients’ insurance companies had conspired to curb reimbursement for the physicians’ services.(10) As evidenced by this 2004 ruling, the uselessness of managed care’s reimbursement system becomes increasingly prevalent as time wears on; the inconsistencies become increasingly exploited until a dangerous spiral forms in which each side is governed by their own stipulations in an attempt to fulfill disparate goals. This trickery has become so pervasive in health care today, that just last year the U.S. Department of Justice listed health care fraud as the second most pressing crime in the country, after crimes of violence. Such deceit has disastrous implications for patient care.

The Psychology, Sociology of Care
The quality of care any given patient receives depends heavily on complex relationships between doctors, payers, hospitals, and even the patient themselves. These connections are rooted deeply within several integral aspects of social and behavioral sciences. Several specific factors influence this balance, aside from the economic incentive, including psychological and sociological determinants. As an example, we know now that “the relationship between the charge generated by the chargemaster and the cost of service and what any given payer pays is tenuous at best, which creates the potential for a bad connection to spill over into many other essential fields of care. (11) For example, payment systems have historically not only failed to support collaboration between hospitals and doctors, they have discouraged it. (12) This tension between payers and payees has tainted the entire process of care for patients all over the country. Physicians are frustrated not only by the obstacles they face regarding reimbursement, but more importantly the hurdles they encounter when delegating the care of their patients. Physicians’ diminishing authority to dictate the correct amount of care has caused a backlash that extends not only to those in charge of paying, but the doctors’ employers as well. Although cooperation and collaboration between hospitals and physicians are key to achieving improvements in the quality of medical care delivery and outcomes, we are seeing an increased dissention between the two sides caused by increasingly disparate ideals within the framework of managed care. (12) However, perhaps the most important relationship in regard to quality of care is that between the provider and their patient.

The crooked evolution of managed care has put providers in an increasingly precarious position in which they become a middleman between the payer and the patient. Consumers of health care strive to find and create a relationship with their doctor based on honesty and integrity. However, despite this obvious necessity, roughly two-thirds of physicians surveyed in a recent study indicated that managed care has had a negative impact on that relationship. (6) Under managed care, doctors become a gatekeeper to medical services. In this role, the physician is viewed ambivalently; when positive, physicians are essential sources of knowledge that have the capability to guide their patients through the most productive route of care, however, when financial incentives are linked to medical decisions, the best route my be forsaken for one that is cheaper or produces more profit for other parties. In a recent study, it was found that gatekeeping had a negative affect on the physician-patient relationship, freedom in clinical decisions, time spent with patients, and ease of ordering expensive tests and procedures. (6)These findings paint a grim picture for the patient. Under the misaligned crux of managed care, essential interpersonal relationships are tainted to such an extent that unbiased, quality care is all but abandoned. Many other negative quality factors stem from this strain.

When providers are cornered into making compromising decisions, they often dangerously misrepresent their patient in hope of championing a better course of care for them. Although these offshoots of deception are often unintended, their impact can be devastating not only to the quality of the patient’s continuity of long-term care, but also to the integrity of epidemiological studies. For example, harm may come to patients if they receive unsuitable treatments or medications based on incorrect information provided on their medical record. (4) Epidemiological implications have the potential to adversely affect at the population level in such a way that misrepresented medical or health histories could be relied on as a methodological basis for new interventions to come. Just as important are the indications that just as “gatekeeping” puts the provider at a disadvantage in regard to his patient-provider relationship, so too does the act of deception. Patients may lose trust in the integrity of the medical profession when it becomes clear that the only way to achieve proper care is through trickery. Further, when fulfilling obligations to their patients, physicians are viewed to be allies of the patient, but when the physician is not able or unwilling to do what has now been established as the norm, the patient may question the trustworthiness of their doctor. The erosion of trust between a physician and their patient has a long sequence of potential issues; some include diminishing frequency of visits, unwillingness to follow through on doctor advice, or even making a change of provider. When provider turnover at the patient level is high, continuity of care is compromised. However, even more is at risk if the prior physician was untruthful in previous encounters. As one article states, “substantial harm may be done when lies of diagnosis, used to obtain coverage for a service, are inadvertently discovered by a patient.” (4) Altogether, while deception may seem to aid the patient in the instance of immediate care, there are many negative long-term implications that not only that patient may face, but the population could encounter as well. With so much attention paid to provider deception, these methods are not the only ways in which patient care suffers under managed care.

The Influence of Economics
Over the past decade, many general care facilities have suffered a mass exodus of specialty care physicians; this dissent has caused numerous catastrophic effects within the patient care facility setting. Physicians starting their own, privately funded specialty care facilities, they have the ability to “cherry pick” the more profitable patients from the general care facilities they once worked for. In fact, one Wall Street Journal Article describes how one general care hospital has been saddled with a monopoly on low-paying patients and services that hits the bottom line. For example, Medicare insurers pay a flay fee for many types of surgeries, regardless of the patient’s underlying health. Meanwhile, the article reveals that the specialty care facility in competition with this general care practice acknowledges it treats fewer complicated cases. (13) With upstart specialty care facilities siphoning the most profitable patients, many hospitals are left with the population of patients who are grossly underinsured or even worse, uninsured altogether.

This extreme competition has led to an equally extreme stratification of care in which privately insured patients enjoy the luxuries of specialty care facilities while those on federal aid or are uninsured face the prospect of finding care at a now endangered class of facilities. Countless corners have been cut at these facilities in order to keep up with their specialty care contemporaries. One such example explains how the competition between two hospitals has been especially fierce in neurosurgery. The general care facility has tried to fight back by recruiting a neurosurgeon not yet certified in the specialty. When the specialty care facility became aware of the fraudulent surgeon, they anonymously mailed letters to three of the surgeon’s patients, alleging their operations may have been botched. During trial, many of the plaintiffs revealed that the general care facility had protected the surgeon because it was under extreme competitive pressure to keep its doors open. (13) Although critics decry specialty hospitals for harming hospitals that serve poorer and sicker patients because they lead to inevitable waste of health care dollars, the success of these facilities illustrate how many doctors, feeling pressured by health insurers, have found new ways to prosper - now, in many cases - at the expense of the patient. (13) Hyper-competition from facilities born out of the frustration of many physicians have initiated a new trend toward a two-tiered care system in which poorer patients suffer from decreased access and quality, while the rich, privately insured patients enjoy extravagant, unneeded amenities inevitably leading to a waste in health care funding. Overall, evidence continues to mount that many unintended, but extremely problematic symptoms have stemmed from the implementation of managed care which have caused the intervention to flounder on achieving its main purposes.

Where Did It Go Wrong?
At its origin, the idea of pre-paid care was to protect a specific niche of society characterized by the obstacles they faced in regard to staying healthy. The design was simple, but more importantly, the people behind it were sincere in their goal to bring comprehensive, affordable healthcare to corners of this country that had yet to benefit from what it had to provide. However, as healthcare became more complicated, so did the system that supported it; pre-paid became HMO’s, which have come to epitomize the core of managed care. Now, instead of an idea, it has developed into an intervention to stop the hemorrhaging of the health care dollar, by creating an efficient business machine. Unfortunately, along the way, many people found fatal flaws in a system of managed care that has perhaps not kept pace with the ever-evolving business of health care. Medical decisions have become increasingly financially tied, with patient outcomes becoming a distant second priority. This emphasis on capital has not worked alone in the demise of managed care; in fact, the biggest failures of managed care can be explained within the theories of social and behavioral sciences.

As with any system, success depends heavily on the collaborative efforts of those enmeshed in it. In the case of managed care, this idea calls for insurers, providers, health care organizations, and the patient to work for common goals. With healthcare, this common ground can be an elusive plateau to reach. The first issue is authority; under managed care, the right of the proper medical decision has been stripped from the provider and transferred to the payer. This has led to an increase of administrative hurdles and a sense of frustration on the part of the doctor. With this premise, authorizations for care are made by people with relatively little clinical knowledge or background, whose goals are to pay as little as possible to the provider. This tenuous relationship between the provider and the payer influences the subsequent relationships the provider establishes with the facility which employs them and their patient. Primarily with the patient, the goal is trust. However, the mechanism of managed care makes openness difficult. Considering providers’ primary obligation is to their patient, they are put in a difficult position in which they must choose between deception and health outcome. Further, managed care has given rise to the role of gatekeeper that many physicians must fill. The idea behind gatekeeping stipulates that the doctor become the access point to any needed care; however, this role causes strain on the delicate relationship and fiduciary responsibility the provider has for their patient. The dangerous twist begins when deception gives way to mistrust in a way that each group acts under its own conditions; when this occurs, continuity and quality of care inevitably suffers.

When frustration boils over, doctors are forced into new roles as money-seekers, not able to procure it under the suppression of managed care. Providers turn to private practices that inevitably bleed hospitals of profitable patients, and leave access and quality of care just as stratified as it was before rural workers achieved care so long ago. In sum, there are countless reasons why managed care has failed as a modern public health intervention. Despite noble and pure intentions, what was once a novel way of managing health care has since withered into one of the biggest and most controversial failures of modern health care. The explanations behind the breakdown have been analyzed through the rhetoric of social and behavioral sciences by exploring a system in which its constituents must compromise integrity and responsibility to achieve positive health outcomes. We have seen that economics can play a decisive role in the interpersonal collaboration necessary to create a successful system, just as we have seen that system crack under unexpected exploitations, deception, and eventual mistrust. And we have seen that system fail at regulating cost and providing efficient care, as it was promised to achieve almost twenty years ago. It is understood that when it comes to health care, class trumps race. And reputation trumps everything. (14) Health officials today must look very closely at the wrong turns managed care have made and the subsequent implications of failure they have created, and wonder if this is the reputation we truly want health care to engender.

1. Bok S. Lying: Moral Choice in Public and Private Life. New York, NY: Vintage Books; 1989

2. Tufts Managed Care Institute. A Brief History of Managed Care. Tufts Managed Care Institute, 1998.

3. Gilfillan, Sally W. Health Insurance in the 1990’s. The CPA Journal; Feb 1993:1-2

4. Bogardus, Sidney T. et al. Physicians’ Interactions With Third Party Payers (Is Deception Necessary?) Archives of Internal Medicine 2004; 164: 1

5. Wynia MK, Cummins DS, VanGeest JB, Wilson IB. Physician Manipulation of Reimbursement Rules for Patients: Between a Rock and a Hard Place. JAMA 2000; 283:1858-1865

6. Feldman, Debra S., MD, Novack, Dennis H., MD, Gracely, Edward, PhD. Effects of Managed Care on Physician-Patient Relationships, Quality of Care, and the Ethical Practice of Medicine. Archives of Internal Medicine 1998; 158:1

7. How Physician Organizations Are Responding to Managed Care. Washington DC: Center for Studying Health System Change 1999. Health System Change Issue Brief 20.

8. Novack DH, Detering BJ, Arnold R, Forrow L, Ladinsky M, Pezzullo JC. Physicians’ Attitudes Toward Using Deception to Resolve Difficult Ethical Problems. JAMA 1989; 261:2980-2985

9. Graber MA. Is it ethical to lie to secure hospital admission? Yes: lying is sometimes in the patient’s best interests. The Western Journal of Medicine 2001; 175:220

10. New England Journal of Medicine March 3, 2005

11. Becker, Cinda. Leading the Charge. Modern Healthcare 2007. Sept. 3:44-46.

12. Schulte, Margaret F. Editorial. Frontiers of Health Services Management 2007; 24:1 1-2.

13. Armstrong, David. A Surgeon Earns Riches, Enmity By Plucking Profitable Patients. The Wall Street Journal 2005. August 2: A1-A5.

14. Schulte, Brigid. Saving Lives, Losing Millions at Pr. George’s Hospital. Washington Post 2003. Dec. 22: A01.

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