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              Managed NONcare: Disability Danger

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        MANAGED CARE: DANGERS FOR PERSONS WITH DISABILITIES
 			    By
   		    Laura Remson Mitchell
	  Government Issues Coordinator Multiple Sclerosis
		California Action Network (MS-CAN)
		National Multiple Sclerosis Society

Managed care as typically practiced in health maintenance
organizations (HMOs) poses a number of dangers to the health care of
individuals with disabilities and/or chronic illnesses. Similar
managed-care cost-control techniques in traditional health insurance
programs pose the same risks. Essentially, the problems fall into two
categories: those related to economic incentives that lead to
under-service, and those related to the nature of this group's
health-care needs. Modification of managed-care programs may remove
such dangers, but these modifications are unlikely unless policy
makers change their assumptions about and expectations for managed
care.

"Managed care" vs. "case management."

As used here, "case management" refers to the coordination of care
from different providers serving the same patient. This often involves
the use of a primary care physician, or a nurse, who serves as the
coordinator. "Managed care," on the other hand, refers to a health
plan that, among other things, uses economic incentives to hold down
costs. One of the goals here is to reduce or eliminate services that
are deemed ineffective or "unnecessary." Typically, managed-care
programs pay providers on a capitation (per patient) rather than a
"fee-for-service" basis and use primary care physicians or other
providers as "gatekeepers" to control access to care.

o Case management appears to be very desirable from a health-care
  standpoint (for all patients, not just those with disabilities).
  Furthermore, it has a potential for reducing long-run costs by
  dealing effectively with health problems before they worsen. Case
  management may or may not be part of a managed-care system.

o In contrast, managed care has been gaining popularity with
  government and business not because of what it can do to improve the
  quality of health care but rather because it is seen as a way to
  hold down health-care costs while providing coverage to more
  Americans. Unfortunately, the same financial incentives that managed
  care relies on to reduce costs also create a conflict of interest
  for providers between giving the best care and maximizing their
  incomes.

NOTE: Although "managed care" and "managed competition" are related to
      one another, they are not the same thing. Managed competition is
      a system in which "managed-care" health plans compete against
      one another and, perhaps, against more traditional health plans
      as well in the open market Managed competition groups consumers
      into purchasing pools so that they can have the same kind of
      bargaining clout that large employers have in negotiating with
      various plans. Despite this distinction, however, the concerns
      expressed in this paper are relevant to managed competition
      because managed competition proposals generally make extensive
      use of managed-care plans.

Economic incentives: Fee-for-service vs. managed care.

Many researchers have pointed out that the current fee-for-service
type of health care encourages inappropriate utilization or
"overutilization" of medical services. (By inappropriate utilization,
I mean tests and/or procedures that are ordered more with the
provider's income or legal protection in mind than on the basis of the
patient's health-care needs. "Overutilization" is a subjective term
that may have some validity on a system-wide level but has very
questionable and potentially dangerous implications when applied to
individual cases: One person's "overutilization" is another person's
necessity.)

Analysts have pointed out that when providers are paid per service
rather than per patient, it is in the providers' financial interest to
provide more--and/or more expensive--services. A major objective of
managed care is to change those incentives by paying providers on a
capitation basis. Depending on how a system is set up, however, this
can create incentives for underutilization of health-care services
that can have serious consequences for the patient--especially if the
managed-care organization is operating for profit. The incentive then
exists to exclude individuals with significant known health-care needs
from participating in the managed-care program at all (just as many
health insurance carriers now refuse to cover those with pre-existing
medical conditions) or, where exclusion isn't possible, to find ways
of denying services--sometimes even when the service is listed as a
covered benefit.

NOTE: Such exclusions and denial of benefits raise some questions
      about the apparent savings associated with managed-care plans.
      If managed-care plans accept and/or attract primarily healthy
      individuals, while those with more health-care needs choose the
      traditional fee-for-service system when given the opportunity,
      then fee-for-service would tend to appear increasingly expensive
      (as it is serving an increasingly high-risk group), while
      managed care would appear increasingly less expensive (as it is
      serving a lower-risk population).

Expectations, economic incentives and the downward spiral of care. The
cost-cutting expectations that are driving the popularity of managed
care are likely to create incentives to deny benefits in order to
achieve savings in the short run. But denying certain benefits--e.g.,
withholding physical therapy or certain types of durable medical
equipment from individuals with disabilities who need them--may
achieve those short-run savings at the expense of more costly problems
in the long run. That's because denying benefits today keeps expenses
down on the current year's balance sheet, while potential costs down
the line can be dismissed as a theoretical matter until they hit home.

Unfortunately, as those deferred costs begin to show up in the form of
increased demand for more expensive health services, the pressure to
cut health-care spending is likely to escalate. In the end, the only
way to curb those costs will involve restricting access to services.
This could be accomplished by reducing or eliminating certain covered
benefits (including such vital services as rehabilitative therapy and
durable medical equipment), by using narrower and narrower definitions
of what constitutes a "medically necessary" service, and/or by
adopting some form of health-care rationing, which limits care based
on such factors as age or diagnosis. In any case, the result is likely
to be bad for those with special health-care needs.  To the extent
that priorities used in a health-care rationing system are influenced
by nondisabled policy-makers' judgments of "quality of life," people
with disabilities may be particularly at risk: Too many nondisabled
people still react to disability based on fear and stereotypes, while
few understand the real quality-of-life issues that affect individuals
with disabilities.

Hidden dangers.

People with disabilities don't necessarily need more total health care
than nondisabled people, though the services a disabled person
requires at any specific time (a power wheelchair, for example) may
seem very costly when viewed as a single item. For the usual acute
care, a managed-care plan may be perfectly adequate, and the covered
benefits listed on the plan agreement may seem comprehensive enough.
For that reason, evaluations of patient satisfaction levels can be
misleading. People in managed-care programs may feel quite content
about their coverage until a flareup of a special health condition
reveals previously unrecognized barriers to getting the services they
need. The fact that a service is covered on paper doesn't always
translate into delivery of that service in the real world, but a
patient who is ill may not have the strength, energy or other
resources to push the managed-care system into providing what it has
promised.

Limited access to specialists.

Managed-care organizations like HMOs generally limit patient access to
specialists by requiring referral from a "gatekeeper" physician.
Unfortunately, "gatekeeper" doctors are often unfamiliar with the
special needs of those with disabilities and/or chronic illnesses. In
addition, cost-cutting pressures on the managed-care organization (as
noted above) would tend to discourage these "gatekeepers" from
ordering expensive services or referring to specialists outside the
managed-care organization.

Moreover, the number of specialists within a specific managed-care
organization can be very limited. For example, one major HMO that
contracts with Medicare in Southern California offers members a choice
of provider groups in several geographic areas. The group serving the
Northridge, California, area includes two specialists each in
endocrinology and in hematology/oncology and one each in neurology,
surgery, obstetrics/gynecology, ophthalmology, cardiology,
allergy/immunology, gastroenterology, urology, orthopedics and
pulmonary diseases. In the mental health field, the group offers one
psychiatrist, one psychologist and one licensed social worker.

The problem here is that a single practitioner in a given specialty
cannot possibly be familiar with the particular subset of that
specialty affecting every patient. For example, not all neurologists
are well-versed in the diagnosis, treatment or management of multiple
sclerosis. In view of the managed-care incentives against referrals
outside the provider group, this kind of situation can lead to
inappropriate care--even unnecessary surgery--with all its attendant
costs and risks to the patient's health.

It is also important to recognize that for individuals with certain
chronic health conditions and/or disabilities, an ongoing relationship
with a specialist/specialists familiar with his or her health problems
can be the equivalent of a relationship with a primary-care physician.
Yet the typical managed-care program treats access to such specialists
as a medical luxury rather than the essential service it is. While HMO
members generally have at least a limited right to "shop" for a
primary-care physician they like, those with disabilities usually
don't have the same freedom to find the right specialist, even though
this relationship is often critically important.

Denial of covered benefits/delays in access to service.

Because managed-care "gatekeepers" are frequently unfamiliar with the
special needs of individuals with disabilities and/or chronic
illnesses, they may deny certain benefits on the grounds that the
services aren't "medically necessary." For example, they may refuse to
authorize physical therapy to maintain function in the belief that
"medical necessity" requires the restoration or improvement of
function. Part of the problem here may be a focus on "cure" rather
than "management" of the condition. (While this is often true in the
fee-for-service system as well, managed-care programs severely
limit--or even eliminate--the patient's option to find a provider with
a different perspective.) It is important to recognize that so-called
"maintenance benefits," which prevent or slow deterioration, may be
essential to the patient's quality of life while also being highly
cost-effective.

Even when HMOs don't deny benefits outright, long delays are typical.
Such delays, too, can result in deterioration of a chronic condition
and consequently to increased costs for later treatment.  All this
contributes to a downward spiral of care for those with special
health-care needs under managed care.

Two-tier system.

Many proposals for a state or national system emphasizing managed care
include options to allow those who wish to do so to purchase more
expensive fee-for-service plans by paying some kind of differential.
Unfortunately, the higher-priced fee-for-service option may not really
exist for many of those who need its flexibility the most because they
can't afford it. Nevertheless, to the extent that those with higher
health risks choose fee-for-service plans over managed care, any
actuarially determined differential would tend to become increasingly
unaffordable. If those with disabilities or special health problems
are forced by financial circumstances to remain in managed-care
programs that fail to deliver the services they need, managed care
would, in effect, continue to discriminate on the basis of health
status and financial resources.

               SUMMARY OF KEY DANGERS/RISKS OF MANAGED CARE

1 - Managed-care programs often provide inadequate access to
    specialists who are qualified to diagnose and/or treat special
    health-care conditions, including various disabilities and certain
    chronic illnesses.

2 - Without a medical provider who is well-versed in the patient's
    special health-care needs, there may be no one willing or able to
    attest to the "medical necessity" of the services that patient
    needs and to advocate for them on the patient's behalf. Thus
    important services may be denied, and/or inappropriate treatment
    may be ordered.

3 - Expectations of significant cost savings due to managed care are
    likely to put pressure on program administrators to focus on
    holding down short-run costs, even when some of the decisions
    involved may harm patients and lead to higher long-run costs. This
    puts into operation a downward spiral of care. This paper has
    attempted to highlight some of the dangers that managed care poses
    for individuals with disabilities and/or chronic illnesses. That
    doesn't mean managed care can't play a useful role in reforming
    our health-care system. But unless policy makers address problems
    like those noted here, they are likely to find that costs
    ultimately are going up, not down--especially for those with
    special health-care needs. Among possible responses to the dangers
    described are the following:

1 - Improve state and federal oversight of managed-care plans, with
    better analysis of utilization data in order to identify and
    correct problems of under-service.

2 - Limit the degree of financial risk to which managed-care providers
    are exposed.

3 - Improve grievance and appeal procedures under managed care.

4 - Allow people with disabilities and other special health-care needs
    to have appropriate specialists serve as their primary-care
    physicians.

5 - Offer a point-of-service option as part of HMO plans.  These
    suggestions are just a beginning, not an end, to addressing the
    issues raised here. In addition, any significant health-care
    reform should permit individuals with disabilities or other
    special health-care needs to remain in the fee-for-service system
    without paying an additional charge at least until it can be
    demonstrated that managed-care plans will meet the needs of this
    population. (Note that waiving the charge only for those with low
    incomes could create a serious work disincentive/penalty for
    people with disabilities.) For further information, contact:

		  Laura Remson Mitchell
                  Government Issues Coordinator
                  Multiple Sclerosis California Action Network (MS-CAN)
                  19955 Blythe Street
                  Canoga Park, CA 91306
           Phone: (818) 882-6462/FAX: (818) 709-8390
                  af752@lafn.org

[April 1992; rev. February 1994; rev. December 1994; text version June
14, 1995]

[as posted on misc. handicap by Laura Mitchell, July 21, 1995]

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