The injection of HMO’s into the medical system and between the doctor and the patient is an unfortunate recent trend in medicine. The problem is more than just rationing healthcare – it destroys health care in several ways.
First is the curse of capitation. Capitation is a system that HMO’s use to compensate doctors. A capitated physician is usually paid a set amount of money per patient on his or her “list” each month – commonly an amount between $5 and $10. The result is that the only way a doctor can make more money is to have more patients on their list. But, the more patients on their list, the less time they can spend with each and greater the chance that malpractice will occur. This is also why HMO physicians’ waiting rooms are always packed, and the wait to see them is so long.
A second danger of capitation is that it often includes provisions that financially discourage the doctor from ordering testing. Their contracts frequently contain a list of common testing procedures that must be paid out of the doctor’s own pocket if ordered. Sometimes the ordering of tests will cost the doctor more than he or she makes for the year of having the patient on their list! This creates a serious disincentive to perform necessary testing and follow-up.
Third, doctors want to maintain their “preferred provider status.” HMO’s rate their doctors based on their utilization – a fancy way of saying they monitor how much a doctor costs them in test requests and hospital stays. Doctors have a justified fear that if they order what the HMO might consider to be too much testing they might lose their preferred provider status, and a large portion of their patients. This is another situation that can force a doctor to choose between the hand that feeds them and the best interest of the patient.
Finally, there are actual HMO medical decisions. Many times hospital stays and expensive testing or treatment must be pre-approved by the HMO – and sometimes they say no! Unfortunately they sometimes say no to testing and treatment that could have saved a person’s life.
The biggest tragedy of all of this is the way that HMO’s have perverted a federal law called ERISA. ERISA is a federal law that was originally designed to protect people from big insurance companies. However, a very small section of this huge act provides that an individual has the right to file a grievance against their HMO. Another small provision of the law says that ERISA preempts (is chosen over) state law. Some courts have put these two together and concluded that ERISA’s right to file a grievance against an HMO preempts state medical malpractice law and prevents an injured person from suing the HMO that hurt them.
An example of an HMO case that we were involved in is the case of a 6-year-old girl who was taken to her pediatrician because she was experiencing persistent vomiting. Her pediatrician correctly recognized that when vomiting persists for long periods it can be a sign of a brain tumor. He ordered a CT scan to be done. The request was rejected by the HMO as “not medically indicated.” Months later the little girl started screaming and holding her head. The tumor was allowed to expand to the point that it killed her. It turned out to be a benign tumor that was fast-growing but would have been very treatable back when the CT was rejected by the HMO. A $7 million recovery was made for the family.