Managing the managers of medicaid managed care: States beware

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POLICY WATCH EDITORS Max Michael, MD Cooper Green Hospital

William F. Bridgers, MD The Eutaw Group EDITORIAL MANAGER Sharney A. King Universityof Alabama at Birmingham CONTRIBUTING EDITORS Dennis P. Andrulis, PhD, MPH National Public Health and Hospital Institute Ronald G. Blankenbaker, MD Erlanger Medical Center Lester E. Block, DDS, MPH University of Minnesota School of Public Health Eli Capilouto, DMD, ScD University of Alabama at Birmingham School of Public Health

Barry B. Cepelewicz, MD, JD Cummings & Lockwood W. Dale Dauphinee, MD, FRCP(c) The Medical Council of Canada G.E. Alan Dever, PhD, MT Mercer University Grassman Chair of Rural Medicine

Emily Friedman Health Policy Analyst Lawrence W. Green, DrPH University of British Columbia Mary E. Guy, PhD Universityof Alabama at Birmingham Marion Ein Lewin, MA Institute of Medicine AHce Atkins Mercer, PhD Universityof Tennessee

C.K. Osterland, biD RoyalVictoria Hospital George Pickett, MD, MPH Lake Success, New York Alan Silver, MD, MPH Mt. Sinai School of Medicine City Universityof New York Brian M. Sumner, MD, MS Lenox Hill Hospital James D. Wright, PhD Tulane University

M a n a g i n g t h e M a n a g e r s of M e d i c a i d M a n a g e d Care: States Beware Iglehart JK Health policy report-Medicaid and managed care. NEJM. 1995;332:1727-1731. Gottlieb M. The managed care cure~U shows itsflaws and potential The New YorkTimes. October 1, 1995,'145.'1. Gottlieb M. A fre~-for-aU in swapping Medicaidfor Managed Care. The NewYork Times. October2, 1995"145.'£

onto your hats because efrts to manage the health care of the Medicaid, indigent, and uninsured populations are becoming a feeding frenzy at the state level! This is due to: uncontrolled, escalating costs of health care; a social desire to provide universal coverage; failure of the Clinton reform package; the states' longstanding desire to totally control the Medicaid program, but maintain federal subsidies; and congressional need to significantly decrease the federal deficit. Congress is planning to control spiraling Medicaid costs by capping its expenditures and sending its subsidies to the states in the form of block grants. The states will have to put up or shut up! Iglehart briefly describes Medicaid managed care efforts from Medi-Cal (introduced in California in the 1960s) to the Arizona statewide program which has functioned since 1982. The California program receives mixed reviews as to savings and effectiveness; however, the state plans to move all 5.4 million Medicaid recipients into a modern managed care plan over t he next several years. By contrast, the Arizona program is more comprehensive and has experienced more positive results. Patients, providers, and government agencies are generally satisfied, and a recent independent

Birmingham Medical Center

evaluation reports medical cost savings of about 1196. Furthermore, plans are competing vigorously for the Medicaid business. More recent Medicaid managed care activities in Florida, Tennessee, and New York are discussed by Iglehart in greater detail. In these instances where implementation has been hurried and not well planned, there is a high amount of fraud, abuse, and dissatisfaction by providers and consumers. Florida plans have a high rate of sanctions for poor quality, avoidance of high-risk populations]individuals and high-pressure marketing, yet the state plans to have all eligible individuals in a managed care plan by 1996. With similar acrimony, New York is in the process of rapidly requiring all 2 million eligible Medicaid recipients to be enrolled in a managed plan to curtail a rate of spending twice the national average. Tennessee's plan was implemented in a matter of a few months and suffered multiple problems due to unrealistic goals, insufficient funding, poor provider support, and general dissatisfaction with the immature infrastructure. Gottlieb, in the two New York T/mes articles, presents a comprehensive view of instances of fraud and abuse in Tennessee. At the outset, some sales representatives were told to visit potential clients in their home so that they would not enroll individ-~i~ who had disease, disability, or were high risks. Also, incentives, such as free life insurance, were offered to encourage enrollment, along with the targeting of the homeless and ineligible prisoners in jail. Many fraudulent names were enrolled that probably cost the state millions of dollars and prevented legitimate persons from obtaining coverage. Because of unrealized savings, Tennessee has capped its uninsured enrollment far below its expected goal and is considering

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premiums for some of its poorer citizens. The message from these three articles is clear. Health care delivery is complex and resistant to change---there are no quick fixes. Managed care is not a panacea, but when implemented appropriately with adequate standards over a reasonable amount of time, it may contain costs while mainmining quality. Lastly, most states are iU-prepared to control the influx of-unscrupulous individuals who abuse the up-front funding which comes with managed care. Regardless, this country appears to be moving rapidly in the direction of managing health care of all populations with special emphasis on the underprivileged and underserved. Ignoring this situation won't make it go away. The medical community needs to inform itself quickly so that it can b e c o m e a responsible part of the solution, not the problem?--RGB The Proletarianization of M e d i c i n e ?

B0denhv/merT, GrumbachK The recar~wuration of US medicine. JAM& 1995;274:85-90. is very little doubt that the W orld of medicine was a different and simpler place 2 or 3 decades ago than it is today. Whether these many changes have been for good or ill is a separate question; probably, it is some of both. As medical practice evolves in the face of economic, social, political, and organizational constraints, the relationships among payers, consumers, insurers, suppliers, and providers have been fundamentally (and perhaps permanently) altered. Bodenheimer and Grumbach delineate dominant trends that have transformed (or are transforming) medical practice. Chief among these trends is selective contracting where employers and insurers channel consumers (patients) into "one or a few managed care plans with which they have contracts." This reduces consumer choice

and also coerces providers into affiliating with the favored managed care plans (bad), but at the same time, payers "are amassing the power to discipline providers whose costs are too high" (good). A second dominant trend, directly related to the first, is that true price competition has been brought into the health care sector for the first time. Sick people (health care consumers) are rarely in a position to shop for the best price, but HMOs and large managed care plans certainly c a n - - a n d do. Price competition should theoretically increase the quality of care and lower costs (good), but the result will also be to drive marginal, inefficient, and costly providers out of business (bad). The creation of integrated health networks (in essence, vertically integrated super-HMOs that contract for services with physicians, hospitals~ pharmacies, nursing homes, home health care agencies, etc.) and the emergence of large physician groups have also transformed medical practice. One principal effect has been to make doctors look more like salaried employees or wage laborers than free professionals; thus, "proletarianization." But in the new environment, the apparent alternative is no patients, no practice, and no income. "Under the new rules-by which payers pick which insurers and providers will care for their patients big will spell success and small wi]l mean ruin" (p. 88). The dominance of the insurance companies and the growth of forprofit health care corporations are the final dominant trends, both also working to reduce the autonomy, power, and ultimately the incomes of doctors. In an earlier (although not necessarily a happier) era, doctors did pretty much whatever they thought their patients needed to have done and the insurance companies simply ponied up; today, the insurers call many or most of the shots (which tests to run, which procedures to follow, how many days to be spent in the hospital, even the hospitals and doctors to which patients may be referred). The rise of entrepreneurialism in medicine raises inevitable con-

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cerns about how trade-offs between patient welfare and the bottom line will be managed. In the end, the new conflicts in medical practice involve a simple, age-old question: Who gets how much money? "The reconfiguration of US medicine i s . . . a revolution in which the payers and insurers have turned the tables on the formerly powerful providers" (p. 90). That the providers find reason to object to their new and much-reduced role goes without saying. The real question, as yet unanswered, concerns the effect of these trends on the cost and quality of medical c a r e . ~ W G u i d e l i n e s for L i t i g a t i o n : Part I

Hyams AL, Brandenburg JA Lipsitz SR, et aL Practice guidelines and malpractice litigatiora"a two-way street. Ann Intern Med. 1995"122:450-455. guidelines are "systemp ~ractice atically defined statements to assist practitioner and patient decisions about appropriate health care for specific clinical circumstances." Numerous specialty societies and physician organizations advocate the use of guidelines as a means of improving the quality of care. As a result, there are approximately 1,400 sets of physician guidelines available. The leading sources of guidelines are the American College of Obstetricians and Gynecology (ACOG), hospital procedure and protocols, the Joint Commission for Accreditation of Healthcare Organizations, and the American Medical Association. Because guidelines indicate a standard of care, Hyams et al evaluated how guidelines are used in malpractice litigation and whether there is merit to the argument, by proponents of health care reform, that the use of guidelines can reduce litigation by encouraging compliance with specific standards of care. The authors reviewed 259 litigation fries at 2 professional liability insurance companies and conducted surveys with personal in-

POUCY WATCH

jury attorneys, which ultimately produced 578 responses. Even though the authors recognized that the insurance cases and attorney surveys they examined were not necessarily representative, many of their findings are worth mentioning. Guidelines were used twice as much for inculpatory purposes (where failure to comply with the guideline might be evidence of negligence) as compared to exculpatory purposes (compliance with a guideline that articulates a standard of care provides a defense to a medical malpractice case). Nearly 25% of the attorneys reported that a guideline influenced their decision to settle a case or had influenced the trier of fact in a recent case. Equally interesting was that guidelines did have an influence on plaintiffs' attorneys about which cases to litigate. Thus, guidelines may reduce the number of inappropriate lawsuits or lead to a quicker resolution of such suits. Nevertheless, one major financial disadvantage to the use of guidelines is that they increase the need for experts, which will further escalate the cost of litigation. Attorney's surveys indicated that the use of guidelines in malpractice litigation is increasing. Guidelines created by the ACOG were most frequently used. The authors believed that when guidelines are simple and clearly defined, compliance is more likely to be higher; however, when the standards define only part of a complicated care process, such as with Ob/Gyn care, compliance may be more difficult and the guidelines may be used to prove negligence. Other factors may be associated with an increased use of guidelines in litigation. The longer the physician-patient relationship, the more likely the claim would involve practice guidelines. Attorneys w h o s e case load was more than 50% malpractice had a higher tendency to use practice guidelines. Claims involving nonteaching or small hospitals may be associated with an increased frequency of

centives to build primary care teaching capacity, especially in underserved rural and inner-city communities; (3) establishing medical student and resident loans and scholarships to influence primary care specialty choice and encourage practice in shortage areas; (4) enhancing the practice environment for generalist physicians by using recruitment and placement services, income subsidies, income tax credits, and increased Medicaid reimbursement; and (5) reducing administrative and legal barriers with discounts, subsidies and indemnification. Unfortunately, a common problem noted was that few bills specified measurable goals or outcomes or provided a mechanism to evaluate the impact of the initiatives.--BC

guideline use because, the authors explained, such hospitals are more likely to produce injuries in which the care provided failed to meet a widely followed practice standard. The development of specific guidelines may improve the quality of patient care, but physicians should understand that more specific guidelines could have positive and negative legal consequences. Guidelines may benefit physicians and hospitals because by providing standards and information about the quality of care to be provided, only suits with merit will have a chance to succeed and those without merit will either not be brought or will be dropped early in litigation. On the other hand, ff physicians fail to comply with these guidelines, such noncompliance may be used as evidence of negligence. Because of this potential chining effect, it is not surprising that some states, such as Minnesota, permit physicians to use guidelines for exculpatory purposes, but will not permit plaintiffs to use them for inculpatory purposes.--BC

Washingto~ DC..UnitedStates General Accounting O2~e's Health, Education, and Human ServicesDivisio~ 1995.

Guidelines for Litigation: P a r t II

n their zeal to reduce the federal budget, including outlays for Ihealth services, the Republican-

Rivo ML, Henderson~ T~, Jackson DM. State legislativestrategies to improve the supply and distribution ofgeneralist physician~ 1985to 1992. AmJ Public Health.1995;85:405-40Z

are increasingly concerned with improving the supSply tates and geographic distribution of generalist physicians as part of their health care reform agendas. The article by Rivo et al examines the degree of state involvement in influencing the supply and distribution of generalist physicians. Since 1985, 47 states enacted 238 laws to improve the supply and distribution of such physicians. The authors found that state legislative involvement varies widely. Nevertheless, states typically implement one or more of the following strategies: (1) establishing planning and oversight roles for the state government; (2) creating in-

W i t h t h e D e c l i n e of D a t a , GAO to t h e R e s c u e Reportsto the Congresson Health Issues.

controlled Congress is also reducing the nation's capacity to carry out the analytical work necessary to keep track of the impact of the cuts they hope to impose. The Congressional Office of Technology Assessment has already been discontinued. Health Services Research will take a major hit with the likely demise of the Department of Health and Human Service's (DHHS's) Agency for Health Care Policy and Research. Without grant money, academia can't conduct its studies, and its advice is not as definitive or defensible. Where, then, will members of Congress turn to come up with all those great health policy innovations that will rationalize and reform the system? One visible source will be the most influential special interests, seen as the American Medical Association (AMA), American Hospital Asso-

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ciation (AHA), American Associa- cald and Medicare reform debate tion of Retired Persons (AARP), points. Readers wishing to follow this and American Association of Medical Colleges (AAMC). They very important source on what's will not be shy, malm~g their happening or likely to happen pitches as usual, provided Con- when Congress gets serious gress doesn't carry through with about reform may order (first its threat to muzzle them. (At this copy of each report free) by mail writing, this initiative may be off from U.S. General Accounting Ofthe table, but it will resurface.) rice, P.O. Box 6015, GaithersReferring to these organizations burg, MD 20884-6015, or by fax at as special interest is not a mis- 301-2584066. Information on acnomer, name the issue and their cessing reports on the Internet positions and biases are usually may be obtained by an E-mail predictable. The same can be said message with "info" in the body about the Washington-based think to [email protected] tanks, although their analytical skJll.q usually exceed those of the trade associations. And of course, D o m e s t i c V i o l e n c e a n d t h e one of the heftiest special inter- E m e r g e n c y D e p a r t m e n t ests is the federal executive Abbott J, Johnson R~Koziol-McLain J, branch's health bureaucracy. SR. Dmns~tic violence against In this climate of transparently ~ t e i n women., incidence and ~ e in an biased information inputs, it is most fortunate that another emergency department populatio~ JAM& agency of Congress itself, the Gen- 1995;273:1763-1767. eral Accounting Office's Health, Education, and Human Services at proportion of women Division, is still alive, still indeeking care in emergency pendent Although not widely rec- deparhuents (ED) are in the ED ognized as a major player by those because of domestic violence? outside Congress, it is one. Its re- Studies investigating this question sponses to requests from mem- are plagued by inconsistent definbers, usually chairs of committees itions, sampling and measurement or subcommittees, are remarkable bias, and related methodological in their clarity and brevity. infirmities; the most commonly Their output is also remarkable: cited estimate between a quarter in its 5-year (1990 to 1994) sum- and a third--is, from a strictly mary are listed about 500 reports, methodological point of view, litranging from a few--about 11 on tle better than a shot in the dark, malpractice to morc =ome 32 on but regularly recited as a hard fact. long-term care to many--about More than a little of the research 125---on Medicare and Medicaid. on this topic has been undertaken It is easy to discern what the mem- by persons seeking more to perbers are thinking about the most, suade than inform. although their breadth of interests Abbott and associates have inis surprising, from queries about vestigated the issue in a careful whether the NIH's hydrazine sul- survey of adult women presentfate studies were flawed to the ing for care in 5 EDs in the portability of health insurance. Denver metropolitan area. A toIts most recent summary cover- tal of 883 eligible women preing the first 9 months of 1995 con- sented for care at the 5 study tains close to 100 reports, includ- sites over the study period; of ing about 39 on Medicare and these, 648 (or 73%) participated Medicaid where the specific top- in the study. Demographics of the ics of concern deal heavily with study population (about one haft managed care excessive pay- nonwhite, one haft with annual ments, antifraud technology, household incomes less than uninsured children, state flexibil- $10,000) suggest that it is broadly ity, and waivers. The GAO reports representative of inner-city femirror closely the major Medi- male ED users. N January1996 The AmericanJournalof Medicine• Volume100

Among study participants, 11.1% (roughly 1 in 9) cited a domestic violence incident as their reason for the ED visit---a substantial percentage by any reasonable standard, but lower than the most commonly cited estimate by a factor of 2 to 3. The tendency to present as a result of domestic violence was not related to age, prior suicide attempts, alcohol abuse, race, income, education, or pregnancy status. Acute incidence and lifetime prevalence are, of course, very different things. Among the 648 participants, more than half (54%) had been "threatened or physically injured by a husband or boyfriend at some time in their lives" (p. 1765). Concerning life-time prevalence, women with prior suicide attempts and those with positive screens for ethanol abuse were much more likely to have been victims of domestic violence than their opposite numbers. Younger women were also victimized at a higher rate. On the other hand, there was no association between lifetime prevalence of domestic violence and factors such as ethnicity, education, income, pregnancy status, or presence of a firearm in the home. Perhaps more troubling than either the incidence or prevalence of domestic violence is the infrequency with which ED physicians and caregivers identify domestic violence as the source of a woman's presenting health problems. Of the 47 women in this study who were in the ED because of an acute domestic violence episode, only 6 reported volunteering information or being asked about domestic violence while there. ED medical personnel need to be aware that domestic violence is an important threat to the physical and emotional well-being of women. Women who have been abused and beaten by men deserve more from their caregivers than attention to their acute injuries.--JDW Requests for reprints should be addressed to POLICYWATCH, Diabetes Building 485, 1808 7th Avenue South, University of Alabama at Birmingham, Birmingham, Alabama 35294-0012.