HMO : A Health Menace?

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What is HMO?

HMO stands for Health Maintenance Organization, which is a managed healthcare delivery system, now in full gear in the United States. In the traditional patient-doctor arrangement that all of us are familiar with and have been accustomed to, and which is still the predominant existing force in Philippine healthcare arena, the patient freely chooses the physician he/she wants to consult. In the HMO system, the patient can only see the physicians who are members of the HMO. In some HMOs, the patient cannot even see a specialist directly. He/she has to be referred by the HMO family doctor to a specialist who also belongs to the same HMO. The patient's freedom of choice is sacrificed. In many cases, even the quality of healthcare suffers.

What is Managed Care?

Managed care or managed healthcare is the umbrella system under which HMO is one. The others are PPO (Preferred Providers Organization), PPP (Preferred Physician Providers), IPA (Independent Practice Association), etc. The main feature of the system is the introduction of a third player in the healthcare delivery. Instead of having only two participants, the patient and his physician, a third party is involved, a business company that serves as a "broker" or middleman, who manages the healthcare delivery. As a "broker" the managed care company takes a cut---a big chunk---of the healthcare dollar as its "fee" for managing the system.

How is this done?

The Managed Care companies, many of them big insurance firms, with their officials and administrative staff, most of whom are not physicians, contract with businesses (factories, stores, banks, government offices, schools, etc) and sells them medical/hospitalization insurance (at a discount) for their employees. Because the premium is discounted, these business companies prefer Managed Care contracts. The physicians, who belong to this managed care group, like HMO, PPO, etc, will be assigned by the Managed Care company to take care of the medical needs of these employees. In order to belong to these HMOs, the physicians have to agree to accept a substantial cut in their reimbursements, often by about 50%, and follow stringent rules in providing medical care to HMO patients. Many of these rules hamper, even prevent, good, efficient and personalized patient care and medical service.

Who pays for the health insurance premium?

The business employers pay the managed care company most of the health insurance premium as a part of their employee benefits, but in many cases, a portion is paid by the employee and/or there could be a deductible amount in the coverage. If the deductible is, say $100, then the employee who seeks medical care will have to be responsible for, and pay, the first $100 of the entire medical or hospital bill. Some policies have co-payments, where the insured employee shares in the payment of the medical care. Most have added and costly premiums for catastrophic illnesses.

Why did Managed Care come into the picture?

Healthcare in the United States is, without doubt, the best in the world today. However, statistics from the past couple of decades have shown that healthcare delivery was costing the country more than one billion dollars a day, yes, a day. It became so untenable that "something" had to be done about it. The Clinton Administration has pushed for a version that was akin to a modified socialized medicine, which scared a lot of people and politicians, and rightfully so. While the Clintons failed in pushing through congress their healthcare reform bill, Managed Care in the country, starting from the West Coast, proliferated and predominated as the system "to achieve cost-containment without sacrificing quality" in the healthcare delivery in the United States.

How was this supposed to work?

The idea was to cut cost by various methods: requiring pre-certification before a patient is admitted to the hospital, using strict admission criteria; discouraging patients from going to emergency rooms or seeing specialists; mandating physicians to prescribe and use the cheaper generic medications; forcing physicians to use less expensive, and less, diagnostic tests; requiring physicians to discharge their hospital patients sooner, sometimes too soon; decreasing reimbursement to hospitals and physicians by 30 to 50%; refusing to cover and pay physicians and hospitals for certain medical care, illnesses or hospitalization that the company deems "not covered," etc. It also instituted dozens of "strict and somewhat punitive" rules, criteria, and policies for physicians and hospitals to follow in providing healthcare to patients, "if they want to participate in the HMO and be paid at all." Physicians who are not members will be referred patients at all.

Did this help the situation?

To a certain extent yes, but not in the overall scheme of things, especially in the area of quality medical care and patient satisfaction. Physicians became more cost-conscious and started to send hospital patients home earlier, and, as a rule, became more efficient and cost-effective, albeit under some "juries" from managed care firms. But most of savings in all these were not all passed on to the consumers and business firms paying the insurance premiums. A significant portion of the savings---hundreds of millions of dollars---went to the CEOs and Presidents of these HMOs and other managed care firms in the form of annual bonuses, a controversial subject written up in the Wall Street Journal a couple of years ago. Americans are now realizing the travesty of managed care and HMOs and how these entities have made access to good medical care most difficult for them. They are now demanding legislative reforms, a "Patients' Bill of Rights," etc. from their congressmen and senators.

Did managed care improve the quality of care?

No. As a matter of fact, the quality healthcare has suffered. Patients feel they have lost their freedom of choice of family physicians and specialists. The wait in the doctor's office is much longer, and the care much less personalized, since many HMO doctors are salaried, are assigned too many patients, and some could not care less about their stranger patients, since they get paid the same whether they see 20 or 40 patients anyway. More sophisticated tests (CT Scan, MRI, Heart Angiogram, etc.) are considered "too expensive" by HMOs, whose main concern appears to be their financial bottom line and not the quality of medical care. In subtle ways, they discourage the use of what they consider "too costly tests or medications," handicapping the physician in his service to his patients.

What is a Gatekeeper HMO?

In the Gatekeeper model of HMO, the primary care physician (the Gatekeeper) is paid an amount per patient assigned to him per month whether they see him or not. If no patient sees him, he still gets that prepaid amount. If there are more patient visits, say, each patient sees him 5 times that month, then he spends more time with each patient and works harder, and still gets paid the same. And, when a patient needs a specialist, the Gatekeeper (who guards the "gate" and controls patient traffic) needs to share the money he was prepaid to pay the specialist's fee. So, it is obvious why the referral to specialists are financially devastating to this HMO family physician. This is also why the quality of medical care suffers under this HMO system, since referral to the specialists is delayed, if not intentionally neglected, for the Gatekeeper himself to survive.

Has HMO invaded the Philippines yet?

Unfortunately, yes, but fortunately HMO in the Philippines is still in its budding stage. The traditional healthcare delivery system is still the major force in the country, and the people and our medical care are the better for it. Hopefully, the Filipinos, our political leaders, our businesses, hospitals and physicians can unite and prevent the growth and catastrophic onslaught of HMOs on the healthcare system in the Philippines. Managed Care has adversely affected medical care and healthcare delivery in the United States. The US Congress is now revisiting the HMO issues and rewriting the laws to protect the patients. Let that painful and inhumane national "experiment" in America be a warning for us Filipinos to unite and be vigilant to protect and preserve our most fundamental and inalienable right in healthcare: quality medical care and the freedom of choice. HMO, as it stands today, is more of a health menace organization and, if allowed to take root and flourish in the Philippines, will clearly be hazardous to the health and well-being of the country and its people.

©2003Raoul R. Diez, M.A.O.D.