Proving once again that there’s nothing quite like a legislative threat to
grease the wheels of corporate altruism, HMO giant UnitedHealth Group
earlier this week announced that it would give physicians outright control
over all patient care decisions. With federal managed-care reform
legislation looming and the economic basis for micromanaging physicians
eroding, other HMOs may soon follow suit, observers say.
“Winston Churchill said, ‘In the long run, Americans will always do the
right thing — after exploring all other alternatives.’ That is so much
the case in the American health-care system,” says Princeton University
health-care economist Uwe Reinhardt.
“Eventually these people will realize that [the pre-authorization model]
buys them ill will and costs them too much money,” he added.
United’s announcement — which came conveniently one day after the start
of the federal government’s open-enrollment period, during which 8 million
government employees will be allowed to switch their health coverage –
has resulted in a deluge of uncritical press for the HMO giant, and has
set combatants on both sides of the managed-care debate into full spin
mode, molding the news to support their widely disparate positions.
“The market has been leading and is ahead of legislation,” says Karen
Ignagni, president of the American Association of Health Plans (AAHP), the managed-care industry’s most visible trade and lobbying group.
A recent AAHP member survey largely supports Reinhardt’s predictions about the decline of pre-authorization, Ignagni adds.
While “it’s not going to be a one-size-fits-all” approach, “a number of
plans are going to reduce their procedure-by-procedure” involvement with
physician decision-making, Ignagni says, citing preliminary findings of
The survey, which Ignagni says was initiated long before United’s
announcement, polled a number of HMOs on the subject of pre-authorization.
Full results of the survey will be released in the next few months.
Advocates of managed-care reform have a different take on the United
“The other side has given up tremendous ground and we are winning,” says John Stone, a staffer for Rep. Charlie Norwood, R-Ga. “The other side would
say: ‘See, the managed-care industry is coming around through free market
But, Stone warns, “as soon as we announce that the conference report is
dead, [United] can turn around and reverse [its policy].”
Norwood was the principal author of the Norwood-Dingell “Patients’ Bill of
Rights” legislation that passed the House of Representatives 275-151 last
month. That bill is set to go to conference with a more lenient Senate
The passage of the Norwood-Dingell bill — which, among other things,
would give patients the right to sue managed-care companies that deny them
access to care — played a “very large role” in United’s decision, Stone
“Because of their decision, United, under the Norwood-Dingell bill, would
remain entirely shielded from all litigation,” Stone says.
The ironic thing in all of this is that United and other health plans may
actually save money by scrapping their controversial pre-authorization
measures, Reinhardt says. “If you supervise every doctor’s [decisions] but
turn down only 1 percent of their proposed treatments, then obviously you
are losing money.”
Ignagni confirms that the average HMO approves 97 percent of all physician
treatment recommendations. At the same time, managed-care companies
maintain huge staffs to evaluate those recommendations.
“They [United] have seen in their records [that they were spending] $100
million a year to deny $20 million a year worth of coverage,” Stone
Far less expensive than pre-authorization is the “profiling” method that
is being adopted by United, Reinhardt says. Under a profiling approach, a
health plan gives physicians more or less free rein to make care
decisions and then examines those decisions at intervals to identify
physicians who don’t hold to accepted care practices.
“If a physician … winds up being a very heavy prescriber of an expensive
antibiotic or orders a lot of MRIs, then that physician will be taken
aside” and spoken with, Reinhardt says. “It’s much cheaper to do and just
United representatives could not be reached for comment.