ABLEnews Extra

                    "The Downward Spiral"

         "One person's overutilization is another
         person's necessity," Laura Mitchell
         perceptively observes in her analysis
         of the dangers "managed care" poses for
         persons with disabilities. While we believe
         it is necessary to distinguish theory
         from practice in such matters as "case
         management" and therefore question the
         author's distinct demarcation between "case
         management" and its close kin "managed care,"
         we commend the salutary warning sounded by MS-CAN.

         [The following file may be freq'd as CBE9204.*
         from 1:275/14; and other BBSs that carry the
         ABLEFiles Distribution Network (AFDN) and ftp'd
         from ftp.icdi.wvu.edu on the Internet. Please
         allow a few days for processing.]

"Managed Care; Dangers for PERSONS with Disabilities" 4/92
Laura R. Mitchell, Multiple Sclerosis California Action Network (MS-CAN)

"Managed Care" as typically practiced in Health Maintenance
Organizations (HMO's) 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 system (sometimes called "managed
competition") that is designed to make use of the incentives of the
market economy to hold down the costs of providing health care.  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.

-- 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 a part of a managed-care system.

 -- 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 creates a conflict of
    interest for providers between giving the best care and maximizing
    their incomes.

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 means 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 the providers financial interest to
provide more-- and/or 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/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 a 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 YEARS'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 service.
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 "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
non-disabled policy makers' judgement of "quality of LIFE," people
with disabilities may be particularly at risk: Too many non-disabled
people still react to disability based on the 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 non-disabled 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
in 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 system (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
system can be very limited.  For example, one major HMO that contracts
with Medicare on 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
neurology, surgery, obstectricts/gynecology, opthamology, 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 incentive 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
thought this relationship is often critically important.

Denial of covered benefits/delays to 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 HMO's 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 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 the patient
     needs and to advocate for them on the patients behalf. Thus,
     important services may be denied, and/or inappropriate treatments
     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 individual 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.

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.  (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
 19955 BLYTH ST
 CANOGA PARK, CA 91306
 (818) 882-6462 or
 (818) 709-8390 Fax
 (APRIL, 1992)

[with a tip of our ABLEnew's Hat to Tom Bengaff at the DEN]

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