Hmo Regulation Essay, Research Paper

Mark Miller

ENG 101

December 2, 2000

HMO Regulation

Health Maintenance Organizations, or HMO’s, are a very important part of the American health care system. They involve elements such as beneficial health care programs like Medicare for seniors and Medicaid for the poor. HMO’s are sometimes referred to as managed care programs, which involves participation through clinics, physicians and insurance companies. Other essential parts of HMO’s include prescription drug plans, such as distribution and cost, and they are also important for information needed by emergency room residents in cases of emergencies.

Although HMO’s are not always seen as positive and helpful institutions, they are definitely important when it comes to medical care. Most of the criticism comes from consumers using these HMO’s and the politicians implementing their procedures. Some of the major problems involved are denial of treatment by physicians. This has to do with the people they see and what people will receive as far as treatment. According to the Associated Press, “Consumers who have been denied a treatment that the HMO says is not covered, or who inadvertently fail to follow HMO guidelines in seeking treatment and are therefore denied reimbursement, will continue to have little recourse.” [12] Basically not much is being solved or controlled.

HMO’s and managed care programs have been subjected to countless regulations and attempted reforms. HMO’s are a combination of doctors and insurance companies that are formed into one organization. They provide treatment to their members at a fixed cost and decide on treatment based on the severity of the patient’s ailments. HMO’s main concerns are to control costs and provide the best treatment possible to their consumers using their programs. The reasoning behind this is to keep patients healthy so no further treatment is needed. A lot of the time these organizations seek out people with less destructive ailments, in other words healthy people. They provide the best possible treatment to their patients to get more people enrolled and to maintain current premiums paid by consumers using their HMO’s. Most HMO’s are groups of doctors hired by insurance companies and are controlled or regulated by the hospitals who facilitate them. They also limit what kind of care they receive. Most pressure comes from the government and its ability to influence hospitals to deny treatment. These regulations are expensive and result in revision of private employee health care claims. This type of behavior results in increased spending by the public and more people become uninsured, approximately 50 to 60 million people go without insurance for at least one month each year.

Particular HMO’s face many additional problems due to attempted government control through regulations. One such institution is the United Health Group in New York. The United Health Group said, “that it returns decision-making power over patient care to physicians on issues like admitting health plan members to hospitals or providing other treatments.” [4] This kind of decision is made to eliminate frustrating features of most doctors’ work: like getting insurance companies to approve medical decisions that the doctors think they should make. This is a problem because most hospitals are influenced by government officials and make their decisions based on what government wants to do. California based HMO’s are constantly reevaluating their service, so they formed the California Managed Health Care Improvement Task Force. This organization worked on ways of making private, employer-based health care systems work more effectively. The head of (CMHCITF) said, “His experience resulted in a clearer understanding of why HMO’s are so widely disliked.” [10] Many people do not understand HMO’s and that is why there are constant questions of why they should be regulated. People need to consult their health care providers and get a better understanding of what is provided and what is not, so later there is no confusion of what type of care they should have received.

Another problem lies in selective-contracting. This is a process where hospitals deny treatment to patients because their HMO is not on the hospital’s provider list. The patients usually pay capitation fees and fee-for-services (FFS). These costs are at a fixed rate and patients are provided specific care at the best possible quality. “Selective contracting is common in managed care throughout the United States. It was created so that managed care could negotiate discount prices for physician, ancillary, and hospital services.” [1] These contracts provide people with quality service at fixed costs. It maintains stability and faith between patients and their HMO’s.

Control and implementation of forced regulations is another important issue. Many health care plans include gag clauses in their contracts with physicians. Gag clauses impose contractual limitations that interfere with physician-patient relationships. They include types of contract clauses that limit a physician’s ability to advise patients of all medical appropriate treatment options. They include extent to which these different types of clauses exist in current HMO contracts with physicians. They are likely to implicate contract language on physicians’ practice. In 1996, the American Medical Association’s Council on Ethical and Judicial Affairs stated that gag clauses were an unethical interference in the physician-patient relationship. Several states have taken action against these clauses in effort to strengthen consumer protections in managed care programs. The federal government has also taken action against gag clauses by notifying HMO’s and other health plans that they may restrict what physicians tell Medicare or Medicaid patients about treatment options.

Another problem exists in suing health care plans. The house recently passed a bill of rights for patients to sue their managed health plans and whether or not that should be expanded, but it still has some hurdles to overcome before it becomes law. The Balanced Budget Act of 1997 made significant changes to Medicare, since its inception in 1965, by adopting market-driven reforms in an effort to balance the federal budget.

Finally the last topic I would like to discuss is possible policy changes that might improve HMO’s and the services they provide. One thing that might improve HMO’s is to provide longer coverage for patients to secure faith between HMO’s and their patients. The selective-contracting system has some good ideas, but I think if you made some changes with who they provide service to and how they decide what coverage is provided needs to be more lenient. Another thing that might help restore quality in HMO’s is if they provided more resources to their patients. Legislation should be passed to benefit those who use HMO’s and Medicare plans because people who make monthly payments for service are usually punished by a raise in costs. Sometimes people pay premiums for 15 to 20 years and may never even use health care. This is unfair because over time costs go up monthly due to denied treatment and bad treatment, because HMO’s are forced to raise their costs to cover these mistakes. According to Chip Kahn, President of the HIAA has concerns, “that legislation also contains new, unnecessary mandates that would raise costs for Medicare beneficiaries’ confidence in the government’s commitment to the Medicare+Choice program.” [2] The big concern is whether or not government really understands the great difficulty in trying to control HMO’s and other health care programs without a nationalized program that everyone can receive fair treatment. Since there are some 6 million people using Medicare in HMO’s something needs to be done to restore these patients faith in the treatment they receive.

There are also many differences that need to be considered between HMO and Medigap coverage. The Medicare HMO market is less mature than the Medigap market, dating back to 1966. HMO benefit and premium levels exhibit greater geographic variation than Medigap policies, reflecting differences in county-based Medicare payment levels to HMO’s.” [6] So HMO’s need plenty of time to evolve before we can really make policy changes. HMO’s need to be understood by the American people in order for the government to implement policy changes and control services provided to those beneficiaries.

In conclusion, there still needs to be a lot of work done to health care in the United States. Other nations provide universal health care to their citizens, but this can cause dilemmas in balancing two often conflicting policy goals: providing the elderly with equitable access to needed pharmaceuticals while controlling the costs. Universal health care probably would not work in the U.S. because our nation is so diverse and our economy is so complex. The system we have now obviously has its problems, but it tends to work for the most part. HMO’s will still create a problem for people to receive absolute fairness in the treatment they receive, but our main concern should be to get people more informed about the treatment they could receive at the right price.

Bibliography

[1] Bodenheimer, Thomas. “Selective Chaos.” The People-To-People Health

Foundation, Inc. (July, 2000 – August, 2000): 5 pp. Online. Lexis-Nexis.

27 September 2000.

[2] Coorsh, Richard. “Medicare Legislation Recognizes Concerns About Underpayment,

Overregulation.” Health Insurance Association of America. October 3, 2000.

1 pp. Online. [http://www.hiaa.org/news/news-current/press-releases/release3

.html] 24 October 2000.

[3] Freudenheim, Milt and Steinhauer, Jennifer. “HMO’s Policy May Please Patients, but

Raise Costs.” New York Times. 10 November 1999, natl. ed.

[4] No Author. “California HMO’s To Allow Appeals.” Associated Press. December 3,

1998. Online. [http://www.policy.com/docs/ap/hmo120498.html] 24 September

2000.

Bibliography

[1] Bodenheimer, Thomas. “Selective Chaos.” The People-To-People Health

Foundation, Inc. (July, 2000 – August, 2000): 5 pp. Online. Lexis-Nexis.

27 September 2000.

[2] Coorsh, Richard. “Medicare Legislation Recognizes Concerns About Underpayment,

Overregulation.” Health Insurance Association of America. October 3, 2000.

1 pp. Online. [http://www.hiaa.org/news/news-current/press-releases/release3

.html] 24 October 2000.

[3] Freudenheim, Milt and Steinhauer, Jennifer. “HMO’s Policy May Please Patients, but

Raise Costs.” New York Times. 10 November 1999, natl. ed.

[4] No Author. “California HMO’s To Allow Appeals.” Associated Press. December 3,

1998. Online. [http://www.policy.com/docs/ap/hmo120498.html] 24 September

2000.