An HMO Nightmare?

My first “career” out of college was in the health insurance industry. I worked for two prominent HMOs  in California over a span of eight years. I came to dislike it intensely for a variety of reasons, and so despite the many skills and lessons I learned, I was glad to leave the HMO world behind when my son was born.

However, occasionally that world fills my thoughts once again. A recent news story brought it all back: the odd, dysfunctional relationship between money and medicine, public perception and corporate processes.

A young woman died recently while waiting for a liver transplant. What makes this case unusual is that her family is pursuing manslaughter or murder charges against their health insurance company.

The insurer initially determined that there was not enough evidence to suggest that the transplant would be successful given the girl’s situation. Just hours before she was taken off life support and passed away, the insurer decided to grant an exception and cover the surgery. The family feels that the company waited until it was too late in order to save themselves from paying for the procedure.

I’ve read several quotes from the family and their attorney that use words like “bean counter,” meaning that they believe the only consideration the insurer made was a monetary one.

I can shed some light on what might have happened, because back when I was in the industry, I worked with the physicians and nurses who make these decisions. Essentially the process is that a team of physicians and nurses review the appeal, considering the patient’s medical history and insurance coverage, supporting documentation in medical publications and references, and the insurer’s internal policies (there are timeframes to be adhered to, information that must be submitted, etc.). The decision is made based on whether the consensus of medical opinion is that the procedure or medication would be effective and is within the bounds of the coverage the person has.

If the requested treatment is considered experimental, or the potential outcomes are so low that the treatment is not considered effective, then the appeal will normally be denied. In the case of this young woman, given the overall poor state of her health (she had multiple organ failure as a result of a complication from a bone marrow transplant given to treat leukemia, and was being kept in a coma), and the fact that the immunosuppressant drugs given after a transplant may hasten the development of tumors, the insurer evidently felt that a transplant was not a reasonable or effective treatment.

One wrinkle is that the physicians at the hospital stated that “patients in situations similar to [the young woman’s] who undergo transplants have a six-month survival rate of about 65 percent,” which they felt was sufficient to warrant her undergoing the transplant.

The thing to remember here is that the insurance company cannot tell the hospital what to do. The hospital could have gone ahead and done the transplant without the insurer’s approval. The insurer wouldn’t have paid for it, but hospitals quite often do complicated surgical procedures out of charity. Funny how no one thinks it’s immoral for the hospital to have kept the girl waiting for a transplant until they were assured of payment!

There are two separate things going on here. One is the medical situation, where at least one group of physicians (those at the hospital) felt the transplant was warranted, and another (at the insurer) did not.

The other is the financial situation. Now, I’m not saying that insurance companies don’t think about money. Of course they do–they’re businesses, often corporations with shareholders. But the intersection between the medical and the financial realms does not come into play at this point in the process. When someone requests an exception to the insurer’s rules like this, the only consideration is what is called “medical necessity.” I never once heard any talk of financial considerations during the appeal process while I was working in the field. And insurance companies pay astronomical amounts of money for transplants and other care every day. (Sometimes we call my son “our million-dollar baby,” because the total bills for his hospital stay at birth were somewhere near $1 million. The hospital alone billed our insurance for over $600,000. That doesn’t include the charges from the surgeons themselves, or the ambulance, or any of the myriad other providers. We paid $250 total out of pocket.)

The medical and financial realms come together long before, when the patient’s employer buys the insurance coverage in the first place.  The employer, when not otherwise bound by law (as in the memorable case of  Catholic employers in California being required to include coverage for birth control if they wanted to offer any pharmaceutical coverage at all), can pick and choose to some degree what kinds of things are covered, based on what things the insurer offers.

So depending on the financial clout of the employer, some people have incredible insurance coverage–everything under the sun, including acupuncture, chiropractic, and expensive fertility treatments, for very low cost– while other people only have basic coverage at a higher cost.

I don’t know why in this case the insurer decided at the last moment to relent. It may have at that point been a public relations consideration, given that there were protests outside the insurer’s headquarters. But I can say that no one I encountered in that industry took anyone’s death lightly. They’re not “bean counters” or insurance weasels, or any other epithet so easily thrown–they’re human beings.

And people seem to easily forget that the insurance company can never tell you what medical care you can have…they just don’t have to pay for it. If we don’t like the fact that financial considerations affect our medical care, then we need to figure out a different relationship between the two realms.

HMOs originally came into being to help reduce spiraling medical costs in the US. That worked for a while, and HMOs also revolutionized the area of preventive care, making routine testing and simple health screenings common and thus saving many lives. However it seems like we are now dissatisfied with the taint of corporate finances on our medical system.

That’s fine with me. Go ahead and change it. But don’t be so hypocritical as to criticize a business for trying to work both ends of the stick they’re given, the medical and the financial. (And don’t criticize me for the oddness of that metaphor–it’s late, and I’m tired!)

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10 Comments

Filed under Rants

10 responses to “An HMO Nightmare?

  1. Malyvacsiga

    I really like reading even-handed article like this. Thank you. Public hysteria so easily blinds most people to the truth under the surface…

  2. Hopewaits

    Interesting to say the least.

    How do the insurance companies determine what drugs they will pay for after the doctor has given you a certain perscription?

  3. Szilvi, thanks. I always feel a little funny defending health insurance companies, but it seems like people think insurance is a God-given right instead of a business transaction.

    Hopewaits, I don’t know as much about the decisions about prescriptions (that was handled by a completely different subsidiary when I was working at the HMO), but I would assume it’s similar to what I experienced: they look at the standards of care developed by a range of sources. Medicare is actually often the foundation, or minimum, that coverages are based on.

    And again, the doctor can give you any prescription he or she wants, and you can have the prescription filled anywhere you want. But your HMO might have specific rules about whether a drug is considered experimental, or not normally indicated for your condition, and so they might not cover the cost. And because HMOs want to save money both for their bottom line, and in some respects for the consumer, they often require generic equivalents, or an attempt to use a less expensive alternative drug, before they will approve a more expensive drug.

  4. Nana

    An HMO is supposed to be a Health Maintenance Organization and the original intent was to have a GP or Family Practice MD handle most routine medical care along with the OB-GYN and Pediatrician services allowed without the need to consult with a group or committee. There would be little or no co-pay for each visit to one of these primary care physicians and the premiums are very affordable. The only caveat being the choice of physicians was limited to those appearing on the HMO’s approved list. The list conained the names of those physicians who would perform routine services for a reduced cost. This was never a problem in large metropolitan areas where there has always been an abundance of highly qualified physicians willing to comply with this arrangement. A similar cost structure was in place at approved hospitals. But, in some areas of the country you would need to travel a considerable distance to reach an approved physician and halfway across the State to find an approved hospital.

    Now I will get to the nitty gritty of the great chasm in health care in the US. HMO medical insurance was not originally intended to cover catastrophic illness! At that point Medicare was supposed to step in and take over. Nice pipe dream, huh? At that time, asking a leviathan Federal Government bureaucracy to cooperate with private sector health care providers was equivalent to asking the Protestants and the Catholics in Ireland to kiss and make up. Too many obstacles existed.

    Eventually someone had the bright idea to have successful businesses take over the operations of HMO facilities and that is when the misconception about money vs medicine was first born. (please note the extremely clever juxtaposition of misconception and born)

    Now I’ll tell everyone a little game being played with those of us who have the creme de la creme of medical coverage, a PPO plan.
    Very high premiums with the luxury of selecting whichever in network ( meaning just about any)physicians we want.

    The hospitals and the doctors love us, absolutely love us! They have figured out exactly how much the insurer will pay for each procedure (usually 80% – 90% of the billable amount). So, using a little second grade math, the insurer receives an inflated bill which ensures the doctor/hospital will be paid the actual amount they expended.

    If you’re old enough to qualify for Medicare, it becomes the secondary insurer to your primary PPO insurer and picks up any left over costs. You end up spending zilch for the procedure.

    So the key is to work for a very large corporate entity ( the larger, the better because the greater the number of covered employees, the lower the premium; this is called spreading the risk and is verifiable by using an abacus and an actuarial table) for which the primary insurer will write an extremely attractive plan covering just about anything and get old enough to qualify for Medicare.

  5. People who are intent on dismantling European style medical care really need to read this! My mother (who’s worked as a nurse on both sides of the Atlantic) sees the lack of public care as the one great failing of the American system (and this is a woman who’s described Bush as a ‘nice’ man!)

    I also found it fascinating in the context of a book by Frank Furedi I’m reading called Culture of Fear Revisited. One of his argument is that no-one is able to accept that that things cannot be prevented, that risks cannot be managed, that it has to be someone’s fault. The flipside is the fear of everything, especially science and the purveyors of science. Medical insurance would seem to sit neatly on the convergence of every possible faultline in this set of discourses…

  6. Nana, the other thing about those inflated bills is that the balance that is unpaid by either the HMO or the patient’s copay is considered a “write-off amount,” meaning that the provider can write it off as a business loss on their taxes. Sounds like a whole ‘nother shell game to me! And yes, spreading the risk among a large pool of employees works just fine for state employees, mega-corporations, etc. But for the average-sized company and its employees, the choices are much more limited and/or expensive.

    URD: There certainly is a fear over here of “socialized” medicine. And there is some justification for that, as I’m sure you’re well aware of the problems with the NHS, for example. So it seems to me we might need a middle path between the pure market-driven US system and the socialized European model. What that is, I wish I knew!

    As for our culture of fear, victimization and litigation are surely another manifestation of it. There’s a whole other post I’ve had as a draft about the anthroposophical view of illness that addresses some of this…perhaps it’s time to dust it off.

  7. Eve

    Interesting post. It surprises me when people fail to understand that business is about money. I wonder what sort of a culture we’re building that doesn’t expect people to understand that?

    Interesting comments, too, by all.

  8. Eve, I think part of the problem is that we have given over the responsibility for our health to the “experts”–physicians, hospitals, the drugs themselves, etc. Therefore when the expert makes a mistake, fails to cure us, or is too expensive, we feel fearful and angry. And so we forget that HMOs are businesses, because they’re not paying for the care the experts want us to have, dammit! There’s a sense of shock that “those bean counters” are withholding the experts from us, and fear that we won’t get the care we need.

    I can speak from my experience that knowing how to ease my children’s illnesses and help them heal themselves is very empowering. This morning my son had a belly ache, quite painful evidently, and threw up. We calmly gave him chamomile tea, oxalis ointment on his belly, and a hot water bottle. Luckily, he felt better by lunchtime. Contrast that with someone who takes their child to the doctor, is told that there’s nothing much the doctor can do and that they should just have the child rest and drink fluids. That parent would probably be afraid of what might be wrong, and angry that the doctor didn’t have a magic pill to take the pain away.

    I’m certainly not against modern medicine. I just think it’s out of balance in many ways.

  9. Good info. and reading. I would definitely bookmark you to check for new updates.
    Thanks,
    Dean

  10. It sounds like the death panels that Sara Palin and the republicans were talking about. They were trying to scare people suggesting that these death panels would come into existance from Obama’s health care reform. This article shows that they already exist.

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