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Managed Health Care: Your Knowledge or Your Life (1996)

A growing number of workers, including many AFSCME members, now have only managed health care plans from which to choose, if they have any choice at all. Whether this is good or bad depends on the quality of the plans, how the plans are selected and what requirements are set out in the health plan's contract. What is certain is that the emergence of managed care has changed the nature of health benefit negotiations. With indemnity plans, unions did not need to concern themselves much with which carrier provided the insurance. What was important was what services were covered and how much employees paid out-of-pocket. Managed care has changed that. Managed care plans, which can also include mental health care benefits and prescription drug plans, must be evaluated carefully. The inclusion of unionized facilities in managed care networks can help ensure quality, as well as preserve union jobs.

Managed care plans differ from traditional indemnity plans in many ways. Traditional plans allow participants to see any physician they choose, and utilization of services generally is not restricted. There is little concern that a patient will not receive necessary treatment. In fact, many critics claim that traditional plans encourage unnecessary treatment.

In contrast, managed care plans limit choice of physicians and health care facilities and tightly control both the utilization of services and the amount charged for these services. There are two main methods of payment under managed care plans: capitated, a set fee per person/per month and discounted fee-for-service.

As the name implies, managed care plans manage health care services. This means that the plan itself sets guidelines to be followed by its participating medical providers to determine when given surgeries are needed, what tests are appropriate, how long a patient should remain in the hospital, and so on. These guidelines may prevent unnecessary surgeries and needless tests, which are all too common in American medicine. If care management programs are based on sound medicine, as compared to economic expediency, and operated by qualified medical personnel, the result can be better care at a lower cost. But if a push to cut costs takes precedence over clinical considerations, care management programs become a dangerous problem. With a bad managed care program, a test or procedure described as covered in the plan description can be, in fact, unavailable in certain situations. Most plans cover only medically necessary services and generally refuse to cover experimental treatments. The definition of these terms can be critical.

The three main types of managed care plans are Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and Point of Service (POS) plans.

  • The most common form of managed care, the HMO is a plan that provides comprehensive health care services, with an emphasis on preventive care, typically for a fixed (capitated) payment. HMOs are the most stringent form of managed care. Participants must select a primary care physician, who controls access to services. HMOs have been around for years and have a history of solid union support. These days, though, many managed care plans, particularly HMOs, are run by for-profit companies. These newer for-profits are underpricing older non-profit HMOs. Competition is fierce. All plans are constantly looking for ways to cut costs and increase their market share.
  • A PPO falls between an HMO and a traditional indemnity plan. Patients choose from a network of physicians and facilities who have agreed to discount the cost of services, but are paid for each service rendered. Financial incentives (lower deductibles and co-payments) encourage participants to use in-network providers. Some plans do not cover out-of-network care at all.
  • A POS plan is one that includes some type of managed care option, but allows participants to go outside of the managed care network by paying more. As in an HMO, participants select a primary care provider from the panel of participating doctors, who directs all care received.

A new type of managed care plan is the Physician Hospital Organization or PHO. A PHO is a plan put together by a group of physicians who wish to exclude the "middleman" (the insurance company). One danger of PHO plans is that physicians often are not adequately educated about risk-bearing. If employees are not held harmless for medical bills and the plan gets into trouble financially, employees could be liable for bills that the plan should have covered.

What should the union look for in a managed care plan?


The main issues of concern are the quality of care, access to care and consumer protections.

Quality of Care


There are questions the union can ask about a managed care plan, whether it be a HMO, PPO or hybrid-type plan, to determine the quality of care available, whether care will be accessible when it is needed, and whether patients will be fully informed and able to challenge decisions made about their care.

Quality of care can be measured by the quality of doctors and facilities in the network, staffing levels and staffing mix, preventive services and outcome measures, patient satisfaction and care management standards.

Selection of Providers


In selecting providers or evaluating those selected by the plan, questions should be asked concerning what type of providers are evaluated, what credentials are required of direct care staff, who reviews the credentials, and how often recredentialling takes place. The union will also want to know whether physicians have been disciplined by the state licensing board and, if so, for what reason.

Staffing Levels


Plans covering our members should be adequately staffed. A higher ratio of doctors per patient will mean easier access to care and more time to spend with patients. Ask about the ratio of primary care doctors to patients, the ratio of primary care doctors to specialists, and the ratio of management to staff. Compare these ratios among plans. Review the ratios of registered nurses to patients and look at the skill mix (mix of RNs, LPNs and unlicensed nursing staff) in network facilities.

Worker Protections


When comparing managed care plans, one indicator of quality to be considered is the health and safety protections provided to the plan's employees. For example, if an HMO's workers are protected from toxic exposures, violent assaults and infectious agents, then it is most likely that patients at that HMO are also protected. Conversely, if infection control procedures are inadequate, a patient could acquire a disease while being treated. Ask about measures the plan takes to prevent transmission of bloodborne, airborne and dermal disease and what type of hazard communication programs and exposure control plans are in place at plan facilities. Is there a joint labor/management health and safety committee and a violence prevention policy? Find out whether workers in the provider network are unionized and, if not, try to find out whether or not management discourages union organizing efforts. A plan that is actively anti-union should not get our business.

Look at whether the plan contracts out for certain services. If it does, ask for a description of services contracted out and an explanation of how the plan accounts for the quality of those services. Also, the plan should provide information concerning the use of temporary employees.

Preventive Services/Outcomes


One advantage of managed care plans is that they typically provide more preventive services than traditional plans. Ask about what preventive services the plan covers and the percentage of enrollees receiving these services. Look at how the plan measures quality and the outcomes of treatment for serious illness and injury. While there are currently no universally accepted standards for measuring the outcomes of treatment for serious illness or injury, quality plans should be working to collect and use their own data. Ask that plans report the results of any clinical outcome measurements and any changes they have instituted as a result of such reviews.

Patient Satisfaction


Another way of assessing the quality of a plan is to survey current participants and those leaving the plan. Most plans conduct their own satisfaction surveys. Because such surveys are not standardized and may not be entirely objective, their value is limited. In some jurisdictions, the union has negotiated for joint labor/management committees that develop satisfaction surveys. In order to be considered, plans are required to participate in the survey.

How many people remain with a plan or leave it can be the best indicator of satisfaction. Ask what percentage of enrollees left the plan last year or during open enrollment. If the number leaving is high, it is important to find out why.

Managed care plans are generally very willing to provide preventive care and to treat routine illnesses, but may be less willing to provide more expensive care. Patients who are unhappy with a plan are frequently those who have suffered a serious illness or injury and feel that they have been treated inadequately or denied medically necessary care. Surveys should include questions about serious illness or injury.

Finally, a good plan should educate enrollees about how to use the network in a way that minimizes confusion. For example, plan members should be able to call one telephone number and access all areas of the plan's administrative services.

Practice Protocols


Plans devise practice protocols for everything from when given surgeries are medically appropriate and how long a patient should stay in the hospital to whether someone can be treated in an emergency room. The union should learn what the protocols are, how they are established, and how actual utilization and denial of care compares with other plans.

Many guidelines are geared to patients who do not experience problems or complications beyond those typically expected for their particular condition. Medical reviewers should be permitted some flexibility in their decisions. Preferably, reviewers should only be able to approve care; denials should be referred to a physician for a decision.

Access to Care


A sufficient number of physicians to service the insured population in each geographic area is key to adequate access. Medical facilities, such as hospitals, outpatient treatment centers and specialty treatment centers, must be conveniently located. Access also depends on hours of operation and the accommodation of members with special needs.

If hours of operation or waiting times for appointments are unreasonable, then the plan is not adequately accessible. Review the plan's standards for telephone response time, the average waiting time for an appointment and the wait once the member arrives for a scheduled appointment.

Out-of-Network Care


There are situations where plan members must obtain medical care outside of the plan's network. Although some states prohibit HMOs from covering out-of-network care, except in emergencies, other managed care plans allow out-of-network care for a higher fee. Plans which allow out-of-network care may have higher premiums.

Most managed care plans require that members obtain a referral to see a specialist. Such requirements can be unreasonable for routine care, such as visits to an obstetrician/gynecologist. The plan should allow at least two OB/GYN visits per year without a referral and unlimited visits in the case of pregnancy. If the plan covers chiropractic or other specialty care, a specified number of visits should be covered without referral.

Transitional Issues


Transition to a new plan raises several issues. The plan should allow employees who are undergoing treatment to remain under their current physician's care until that particular treatment has been completed. For employees with long-standing doctor/patient relationships, the plan might phase out treatment with the current doctor gradually.

One of the biggest complaints about managed care plans is the disruption caused when a doctor leaves the plan. To lessen the impact of turnover, a plan should allow patients to complete any current treatments with that doctor, then assist them in locating a new doctor. Also, plans may drop a hospital mid-year. In this situation, current patients should be permitted to complete their period of hospitalization and accommodations should be made for those who are not located near remaining hospitals.

Special Needs


AFSCME's membership is diverse and plans covering our members should accommodate that diversity. Ask about the percent of physicians and other medical staff that speak a language other than English and how the plan accommodates those with disabilities. Ask for lists and locations of specialized facilities, including exclusive networks or centers of excellence which provide care for rare or specific illnesses.

Safety net hospitals--those with ultimate responsibility for caring for the uninsured--are having trouble surviving in today's health care marketplace. Those facilities tend to be in the public sector and are more heavily unionized than other hospitals. Other facilities may scrimp on charity care. Including safety net hospitals in managed care networks will guarantee that the uninsured can still get care and will help the facilities survive.

Emergency Care


Most plans limit or deny payment for visits to an emergency room for illness or injury not considered urgent or life-threatening. Plans have developed several ways of handling emergencies. Some large plans provide emergency services around the clock at their own clinics and hospitals. Some plans have a telephone call-in service with doctors or nurses who advise patients as to whether their condition is an emergency. Some look at the patient's symptoms, rather than the diagnosis, to determine whether the patient could have perceived the situation to be urgent or life-threatening. The definition of emergency that a plan uses often determines whether care is covered by the plan.

Consumer Protections


The methods used to compensate managed care providers may encourage them to provide less, rather than more, care to plan participants. Public disclosure of financial arrangements with doctors, as well as information on utilization review standards and decisions, grievance or appeals procedures, and limitations of coverage, are extremely important. Consumer oversight boards, including health care workers and union representatives, can be a vital part of protecting patients' rights.

Currently, about 60 percent of managed care plans pay physicians on a capitation basis. Some pay a bonus to those who keep costs below a certain level, or apply penalties to those who exceed specified costs. Many plans restrict physicians from disclosing incentives to limit patient care. Try to find out how physicians are paid.

Grievance Procedure


In a managed care environment, where providers face incentives to provide less care rather than more, it is important that the plan include a fair grievance and/or appeals procedure that is clearly communicated to enrollees. Look at statistics on the number of complaints and how they were resolved, including average time for resolutions. Consider whether the plan provides for review by an impartial outside arbitrator with medical training and whether the arbitrator's decision is advisory or binding.

For more information or assistance in negotiating managed care plans and/or for a copy of Managed Care: What You Don't Know Can Hurt You , contact the AFSCME Department of Research and Collective Bargaining Services at 202/429-1215.

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