Who Owns The Patient Anyway?

By Janice Castro

Dr. Don Shuwarger, a Houston obstetrician, used to work six days a week, seeing about 40 patients a day. But on Jan. 1 he lost 2,100 of his 3,000 regular patients when their employers, seven aerospace companies, joined managed-care networks. When he tried to follow most of his patients into the five plans, he was told they had enough obstetricians and did not need him. Of course, his former patients can continue seeing him if they pay higher deductibles, but very few are doing so. "It's almost enough to make a guy paranoid," he says. "The impression in the patients' minds is, 'Nobody wants him. What's wrong with him?' " So these days Dr. Shuwarger is having trouble ; making ends meet: he is living on his savings and may close down his practice. And then? He's thinking of looking for a job as a staff physician in a managed-care plan. If it will have him.

Just a few years ago, doctors like Shuwarger fought managed care mainly by ignoring its steady advance across the country. But now that 7 out of 10 insured patients are enrolled in managed-care plans, these independent practitioners have pulled a classic if-you-can't-fight -them-join-them maneuver -- only this one is turning fierce.

Faced with the prospect of being put out of business, old-fashioned fee-for- service doctors have mounted a campaign to secure their way into managed care and gain some control over it. In Texas, with support from the Texas Medical Association, doctors who were let into Aetna and Prudential managed- care networks and then dropped are suing them, arguing that they are being denied their "right" to serve their patients. In Virginia, doctors are suing a plan that fired them, citing an 11-year-old law called "any willing provider" that guarantees them the opportunity to continue serving their patients even after those patients join managed-care plans. In Massachusetts, doctors who have been accepted into a Blue Cross HMO are chafing under its rules: they are suing the Cambridge-headquartered network for cutting corners on care and endangering patients.

At the same time, through an intense lobbying campaign, the American Medical Association has succeeded in inserting into every health-reform bill produced so far provisions that would require plans to carefully consider applications from fee-for-service doctors like Shuwarger, would make it harder to fire them after they are admitted, and would give them a say in the way the plans are run. "It's really ironic," says Senator Bob Packwood. "For years the A.M.A. and the other medical societies would not even let HMO doctors join them. Now they are fighting to get into HMOs."

As the battle for a place in managed-care systems has grown, the doctors have been joined by chiropractors, pharmacists, optometrists, therapists and other health providers who fear being left out. These groups have also found a sympathetic ear in Washington, where they argue that patients need "safety valves" in managed care that would permit them to choose their own providers. The most radical attempt to accomplish this is the any-willing-provider clause contained in the bill passed by Sam Gibbons' House Ways and Means Committee last month. This bill would force health plans to hire any and all doctors who want to treat patients covered by the programs, so long as they meet such basic qualifications for employment as having state accreditation in their specialties and approval to practice at local hospitals. By doing so, the bill would make it illegal for existing health-care organizations, such as Kaiser Permanente, the largest nonprofit HMO (enrollment: 6.6 million people), to restrict their patients to a carefully chosen roster of physicians employed full time by the plan. Says Dr. David Lawrence, who heads Kaiser Permanente: "This is a massive Chrysler bailout for inefficient doctors. We don't take just any doctor. This strikes at the heart of what we've been doing for 50 years: trying to find the best doctors and figure out the best ways of helping patients."

The Ways and Means bill would also require managed-care systems to hire all kinds of nonphysicians as well, including chiropractors, podiatrists, optometrists, nurse practitioners and psychologists. Managed-care executives call this the "every-living-provider" rule and, not surprisingly, it came after dozens of professional groups descended on Capitol Hill to push hard for it. For instance, the chiropractors, aware that physicians are not always eager to send them patients in either the managed-care or fee-for-service systems, spent $2.8 million lobbying to get themselves included in the bill.

Similar campaigns have already scored successes outside Washington. Since 1983, eight states, from Wyoming to Virginia, have passed any-willing-provider laws that guarantee that doctors and hospitals can participate in any managed- care plans they choose. In 16 other states, similar laws throw open the door for pharmacists.

Some A.M.A. leaders made approving noises about such rules at first -- until they realized that the authority and dominance of doctors would be diluted as chiropractors and everyone else followed them into the plans. So now the A.M.A. is taking another tack. It is asking the Clinton Justice Department for special "antitrust" exemptions that would allow doctors simultaneously to maintain their practices as separate businesses while also banding together in order to bargain for patients with local health plans.

Under current law, negotiations among competing physicians are banned as price fixing, unless they agree as a group to provide whatever the patients need for a flat annual rate. In that case, they are acting like a managed-care group and thus must live under a limited overall budget. But the A.M.A. wants to free doctors from the budget constraints and allow them simply to set prices for various medical services. Concedes Kirk Johnson, the A.M.A.'s general counsel: "The fear, under present antitrust law, is that doctors could dictate the prices in a market and withhold their services from health plans that did not meet their demands. But we don't think that would happen."

The A.M.A. argues that fee-for-service doctors need special market protection because they do not have much experience with the economics of managed care and cannot work as inexpensively as established plans. "You can't expect fee-for-service doctors to put themselves at financial risk overnight," says Johnson. "It's very damned difficult to learn how to predict the costs of taking care of a group of patients."

Which is precisely why managed-care doctors are apoplectic about these moves. They argue that they, unlike fee-for-service physicians, have studied the art of offering good medicine at good prices by, among other things, focusing on preventive care. They also say that the new rules would virtually guarantee employment for many physicians, drive up health costs for everyone and thus undermine the economic structure of managed care. They offer at least two studies to make their case, both of which were funded by the managed-care industry: one was released in May by the Lewin-VHI health consulting firm and showed that managed care is 23% cheaper than the indemnity plans that cover fee-for-service physicians. Says Dr. Richard Merkin, whose Bakersfield Family Medical Center in Southern California treats more than 40,000 patients enrolled in several managed-care networks: "Most of our doctors are family physicians. They know they're never going to make a billion dollars. They don't care."

Another study, released two weeks ago by the Group Health Association of America, a lobbying group for managed-care plans, claimed that if HMOs were forced to take any doctor who wanted to participate, family premiums could rise by as much as 29%, from $4,476 to $5,760. Says Karen Ignagni, president of GHAA: "These proposals are designed to cripple competition from HMOs."

But the ferocity of the new battle is a measure of managed care's success. Membership in HMOs, for instance, has more than quadrupled since 1982, from 10.8 million people to 45.2 million, and is expected to reach 50 million by the end of this year. Other types of plans, including the big insurance-run networks, handle about 80 million other patients. At this rate, within a few years almost every American with private health coverage will be involved in a managed-care plan.

There is some evidence, too, that many Americans are not unhappy about the change. In a TIME/CNN survey conducted by Yankelovich Partners in May, 38% of those enrolled in managed-care plans said they were worried that their health plans might deny them medical treatment at some point in order to save money. Yet 86% of these managed-care patients said they would not want to give up the managed-care doctors who are treating them in the plans.

The doctors attacking managed care insist that they are only trying to protect the quality of medicine. Says Dr. James Todd, executive vice president of the A.M.A.: "Do you really want your doctor to have to call an 800 number at an insurance company somewhere when you are sick and take orders from someone he doesn't know and who may know nothing about medicine?" Other fee- for-service doctors echo his concern. In Houston, Dr. Robert Maidenberg says that he and 36 other physicians were dropped by Aetna's network because they cared too much about their patients. "Nobody ever said the best was the cheapest," he says. (Aetna's response is that the 37 doctors it dropped were not as skilled, productive or conveniently located as the 2,200 doctors it kept.)

For all the talk about good medicine, though, the current battle over access to patients is a sobering reminder that at bookkeeping time, patients are just a source of cash. In Texas the lawsuit brought by Dr. Maidenberg and four other doctors accuses Aetna of violating their "property rights" by taking away their patients. In Florida, when the Humana insurance plan sued Dr. Ira Jacobson because the Miami family physician quit and took 170 Humana patients with him, it demanded payment of $700 a head for its lost customers. A state appeals court ruled in December 1992 that Dr. Jacobson owed nothing; after all, said the court, Humana did not own the patients.

The prospect that Congress may provide something close to universal coverage is making the fight to secure patients even more intense. Even the public hospitals that have long served the poor and uninsured find that they must compete with managed-care plans. In New York State, about 275,000 Medicaid patients have joined HMOs during the past three years under a state program intended to save money by keeping them out of emergency rooms for toothaches and ear infections. In an effort to hold on to their patients, the public hospitals are waging marketing campaigns that include giving away hats and flashlights. In today's battle over patients, it has come down to this: hospitals seeking to build "brand awareness" among the poor.

With reporting by Sharon Epperson/New York, Edwin M. Reingold/Los Angeles, Karen Roebuck/Houston and Dick Thompson/Washington