Related Resources • Part 1: Why the Health Care System Behaves Like That • Part 2: Managing Your Doctor • Part 4: Managing Your Own Health

By DrRich

There are as many kinds of health plans as there are trees. Nobody understands all of them. Indeed, health plans tend to be so complex that few people fully understand any of them - including, it seems, the people that run them.

Health plans aren't complex by design. No complex system - such as the federal government or the human body - is designed. They just evolve that way. (Aside to creationists: Yes, it is indeed possible that God designed the complex system known as the human body. But we sure don't think He designed any existent health plans.) So health plans aren't complex by design, but now that they have evolved that way, well, those who run them seem to like that just fine.

The complexity turns out to serve a purpose. If the plans are complex, then who's to say who deserves what, and under what circumstances? The complexity gives those who administer the plans maximum latitude.

Thus, nobody, not even DrRich, can teach you all the ins and outs of your health plan. After all, what's in one day is out the next. What we can do, however, is impart some general information - some dirty little secrets, if you will - that can help you understand any health plan you might have. Since many of the specifics regarding what's coming to you under your health plan are ultimately negotiable, all you really need to know is enough to help you decide when and how to negotiate.

Four Dirty Little Secrets

DLS # 1 - All health plans are businesses, and they need to make money.  Everyone understands that for-profit health plans need to make money, of course - that's why they exist in the first place. If they don't make a profit, their shareholders become quite angry, and highly-placed and highly-paid executives lose their jobs. What many have not grasped yet is that even not-for-profit health plans need to make money. The days when not-for-profits could garner sufficient funding from charitable contributions are long gone. Now, they have no choice but to depend on the bond market for their funding. And pleasing the bond market is very similar to pleasing the stock market; nonprofits that lose money are left for dead. For this very good reason, then, the behavior of for-profit and not-for-profit health plans has become, for all practical purposes, indistinguishable. They are businesses, and their bottom lines had better be in the black.

DLS # 2 - You can't make money taking care of sick people.  Sick people are extremely expensive, and the more sick people health plans must take care of, the less money they make. Indeed, while it appears that not even health plans have realized it yet, it is most likely impossible for health plan to turn a profit purely by operating their core business (i.e., by providing health care to their subscribers.) The heady profits turned by many HMOs during the mid-1990s came instead from acquiring community property for pennies on the dollar. Now that all the likely charitable organizations have been fully absorbed in most major cities, and HMOs are left with having to operate that core business for the money they make, most are in serious trouble. 

DLS # 3 - Patients aren't customers; they're cost centers.  Very few patients go out and buy their own health insurance. Most receive their health insurance through their employers, the government, or not at all. Thus, patients don't really have the power to shop around and choose among health plans (except within very strict limits), nor do they have any true power to walk away from the health plans presented to them. Their lack of the ability to choose a plan, and the ability to exit a plan, essentially destroys any claim they may have to the title "customer." Indeed, their economic position in the health care system is more akin to that of "commodity." (They are, in fact, called by the industry "covered lives," and are traded back and forth like pork bellies.) Thus, health plans see relatively little reason to afford patients the same respect that businesses traditionally afford their customers.

It's even worse than that, however. Not only are patients not customers, they're also the main obstacle (along with their doctors) standing between the health plan and the money it must make. Patients are merely a cost center. Customers may always be right, but patients aren't customers - they're merely a threat to the bottom line.

DLS # 4 - Encourage the healthy; discourage the sick.  While the health care system ostensibly exists for the sick, the health care system as controlled by today's health plans is actually geared up to please the healthy.  

If you're running an HMO, you want to encourage healthy young families to sign up for your HMO instead of Joe's HMO down the street (their only other choice). You will collect premiums for each member of this young family, and odds are, you will get to keep most of that money. You want to treat these young families very well, both so they will stay with you, and so they'll tell their (young) friends to join your HMO. You will treat the sorts of illnesses experienced by young families - conditions like appendicitis, strep throat, and childbirth - with great efficiency and a minimum of red tape. You will give them mammograms, and memberships to health clubs. And when you conduct your "patient satisfaction surveys" (an important tool used to convince employers that your HMO will make their employees happy) these enrollees - who are likely to constitute 85% of all your enrollees - will say they are "satisfied or very satisfied" with your services.

On the other hand, you want to discourage the elderly and the chronically ill. You don't mind paying to treat an illness once, as long as it's gone after that. What really gets your goat is having to pay for an illness that isn't ever going to go away. Why, you'll just keep paying and paying. There are many ways to discourage the chronically ill from joining your HMO, or from staying in it if they've already joined. *(DrRich describes these methodologies elsewhere.)* The easiest thing to do is simply let the red tape accumulate, and thus drain the will from the patients and their doctors, so they'll just stop pursuing more expensive treatment modalities out of sheer exhaustion. With tried and true management techniques, you can keep these malcontents to under 15% of your enrollees - and your patient satisfaction surveys won't be affected very much.

Now that you've got the general idea, let's turn to what you can do to try to survive such a health plan. The big difference between managing your doctor and managing your health plan is that appealing to any underlying sense of right and wrong, or of professional ethics, is utterly hopeless when it comes to health plans. You want your health care and they want to keep their money. Just keep that in mind - and ignore all those commercials they spend your premium dollars on, with the soft lights and soothing voices, protesting how much they truly care about you - and you'll be in the right frame of mind for what you must do.

The medical necessity scam

Getting what you need from your health plan can be tricky. By far the best way of doing so is to find a doctor who will do whatever is necessary to see that you are treated appropriately. But given the duress doctors are working under, it's not realistic to expect them to always take up your cause, however dedicated they might be. At least some of the time you will be on your own.

Most of the significant problems patients experience with health plans (other than, of course, the planned inconveniences and inefficiencies that discourage utilization) fall into the category of "refusal of a requested service." That is, the patient or the doctor requests a particular service, and the health plan denies the request, usually holding that the requested service is not "medically necessary." This is a particularly good scheme for health plans, because medical necessity is so often a subjective phenomenon.

While some medical services are clearly necessary (e.g., penicillin for strep throat), and others are clearly not necessary (e.g., penicillin for a viral infection such as a cold), in many instances whether a medical service is necessary or not is much less clear cut. There are many gray areas in medicine. A medical service may be wasted on one patient with a certain condition, and extremely useful for nother patient with the same condition. Experts will often disagree on the usefulness of a particular service, either for all patients or for one particular patient.

Health plans traffic in these gray areas of medical necessity. They commonly will make a blanket statement about the usefulness of a service, often after ferreting out an "expert" whose opinion they admire, when such a blanket statement is clearly unjustified. They'll deem any newer medical or surgical procedure to be "experimental" long after it has come into common clinical use, and without any defined criteria for declaring the procedure no longer experimental. They'll make a list of inappropriately simple rules, and give those rules to a functionary with little or no medical background to make determinations of medical necessity on a case-by-case basis. They'll persist in calling a particular service medically unnecessary long after they've been forced to reverse their decisions on that service many times. Usually they'll get away with it, too, since their appeals process has been rendered so tedious that doctors, and often patients, are very reluctant to embark on it.

The basic problem, of course, is that the people who must cut the check (and who get to keep the money for themselves if they can avoid cutting the check) are the same people who get to determine medical necessity. It's crazy, it's unfair, but it's the system we've chosen.

If your health plan has refused a medical service that you or your doctor have requested, you have a decision to make. Unless the refused service falls into the "clear cut" category (where the majority of medical experts would agree with the health plan's decision,) then you potentially stand a good chance of ultimately having that refusal reversed - but only if you're willing to go through a very tedious appeals process first.

Appealing a health plan's decision

If appealing a health plan's decision were easy, then everybody would be doing it. While DrRich can't prove it, and while the public relations director of any health plan would strenuously deny it, many plans behave as if the denial of medical services, coupled by a difficult appeals process, is simply a routine and effective cost-cutting measure. Health plans know that the average subscriber will be daunted by the appeals process - indeed, they count on that fact. And in fact, because appealing these decisions is so odious, you'll want to do it only when it's really important. You will want to choose your battles carefully.

You can think of the whole denial-appeal process as a game. Your move: you ask for a health care service. Their move: they deny it. Your move: if you choose to go no further, they win. If you choose to appeal, the game continues. The game may go back and forth through several more turns, until one of two things happens. Either you give up, or they give in. 

The dynamics of this game are quite interesting. You have a much better chance of winning if your doctor takes an active role in supporting your appeal. If the medical reasons for providing you with the service are good enough, eventually your doctor will be permitted to talk to one of the health plan's actual medical officers, and you will usually win the game at that point. 

(Of course, your doctor pays a price for giving you his assistance. The time he loses in the process is a piece of the price, since the appeals process is generally bogged down with time-consuming paperwork, and several telephone sessions. The larger price has to do with being labeled a troublemaker. Doctors who appeal too often are duly noted by the health plans, and are eventually culled from the herd.)

You can even win without your doctor's direct assistance, if you're persistent enough. It will take some work, though. You'll need to gather evidence that the medical service you're asking for is routinely used for conditions like yours, that medical experts recommend it, that other health plans pay for it, or even that your health plan has paid for it in other patients. You may need to hire an attorney. You may even need to threaten to go public.

One suspects that health plans use typical risk management strategies to manage appeals. They seem to stonewall to a certain point (knowing that most people drop out of the game after one or two "turns.") But they seem much more likely to give in if the subscriber persists beyond a certain point. This is especially true if the service being requested is not excessively expensive, and if granting it would not be particularly likely to open the floodgates to many similar requests. 

For this same reason, the threat of going public can occasionally be a good strategy, if less drastic means have failed. But the patient must realize that actually going public can backfire severely. Once the question enters the public arena, the health plan will have no choice but to fight to the bitter end - since if they grant the service now, they will have loudly and publicly set a new precedent, and will be expected to grant that same medical service to everybody else.  Also, such stories are now so commonplace that the news media is likely to pick it up only if you are a particularly appealing person or your story is particularly heart-wrenching or guilt-inducing.
 

Rationing by omission

Patients ought to be aware that not all denial of medical services is out in the open. One of the more common means of withholding services is "rationing by omission." That is, patients are simply not told of all the possible options available for managing their medical condition.  The ones that are left off are, almost invariably, the more expensive options - whether or not they are more effective.

Rationing by omission obviously requires the complicity of the patient's physician. The doctor has to agree not to spell out every alternative. Unfortunately, such complicity is much more common than most doctors like to think. In fact, the famous "gag clauses" that many HMOs have required their doctors to sign included language forbidding doctors to describe to their patients any treatments that are not offered by that HMO. To do so, it is held, would undermine the patient's confidence in the HMO - an act explicitly forbidden by the gag clause. *(See DrRich's discussion of gag clauses.)*
Avoiding rationing by omission is another reason it is vital for you to find a doctor who truly honors her primary commitment to the well-being of her patients. But to be sure you're not a victim of this sort of rationing, you'll need to arm yourself with as much knowledge of your medical condition as you possibly can.