Capitation and Ratting on Patients

Posted on February 13, 2008
Filed Under Gekkonian Rationing, Primary Care in America |

Recently the Wall Street Journal Health Blog reported that California Blue Cross, in reaction to “getting slammed by everybody from Arnold Schwarzenegger to Hillary Clinton,” has agreed to stop sending letters asking doctors to help them find patients who failed to disclose medical conditions on their health insurance applications, so the Blues could cancel their policies.

When DrRich first read this story in the WSJ blog he thought that, surely, the Blues wouldn’t be so bald-faced as to explicitly ask doctors to “rat out patients,” (to quote Governor Schwarzenegger) so their insurance could be canceled. Surely, the Blues’ wouldn’t be so stupid as to expect doctors to comply with something like that. Surely, if the Blues really were trolling for cancelable policies, they would couch their request to doctors in such a way as to disguise their true aims. They’d be asking doctors, perhaps, to confirm their patients’ medical histories for the sake of completeness, similar to the kinds of requests doctors routinely get from insurance companies when their patients need special referrals or services.

But, no. The Blues really were explicitly asking doctors to identify patients who might be eligible for cancellation. Here, read the letter Blue Cross sent to doctors for yourself.

We can only be stunned by the utter brazenness of California Blue Cross. We can only be thankful that the very first time this execrable letter landed on the desk of a physician, that physician called them out, demanding a halt to this detestable practice, and going public with the travesty.

Indeed, once this became public the resultant outcry was immediate. As the LA Times reports:

Governor Schwarzenegger called the behavior “outrageous,” and “one more reason why it is so important to have comprehensive healthcare reform.”

Hillary Clinton complained that this is an “example of how insurance companies spend tens of billions of dollars a year figuring out how to avoid covering people with health insurance.”

Representing California physicians, who were also outraged, the president of the California Medical Association said, “This letter was part of Blue Cross’ pattern of unfairly canceling policies when people need coverage most. We’re relieved that Blue Cross is ending this particular tactic but continue to have serious concerns about this company’s practices looking forward.”

And as a result of this massive outcry, California Blue Cross quickly announced they were stopping the practice.

So thank goodness California physicians refused to go along with this reprehensible request.

Oh, wait.

According to Shannon Troughton, a spokeswoman for Blue Cross parent WellPoint Inc. (obviously taken aback at the public reaction), “the company had been sending as many as 1,000 letters a month for years and had received no complaints.”

What?

You mean to say that California doctors have received at least 24,000 copies of this letter (assuming that “years,” being plural, indicates only two - it’s simply too painful to imagine this could have been going on longer than that) without squalking? And apparently during all that time they’ve actually been complying with the request made by this letter? How is this even remotely possible?

The February 12 report from the LA Times provides the answer. These letters were sent out only to physicians who were participating in a capitated reimbursement model. That is, these doctors were receiving a fixed amount of money per patient per month, and the less money they spent taking care of those patients, the more money they got to keep. In other words, the Blues sent these letters only to doctors who might be as interested as Blue Cross, from a financial standpoint, in ridding the system of expensive patients. As in every good business model, the incentives of the parties (i.e., Blue Cross and the physicians) lined up perfectly. We don’t know for sure from publicly available information whether doctors actually complied with the requests made in these letters, but from Ms. Troughton’s comments it certainly sounds as if this happened.

One can almost hear Ms. Troughton’s plaintive tone. Everyone’s been happy with this. So what’s the problem? And we can even begin to sympathize with her - why is ALL the opprobrium being directed toward Blue Cross, when doctors also appear to have been active partners in this long-standing practice?

When you are part of what is widely considered an Evil Cabal (the insurance industry), then simply partnering in your evil schemes with what is widely considered the Mostly Innocent (doctors), does not assure you a smooth path should it all hit the fan. Indeed, when the jig is finally up, often the Mostly Innocent can feign being shocked, shocked, along with everyone else, and actually get away with it.

Doesn’t seem fair, one must acknowledge, but that’s the way it is.

It’s sort of like the healthcare system in general, which is explicitly designed not to be fair. Indeed, society (i.e., us) deputized insurance companies and the Feds to cut costs by whatever means they can get away with (i.e., to covertly ration healthcare), rather than according to some standard of equity. And the insurance companies and the Feds have vigorously responded by taking whatever measures they must to control the behavior of physicians. As a result, systems have been set up, and relationships established, to conduct these societal imperatives. In the process, the professionalism of doctors has been largely compromised, and physicians have been fully conditioned to respond to the needs of those who determine their professional viability. The doctor-patient relationship has been destroyed, and patients are left out in the cold, their supposed advocates’ interests lying elsewhere. This, simply speaking, intrinsically unfair as it is, is the paradigm we’ve all signed up for.

Every now and then, however, some aspect of this system we’ve invented suddenly becomes visible, like a bathroom light suddenly revealing cockroaches - and we are stunned by what we see. Our political leaders and our doctors always respond with suitable outrage (ignoring their own complicity in promoting and maintaining this system). A few changes are made, a few heads roll, a cockroach or two are crushed by a slipper, the light goes back off, and everything goes back to normal.

This particular problem - the Blue Cross letter to California doctors - is indeed being taken care of. And the California Blues and its capitated physicians will simply have to find other methods of getting rid of - or in some other way minimizing the expenditures on - people with expensive medical problems. Because that’s what our system compels them to do.

Comments

4 Responses to “Capitation and Ratting on Patients”

  1. Roy M. Poses MD on February 15th, 2008 3:47 pm

    I read the LA Times story before writing the Health Care Renewal post on this issue (see: http://hcrenewal.blogspot.com/2008/02/wellpoint-halts-attempts-to-have.html)
    It is really hard to tell how many letters were sent to whom before this week.

    To quote the LA Times story,
    “Physician groups and doctors who received the letter told The Times they never had seen anything like it. Also unfamiliar with such letters was Don Crane, executive director of the California Assn. of Physician Groups, which represents many of the large HMO-style medical groups.”

    “‘I have not heard any dialogue on this business of underwriting or ferreting out existing’ conditions, Crane said.”

    It may be that the letter was going out to some groups paid by capitation for a while, and then was sent to a larger population recently. On the other hand, it may be he said/ he said.

  2. Peggy on February 15th, 2008 6:00 pm

    society (i.e., us) deputized insurance companies and the Feds to cut costs by whatever means they can get away with (i.e., to covertly ration healthcare)

    This is true, but what the “deputized” (not insurance companies but our representatives in Congress) did was and do is to take campaign contributions from insurance companies in return for protecting their profits while giving them increasing control over doctors’ medical decisions in caring for their patients. In effect, putting petty, medically-ignorant bureaucrats increasingly in charge of treatment of patients. Then, there’s the AMA, which represents fewer and fewer doctors but that has it’s own agendas when lobbying Congress, and those agendas apparently seldom have much to do with best patient care or supporting doctors to do what they’ve trained to do.

  3. DrRich on February 15th, 2008 9:03 pm

    Dr. Poses,

    The two quotes that make my point were published in the LA Times (see above links), from Ms. Troughton, spokesperson for Wellpoint (the parent company of California Blue Cross):

    1) “Blue Cross sent the letters to medical groups that operate, in effect, as health maintenance organizations. Blue Cross pays such groups a set amount per patient each month. With a few exceptions, the groups are then responsible for arranging and providing patients’ medical care and take on a substantial piece of the risk.”

    2) The company “had been sending as many as 1,000 letters a month for years and had received no complaints.”

    I expect the excrement finally hit the fan when the Blues sent the letter (by some error, perhaps?) in the past week or so to some docs who were not taking on “a substantial piece of the risk,” i.e., to non-capitated docs. How many doctors actually received these letters without complaint is unclear, but those who did received thousands of them, and remained silent over a period of years.

    I find it less disturbing that insurance companies engage in reprehensible behavior (since covert rationing is intrinsically reprehensible, but after all, SOMEBODY’s got to do it, and we’ve given the job to the insurance companies), than that apparently some doctors have been complicit in one of the most underhanded schemes to date.

    DrRich

  4. DrRich on February 15th, 2008 9:06 pm

    Peggy,

    The big fight in which our politicians are engaged is over WHICH group of petty, medically-ignorant bureaucrats will have control over covertly rationing our healthcare, the bureaucrats running the insurance industry (Republicans’ choice), or the ones running government-controlled healthcare (Democrats’ choice). Frankly, I don’t think it matters that much which group ultimately gets to control doctors’ behavior. Either way, doctors and patients are completely screwed.

    DrRich

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