Jury’s Verdict is a Loud and Clear Message to HMOs: A $120 Million Award Says that Aetna and Other Firms Must Do Better at Authorizing Treatment

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Opinion Editorial by Jamie Court

Los Angeles Times

Should the life and death appeals of HMO patients really be in the hands of private reviewers who are hired by the HMO and use private protocols to reach their decisions?

Privatization advocates have long tried to turn public control of our schools, courts, public assistance systems and municipal services over to private corporations in the name of greater efficiency. But recently Aetna, and other of the nation’s largest health maintenance organizations, have tried to privatize legislative reforms of their own industry by promising to implement private, ”independent” review systems, in which the HMO voluntarily would pay a third party to review patient problems, rather than submit to public mandates.

State and federal legislators cannot trust the HMO industry’s promise to reform itself through private efforts. Nowhere can the perils of privatization as a substitute for public accountability be seen more clearly than in the HMOs’ reliance on independent review systems, which purport to give patients facing delays and denials an appeal but deliver far too infrequently.

First, the universe of reviewing companies are hardly ”independent” of the HMOs that contract and pay for their services. For instance, marketing communications from one such company, Medical Care Management Corporation of Bethesda, Md., to HMO clients boasts that the company ”can save payers millions of dollars a year on just a few cases. Our expert physicians affirm the high-cost, high-risk procedures submitted for review in one-half to two-thirds of cases, depending on the type of disease and the patient’s profile. If you are paying for 100 such cases now, inadvisable treatments may be costing you over $ 6 million.”

California actually already has enacted an independent review system in 1996 for patients in need of experimental procedures when standard therapies do not work. In theory, this independent review system was unassailable, but in practice not a single reviewing agency has been accredited to perform reviews under the law, which was to start July 1, 1998. No company has been able or willing to prove their independence through detailed disclosure about their financial ties to HMOs, their protocols and their reviewers.

Appeals decided by such companies are the HMO industry’s reform of choice because the private process permits bureaucratic maneuvers by HMOs that a seriously ill patient has neither the time nor capacity to defend against.

Folsom resident Barbara Brown, once a teacher of the year, ran up against these problems when she contracted advanced ovarian cancer and standard treatments would not do. On July 1, 1998, she appealed under the Friedman-Knowles Experiment Treatment Act. With no accredited reviewers, Kaiser picked an agency of its choice, Medical Care Management Corporation. Brown says, ”First, Kaiser made every effort to control all the information that went into the review process. Second, Kaiser biased the panel of experts against my proposed experimental therapy by steering the experts toward Kaiser‘s own leading set of questions. Third, in their reports, the experts all stated that their assigned role was to respond to Kaiser‘s questions, rather than to perform a truly independent medical review.”

Denied life-saving treatment by both Kaiser‘s internal grievance process and then its so-called external review, Brown was forced to sell her house to pay for her treatment. Only a community bake sale and carwash that raised $ 25,000 provided the down payment for her care. But Brown is recovering quickly, as her experimental surgery, which her HMO said would kill her, resulted in the surgeon being completely able to remove all visible presence of a tumor from her abdomen.

Private review systems are no substitute for civic scrutiny – such as a court of law. Congress and the state Legislature must not be deterred from right-to-sue legislation and other public mandates, or the fate of mothers like Barbara Brown will continue to be decided at carwashes and bake sales rather than by the imposition of public values on private corporations.

Third-party review systems only work well in conjunction with public laws for HMO accountability. Companies know that if they don’t play fair they will face large damage awards or other fines. Texas’ independent review process, for instance, has been held out as successful, but Texas is also the only state in the nation where a patient can take an HMO to state court for quality-of-care violations, like one can sue a doctor. The independent review and liability laws were passed simultaneously.

A private system of appeal without ultimate public accountability is destined to betray the HMO patient. Legislators who forget their public mandate to reform HMOs and favor of a private solution would be doing their constituents a grave disservice.


Jamie Court is director of Consumers For Quality Care, a project of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. Write to him at 1750 Ocean Park Blvd., Santa Monica, CA 90405, or by e-mail at cqcconsumerwatchdog.org.

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