Despite President Clinton's failure to pass federal legislation significantly changing health care financing, delivery and access in his first term, the market has driven substantial changes in the delivery and financing of health care over the past decade. Due to the rapidly rising costs of health care, major changes have occurred in the market place resulting in an ever increasing shift to managed care. Enrollment in managed care plans increased from 29% in 1988 to 51% in 1993. The United States is the only major industrialized country which does not provide universal health care coverage, yet it spends twice as much for health care as do most other industrialized countries (15% versus 8% of the gross domestic product, respectively). Additionally, the United States is the only major industrialized country where health care is a for-profit industry at almost every level: health care providers; home-health care; long-term care; hospitals; diagnostic laboratories; and pharmaceutical companies. It is estimated that up to 39 million Americans go without health insurance every year. Unfortunately, there is not a constitutional right to health care under the United States Constitution.

A major limitation on health care reform the past few years has been the Employee Retirement Income Security Act (ERISA), enacted in 1974, which prohibits any significant regulation of health care at the state level. This law requires federal approval of any state regulations concerning health care insurance, other than control of insurance rates. In 1993, Washington State passed a law requiring all employers to provide health insurance to their employees; however, this requirement was never enacted because Congress refused to issue Washington State the waiver required under ERISA. Hawaii remains the only state to have received a federal waiver allowing it to require all employers to offer health insurance to their employees. Recently, the Health Insurance Commissioner of Washington enacted a rule that all health insurance plans must provide coverage for effective alternative therapies to all subscribers. A federal court ruled in May, 1997 that this regulation violated ERISA. As a result of ERISA and federal inaction, health care reform has been directed by the health care industry, rather than by governmental action.

Managed Care Defined

There is no universally agreed upon definition of managed care, however, the term generally refers to health care insurance plans which attempt to limit the cost of health care provided to its subscribers through controls placed on the providers of that health care. Also, there is a much closer relationship between the health care provider and the insurance plan under managed care. Coordination of care can be better under managed care because there may be better communication between the providers and the insurance plan. Another control on cost utilized by managed care plans is the use of primary care health care providers as "gatekeepers," so a specialist can only be seen if the primary care provider agrees to make the necessary referral. Because providing health care for people living with HIV may be very expensive, the rapid increase in managed care plans may have a great impact on the quality of care available to people living with HIV. Traditional health care insurance in the United States has been fee-for-service, an example of this would be the typical old Blue Cross/ Blue Shield health insurance plans. Under fee-for-service plans, an individual chose their health care provider and received whatever care they and their health care provider had agreed was necessary. The insurance company was billed and then reimbursed the person, or paid the health care provider directly, for that care. There was little or no questioning concerning the appropriateness of the care provided and pre-approval was non-existent. Under this system, the health care provider often did more rather than less, as the more services they provided the more money they made. In contrast, under managed care, a person may be restricted in their choice of health care providers, and their health care provider may be restricted in the type of care they provide under the rules of the managed care insurance provider. Generally, under managed care, the more services provided by a health care provider, the less money they make.

HMOs and PPOs

Managed care health insurance plans take many forms, but in general there are a couple of major types; health maintenance organizations (HMOs) and preferred provider organizations (PPOs). PPOs are a network of health care providers from whom members of that plan must receive their care. Care provided by a non-member health care provider may not be reimbursed at all, or there may be a higher co-pay required when using a non-member health care provider. HMOs may be either open or closed panel organizations. A closed- panel HMO employs its health care providers, who usually are paid a salary and work full-time for that HMO. An open-panel HMO contracts with many physicians in the community and the member may choose any one of those physicians, similar to a PPO. While many HMOs pay their health care providers a salary to work for that plan, under managed care, health care providers may also be paid either a prenegotiated fee for each service provided, or paid by capitation. Capitation is a payment system wherein the health care insurance plan or the provider is paid a fixed amount of money each month for each person enrolled in that health care plan. The health care provider is paid whether or not they see that individual patient. The more sick people that enroll with that health care provider, the less money they make, the healthier the "panel," the more money they make, because they do not have to provide as much care. The incentive under this type of reimbursement is for the health care provider to provide less care, in contrast to traditional fee-for-service plans.

Managed Care & HIV

A potential advantage of managed care is that effective case management can be incorporated into all aspects of a person's health care. Under traditional fee-for-service plans, there is no coordination of care. To lower costs, managed care plans employ case managers to coordinate care and eliminate overlap and duplication, encourage compliance, and possibly encourage preventative care. If a person develops PCP pneumonia, the health care provider and insurer loses money under managed care. Consequently, there is a direct financial incentive to keep a person healthy under managed care plans. HMOs place a greater emphasis on prevention, because they make more money when their members are healthy. HMOs also save money by providing suboptimal care which encourages people living with HIV to leave the HMO and join another plan if they are fortunate enough to have that option. Managed care plans have tended to limit mental health benefits, which can have a direct impact on the medical needs of many people living with HIV/AIDS.

A major disadvantage of managed care for people living with HIV is the potential restriction on physician choice and access to competent, sensitive, well-informed, and motivated health care providers. Additionally, gatekeepers may prevent needed referrals to specialists, such as, gastroenterologists, pulmonologists, and ophthalmologists. A recent study published in the January 1997 issue of the Journal of AIDS and Human Retrovirology compared patient satisfaction with fee-for-service and managed care plans. The study found that while patients in managed care were more satisfied with the financial arrangement (there are usually fewer co-payments and often times broader coverage for drugs and diagnostic procedures), they were less satisfied with health care provider selection and options than were patients in fee-for-service plans. A study conducted at an HMO in Seattle showed that the survival of people with AIDS was significantly reduced when their primary care physician treated less than 5 people with AIDS a year. Another study showed that the median survival for people with AIDS was 17 months under managed care versus 23 months for fee-for-service insurance.

There is a debate ongoing in the medical community concerning the need for specialists and specialty clinics to care for people living with HIV. Due to their emphasis on cost containment, managed care plans usually do not allow HIV specialists and specialty clinics to treat people with HIV, unless they can show that they are cost-effective. A recent study reported by the Tower Infectious Disease Medical Associates in California showed that every $1 spent for combination drug therapy was offset by a $2 reduction in overall treatment costs, and protease therapy resulted in a 58% decline in hospitalization and homecare. Another cost-effective program is pre-natal screening of pregnant women for HIV. The prevention of only two babies from becoming HIV-infected will pay for such a screening program. It is unlikely that many managed care plans will encourage the development of HIV experts to treat people living with HIV, as it is not in their best financial interest to encourage HIV-positive people to enroll in their plan. It is common for an HIV-positive individual to use more than one physician because of the variations in treatment strategies, aggressiveness, and innovativeness among health care providers. This opportunity could be lost under managed care plans.

Medicaid, Medicare, & Managed Care

The single largest payor of the health care costs for people living with HIV in the U. S. is the Medicaid program. The Medicaid program is a jointly funded, federally-designed program, administered by the states. It provides medical coverage for financially indigent (poor) and disabled people. To be eligible for Medicaid (which varies by state) income must be significantly less than the federally established poverty level. Medicare is the federal health insurance program for retirees (over 65), and people that have been on social security disability for three years. Some people living with HIV may be covered by Medicare, even if they are younger than 65. The Medicaid program pays for 53% of the costs of medical care for adults living with HIV and 90% of the costs for children living with HIV. Over 100,000 PWAs are covered by the Medicaid program. In 1996, it is estimated that the total money paid by the federal and state governments for HIV care provided under the Medicaid and Medicare program was $4 billion. The cost of protease inhibitors for all people covered by Medicaid would be $750 million- $1.3 billion per year. Due to the rising cost of Medicaid, the federal and state governments are turning to managed care in an attempt to save money. Poor and disabled people are being forced in many states to join managed care plans to continue receiving their Medicaid coverage. In 1995, 11.6 million people receiving Medicaid were enrolled in manged care plans. This results in many problems. First, the health care providers many times do not have offices near where the people live. Secondly, providers and insurers may be unwilling to enroll many people with HIV due to the higher cost of providing health care, for which they are receiving no extra money from the state. (Providers may receive as little as $15/month for each person enrolled in a Medicaid managed care plan. ) Thirdly, there is also no assurance that the health care providers chosen by the state will have any interest or expertise in providing care to people living with HIV. Today, a health care provider must spend a significant amount of time staying informed of the latest developments to provide the best care to people living with HIV.

In one state recently, all Medicaid patients were forced into a managed care plan and there were no providers identified with expertise in treating HIV, as was promised by the state. Another state, which is now shifting its HIV-positive patients into a Medicaid managed care plan, is refusing to reimburse providers any more money for care of those individuals. Prior to a state forcing Medicaid recipients into managed care, the state needs to get a waiver from the federal Health Care Financing Administration (HCFA). In New York, AIDS activist were able to prevent the approval of New York's request when they showed that 95% of the managed care groups were unable to provide specialist care for HIV. Even though the providers are required to take HIV positive patients, it is certain that some of them will find ways to discourage people from enrolling. The easiest way is to simply not provide state of the art care, and the patient will go elsewhere, if they have that option. The critical determinant in all managed care plans is the monitoring of the quality of care, and it remains to be seen how Medicaid managed care plans monitor and ensure that the quality of care is not lowered to save money.

Quality of Care under Managed Care

A potential advantage of managed care plans is the adoption of "best practice standards," or "practice guidelines," for its participating health care providers and the potential for real quality of care standards and monitoring. Under traditional fee-for-service insurance, nobody monitored the quality of care given by a health care provider to people seen in her office. Quality of care committees reviewed only the quality of care provided to hospitalized persons. This is not the case for managed care plans, which monitor both inpatient and outpatient care, at least concerning the appropriateness of the charges. Whether this monitoring is more than monitoring of expenditures, and truly monitoring for quality of care remains to be seen. A couple of recent studies have shown that people with chronic illnesses, like HIV, are the least satisfied with their care under managed care plans. A real possibility exists that managed care offers AIDS activists an opportunity to encourage the adoption of "best practice standards" that would include the prohibition of monotherapy for HIV and the monitoring of viral loads in all HIV positive persons. There needs to be constant pressure to monitor quality of care because the primary goal of most managed care plans is to maximize profits by limiting costs, i. e. providing less services. Additionally, unless access to competent health care providers is available to all people, then quality care is really not available.

Clinical Research & Medical Education under Managed Care

The major long-term impact of the shift to managed care has yet to be realized or appreciated and it has major implications for the care of people living with HIV. Both clinical research and medical training receive little or no support from managed care plans. This lack of vision and priority is already beginning to have a devastating impact on teaching and research hospitals like San Francisco General Hospital, and many others. Without a commitment to help support clinical research and medical education, there is going to be a great loss in our ability to gain information on the efficacy of new antiretroviral drug combinations, immune stimulants, and prevention and treatment of opportunistic infections. In the past, this research has been supported by hospital revenues generated by private insurance, and governmental-funded insurance plans. Managed care is resulting in the loss of this revenue. Teaching hospitals are being shut out of HMO and PPO networks, and are denied an opportunity to care for revenue generating, insured people. These hospitals are left to care for all of the uninsured people with no revenues to train new health care providers or conduct clinicial research. Many of these combined county-teaching hospitals around the country have been the leading centers in research and care of people living with HIV. With teaching hospitals unable to compete with non-teaching hospitals, who will train the experts of tomorrow? Not the for-profit managed care plans, and probably not the federal government in the current self-centered, anti-spending era. As HIV becomes a more and more complex disease to treat, there is a greater need for well-trained health care providers and more clinicial research.

Washington's Shift to Mandatory Managed Care for all SSI Recipients

Washington State has already begun to shift people receiving SSI to managed care plans. The change-over is occurring over 2 years, by county. Spokane county began voluntary enrollment on 4/1/97, and all SSI recipients in Spokane county will have to enroll in a managed care plan by 9/1/97. Planned dates for other counties are as follws: King county, voluntary enrollment begins 8/1/98 and mandatory enrollment begins 5/1/99; Pierce county shifts to managed care on 10/1/98; and Snohomish county on 7/1/98.

What does this mean to you? If you receive your health care based on SSI eligibility through the state's Department of Social and Health Services' (DSHS) Medicaid program, your medical care will be effected. The possible adverse impacts will include some loss of physician access and selection, loss of specialists' services, and delay in receipt or denial of some services. While DSHS has said that physician availability and access will not be a problem, this may not be true. The state is putting out notices to insurance and physician groups to place bids (Request for Proposals, RFPs) in order to provide care to persons on SSI. The state is only required to select the two lowest bids by federal rules. However, the state will likely select more than the two lowest bids, although they have not said how many plans they will approve in King county. Additionally, when the change occurs, participants will receive notice of the approved plans, and they will only have a short time to make a selection, otherwise they will be arbitrarily assigned by DSHS to one plan, and only have one month to request a change of that assignment. Some states have hired enrollment brokers, people to assist individuals in making this selection, but Washington State will not do this. So individuals will be forced to plow through very confusing technical descriptions of the different plans to decide for themselves which plan to enroll with. If your clinic or physician is not a member of one of these plans, you will not be able to continue to use your clinic or physician.

While out-patient drugs will continue to be provided, there may be a limitation placed on a significant number of drugs currently prescribed to people with HIV/AIDS. The term "off-label" drug use refers to the use of a drug to treat a condition for which the drug was not originally approved by the FDA. This occurs very commonly in medicine because of the cost of getting FDA approval for the use of a drug to treat a particular condition. So, once a drug is approved, if it is subsequently found to be beneficial to treat another condition, the manufacturer usually does not seek another approval by the FDA for the second condition. Therefore, many drugs are prescribed for conditions that they were not initially approved for. This is a very common situation. Many drugs used to treat cancers are used "off-label". An example for HIV is interleukin-2 (IL-2), which is approved to treat a type of cancer, but is also used by some physicians to treat HIV infection, combined with combination antiretroviral therapy. One study has estimated that up to 40% of drugs used to treat illnesses associated with HIV infection are used "off-label." In the past, insurance providers have usually paid for these drugs. Now, DSHS is threatening to no longer pay for "off-label" drug use. This change would have a tremendous impact on the quality of care received by people with HIV/AIDS in Washington.

STEP is planning a Community Forum later this year to discuss advocacy issues and if you are interested in learning how to advocate for changes in the plans of DSHS, contact STEP next month for further information about this important Community Forum.

Further Information

The information contained in this article is derived from many sources, a few references are listed below:

Henry J Kaiser Family Foundation Forum on AIDS and Managed Care. Journal of AIDS and Human Retrovirology 1995:8(Suppl 1).

Managed Care: Special Report. AIDS Alert 1996:11(5);46-60.

NYC Managed Care Threatens Women and Children on Medicaid. Nary G, J Int Assoc Physicians AIDS Care, 1995:Oct 1;9, 38.

Insurance Type and Satisfaction with Medical Care Among HIV-Infected Men. Katz MH, Marx R, Douglas JM, et al. Journal of AIDS and Human Retrovirology 1997:14;35-43.

For Teaching Hospitals, Multiple Complications. Freudenheim M, New York Times- C1, May 19, 1997

AIDS Care Under Managed Care. Palenicek J, et al. , ICAAC, New Orleans, Sept. 16, 1996.

Jeffrey Schouten is a general surgeon and co-chair of STEP's Scientific Review Committee

These articles were provided by the Seattle Treatment Education Project - Copyright (c) 1997 - Seattle Treatment Education Project. Noncommercial reproduction encouraged. Distributed by AEGIS - http://www.aegis.com

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