Physiatry Practice Management Resources

One bad incident was enough to turn New York City ophthalmologist Barry G. Chaiken against managed care. When a patient covered under an experimental Blue Cross capitation plan back in the 1980s required an emergency procedure to relieve pressure in her eye from glaucoma, Chaiken could not use his hospital's laser without approval from the insurer.

"It took 48 hours and conversations with two doctors and an administrator before I could get approval," recalls Chaiken, 47. "The next day I quit the plan. I said I would never deal with this kind of insanity again."

On the opposite coast, family physician Thomas LaGrelius, 55, of Torrance, Calif., also had an early brush with capitation and care was delayed. "I told my partners we were involved with a criminal organization," LaGrelius says. "'What insurers are encouraging is unethical and immoral,' I said. My partners said, 'Look at this big check!' I resigned from the group and opened a solo practice."

Both Chaiken and LaGrelius now actively solicit others to join what might today be considered radical organizations; that is, groups of members who agree to sign few or no HMO or PPO contracts.

Chaiken's group is the Association of Independent Physicians of New York; LaGrelius' group is called INDOC, which stands for Independent Doctors. Physicians who belong to these groups say they differentiate themselves by giving patients a lot of personalized attention. Free from managed care constraints, these physicians do not follow prescribed formularies, use mandated laboratories or hospitals, or send patients to certain doctors just because the physicians are listed on panels.

About 8,000 physicians nationally are associated with these types of groups, and their ranks may be swelling. Membership in one, the Association of American Physicians and Surgeons (AAPS), in Tucson, Ariz., quadrupled in nine years to its current 4,000 members. Not surprisingly, the group's HMO-avoidance messages have garnered a tremendous amount of media coverage on TV news magazines and nightly news programs, on the radio, and in newspapers.

Cash-Flow Considerations

The question many physicians would ask those who have joined these organizations is this: How does any physician who professes to be against HMOs meet expenses without the patient flow such plans provide? Surprisingly, many of the physicians who have joined these organizations don't have practices catering to wealthy patients.

"Eighty-five percent of my practice consists of patients who are fed up with managed care," LaGrelius says. "They are on plans that have POS (point-of-service) or out-of-network options. They pay me out of pocket and collect the reimbursement themselves."

Nearly 92% of American workers who have employer-provided health coverage are offered at least one plan that covers care provided by out-of-network physicians and hospitals, such as a PPO, POS, or fee-for-service plan, according to the American Association of Health Plans (AAHP), a lobbying group in Washington, D.C., that represents HMOs. In January, a report from William M. Mercer Inc., benefits consultants in New York, showed that enrollment in HMOs and POS plans declined to 47% from 50% of all workers last year, the first such decline in five years. Enrollment in traditional indemnity plans declined to 13% from 15% and enrollment in PPOs rose to 40% from 35%, Mercer said.

Despite these enrollment trends, many physicians who withdraw from all HMO contracts are amazed at how well they are surviving. Las Vegas gynecologist Lisa Underwood, MD, lost 50% of her patient volume but lost no income when she switched from a practice that had 70% managed care patients in 1996 to less than 10%. She kept direct contracts she had with large self-insured employers and she set the fees for those contracts.

"The first three months, my salary declined, but by the end of the first year, I came out even," she says. "With managed care plans, I was seeing 25 patients a day at 20% of my fee. Now I see 15 patients a day at full fee." What's more, she now works eight-hour days rather than 12, she adds.

While Underwood had an increase in fees, she also had a decrease in administrative work, meaning she could reduce the size of her staff. She no longer needs three staff persons to handle managed care paperwork, such as authorizations, precertifications, filing, posting, and tracking late insurance payments.

Underwood's anger at managed care reached its zenith over formulary restrictions and surgical protocols. "People don't fit into protocols," she says. "I was writing letters every night to get exceptions to the rules. I was doing more paperwork to get around the red tape. The added insult was that I was getting paid 20% of my fee and having to pay three people to chase down payments," she says.

She cautions other doctors who consider disenrolling from plans to consider their practice style. Her typical new patient office visit is an hour long and includes a free ultrasound. "Fee-for-service doctors must offer more than eight-minute appointments or they won't be in business," she explains.

Underwood, 44, is a member of AAPS, which, like similar groups, offers marketing and advertising support to raise the profile of non-HMO member physicians. Some of these organizations even push legislative reform. Top agenda items are support of medical savings accounts, the demise of employer-provided health insurance, out-of-network options for patients in managed care, and removal of gag rules that discourage doctors from telling patients about all treatment options, regardless of whether the insurer approves them.

Is this a maverick minority destined never to gain a critical mass or the beginning of an organized resistance movement, a revolution in the making? Managed care experts do not believe they see a trend. Only 8% of nonfederal, patient care physicians are free of HMO contracts, says Donald White, a spokesperson for the AAHP. A recent report from the AMA, Socioeconomic Characteristics of Medical Practice 1997-98, shows that 92% of physicians participate in managed care contracting. Martin Gonzalez, an author of the report, says that in 1996, it was 88%.

"The choice not to affiliate with managed care plans is not representative of the overwhelming majority of physicians who practice through HMOs and other forms of managed health care," White says. John Hurley, MD, the director of medical education for Kaiser Permanente in Washington, D.C., says, "There are plenty of doctors waiting to take on the HMO patients that these anti-HMO doctors refuse."

Antagonism between physicians and health plans is undoubtedly strong. "There is a movement now to get off some plans. It's been building gradually," says Tucson, Ariz., internist Jane M. Orient, MD, executive director of AAPS and author of Your Doctor Is Not In, Healthy Skepticism About National Health Care (Crown Publishers, 1994).

In one of the biggest rebellions against a health insurer, 400 doctors in the Genesis Physicians' Practice Association in Dallas broke their contracts with Aetna Inc.'s HMO last fall. Physicians complained Aetna was slow in paying claims. Other disenrollments are making headlines too.