The managed-care industry and UnitedHealth Group scored a major public relations victory last week when headlines across the country trumpeted United's decision to eliminate pre-authorization reviews for many medical procedures for its 14.5 million enrollees.
But after the applause subsided, several other insurers said they have been doing many of the same things for years.
In fact, a survey to be released later this year by the American Association of Health Plans says many health plans have been chipping away at their pre-authorization processes.
"They are reducing the number of procedures that require pre-approval," said AAHP spokeswoman Susan Pisano.
For the past two years, the Washington-based AAHP has been battling "patient protection" legislation that would give HMO enrollees expanded legal and appeals rights. The Senate passed its version of the legislation in July. A more liberal House bill that would allow patients to sue their HMOs passed in October. A panel of lawmakers from both sides began hammering out a compromise bill earlier this month; a consensus is not expected until next year at the earliest.
Observers have little doubt that the debate in Congress influenced United's decisionmaking.
"You have to presume it's heavy in their minds," said Ken Jacobsen, national health practice leader for the Segal Co., a New York-based benefits consulting firm.
United's new approach is straightforward. Earlier this month it simply eliminated pre-authorization reviews, the go-ahead physicians must get from the health plan to commence patient treatments or procedures. Minneapolis-based United was spending $100 million per year on a process that approved 99% of procedures anyway, according to the company, and found itself in a cycle of diminishing returns.
"For every dollar United was putting into it, they were saving about a dollar. A few years ago, they were saving several dollars," Jacobsen said. "Fifteen years of such reviews have flattened practice patterns, and the return is no longer there."
United's overhead costs dropped 8% during its test period of eliminating pre-authorization review in Tennessee. Such savings appear to be a tonic for an organization under pressure to reduce costs. While profitable, United's medical costs for the first nine months of 1999 were up 15% from a year ago-$11.2 billion compared with $9.8 billion.
Although United spokesman Phil Soucheray acknowledged that removing pre-authorization reviews and their accompanying overhead would save money, he could not provide immediate savings projections.
In addition to bottom-line results, those in the industry hope United's decision will advance the political debate on managed care, particularly regarding the notion that health plans onerously curb procedures. Many believe politicians remain focused on grievances that plans have been addressing for years.
"This is something that really illustrates how frozen the description of managed care has been," said Bill Pierce, a spokesman for the Blue Cross and Blue Shield Association in Washington.
"I follow the public debate in Congress and in the editorial pages and scratch my head," said David Olson, a spokesman for Woodland Hills, Calif.-based Foundation Health Systems.
Few believe the policy change will greatly affect the way physicians, long acculturated to the ways of managed care, practice medicine.
"I don't think doctors will be performing a lot of additional procedures. Managed care has instilled in all of us a sense of cost," said Thomas Reardon, M.D., president of the Chicago-based American Medical Association. However, Reardon said he expects United's policy change to expedite some hospitalizations and tests.
"It will decrease the hassle factor," he said.
Donald Fisher, chief executive officer of the American Medical Group Association, an Alexandria, Va.-based group practice lobby, agreed with Reardon. He noted that the change "will just make things less onerous."
Meanwhile, payers contend that on their own they have been making the process easier.
Indianapolis-based Anthem eliminated such reviews in the Cincinnati area more than two years ago in cooperation with Paragon Health System, according to an Anthem spokeswoman. Paragon runs Anthem's managed-care networks in Cincinnati with Anthem Blue Cross and Blue Shield.
Foundation's Olson noted that its subsidiary health plans have "stopped requiring prior authorization for tests (involving fee-for-service patients). We're more focused on hospitalization."
Olson added that reviews have been all but eliminated for risk-bearing contracts.
"We only review capitated patients at the margins, such as for transplant procedures," he said.
United has promised to return some of its future savings to patient care, said Soucheray, but no specifics are available, he said.
United already spends less than the industrywide average on patient care. Its medical loss ratio for the first nine months of 1999 was 85.8% vs. 86% a year ago. The average medical loss ratio for HMOs in 1998 was 89.5%, according to Seattle-based healthcare actuary Milliman & Robertson.