HMO, Insurance Policies Threaten HIV Care: Interview with Dr. X

A major but under-addressed problem in HIV care is that health plans use various ways to avoid HIV and AIDS patients by restricting or eliminating the doctors who treat them. Even though it is well known that HIV patients who receive specialist care do better and live longer than those treated by non-specialist physicians -- and even though specialist care has been found to cost less, because mistakes are avoided -- the cheapest HIV and AIDS patients are the ones not there at all because they could not get adequate care through the plan and went elsewhere. Health plans cannot legally refuse to take patients with HIV and AIDS, but they legally can and do accomplish the same result by making it difficult or impossible for the doctors in the plan to provide quality care for this condition. (The problem is much less severe with other expensive illnesses like cancer, because cancer treatment is a recognized medical specialty with standards that are hard for health plans to evade.)

Doctors cannot talk freely about this problem because their contracts usually require that the terms be kept confidential -- and health plans can and do retaliate. So we interviewed a physician we agreed to identify as Dr. X, who treats HIV patient in the Western U.S.

[Note: To understand this interview, readers should understand the concept of 'capitation' in health care. Capitation means that instead of being paid a fee for each service they perform, physicians are instead paid so much per month per patient (so much 'per capita,' hence the word 'capitation') -- and then the doctor must pay for any medical care the patient needs. Hopefully on average there is some money left over at the end of the month, but with capitation, sometimes doctors lose money instead of earning money for their work. Capitation reverses doctors' financial incentives; the earlier fee-for-service system created incentives to overtreat, while under capitation, doctors earn more if they undertreat.

[One of the tricks of the health-plan industry is to pay doctors the capitated rate for a healthy adult (usually about $10 per month or less) even for patients with HIV or AIDS, guaranteeing that the doctor will lose money on every AIDS patient, and making an HIV specialty practice difficult or impossible.

[Most health plans today do not capitate pharmaceutical costs -- meaning that doctors are not "at risk" for these costs. So far there seems to be little pressure on doctors to capitate drug costs -- perhaps because pharmaceutical companies would oppose it. But under Federal antitrust laws, individual doctors and medical practices are not allowed to bargain collectively with health plans, creating impossible burdens for small practices and driving the trend toward institutionalized medicine. And in HIV, another result is to deny many patients the specialist care which is clearly medically indicated.]

Interview with Dr. X

John S. James: What particular tactics do companies use to discourage physicians from seeing many patients with expensive illnesses? How is this different in HIV than in other major illnesses such as cancer?

Dr. X: An HMO or health insurance company cannot discriminate against somebody because they are HIV positive, cannot discriminate against a patient because of their disease. But they can discriminate against doctors who treat that disease. So to avoid attracting HIV-positive patients into their plans, they can and do refuse to contract with HIV-treating physicians, a practice known as redlining. Then the patients will go on to a different insurance company where they might find a physician with a recognizable HIV specialty. Redlining the doctor is legal to do.

James: Are you kept out of certain plans because you see too many HIV patients?

X: Absolutely. The insurance companies are very open about admitting it.

AIDS patients cost less per year than breast-cancer patients, or kidney patients on renal dialysis. Yes, AIDS is expensive, but certainly not out of line with other catastrophic illnesses.

But there is much less problem with other expensive illnesses. You could not redline doctors because they treat cancer; society would not stand for it. But it's OK with doctors who treat HIV. A recent article shows gay and lesbian physicians make less than their heterosexual counterparts -- often because gay and lesbian physicians treat people who would not otherwise get care.

In HIV, although treatment is expensive, it is not the physicians who are making the money. Many physicians are getting paid basic family practice and primary care rates to do high-level specialty care.

"Healthy Adult" Reimbursement for Patients with AIDS

James: When HIV physicians can get into the plans, how much are they paid per month to provide care for someone with HIV infection or AIDS?

Dr. X: Some capitated plans pay less than $5 per person per month to care for an AIDS patient; some pay up to $20 or $25 per person per month. Some of the plans have the doctors assume more risk, with medications or labs; I have never contracted with those because they are too prone to financial disaster, should there be any great changes in therapy.

The capitated plans are usually geared toward a healthy population that does not utilize medical care very often. So over a period of a year they are financially viable for a doctor whose practice is mostly persons who are not sick. But an HIV-infected population requires regular visits, medication refills, and other services; every bit of that is an expense.

It costs about $5 to have an interaction with a patient over the phone, whether to set up an appointment, or for medical advice, or a pharmacy refill interaction -- because the chart has to be pulled and re-filed, and documentation has to be saved, either by the physician or the medical assistant. One of my managed-care companies was stacking my office with their HIV patients but reimbursing me $4.60 per month. So what they were paying me for global HIV care barely paid for calling in their medication refills once a month.

It would only take one disastrous financial quarter for a physician to not be able to practice any more, to go under financially. Many primary care physicians, specifically HIV-treating doctors, are going month to month in their finances. There are huge issues here that need more public attention.

James: When you are seeing a patient, the labs and the drugs are neither expense to you, nor an income?

X: I make no profits off labs or the medications I prescribe; that's an ethical issue.

James: So you are paid so much per month to cover the office visits and overhead?

X: In capitated plans, yes.

Non-Capitated Plans

X: There are also "modified fee for service" plans, where for every dollar that is charged by the physician, there is usually a modified fee that would bring the dollar down to about $.60. And these insurance companies take often 10% in addition and put it into a kind of contingency fund, in case you go over on office visits, or on your hospitalization or medicines -- this is an incentive for physicians to not over- utilize medical services. But when most of your patients are HIV-positive, you are going to utilize these services; I have never seen any of that incentive money come back, because by definition I have an overutilizing population.

James: So with a plan like that, you would get about 50 cents on the dollar?

X: We usually get about 50 cents on the dollar from insurance companies. At the end of the month the question is whether we have enough for payroll, for rent, for paying bills. There is usually little or nothing left over after that.

James: And with the capitated plans, you are basically expected to treat people with AIDS for about $10 or less per month?

X: Some of them, yes. Not all the plans pay terribly. None of our managed-care plans are lucrative.

James: How are the better plans different?

X: They don't capitate [and pay healthy-adult rates for HIV and AIDS care]; instead they pay a fee for service. It is a modified [reduced] fee, but often we can live with it. It will pay for the services and employees.

James: But a lot of patients cannot use those plans?

X: Many cannot. But many do have a choice. Many patients with HIV have the opportunity to obtain insurance that will cover them better, but then they will have to pay more out of pocket. So they opt for a plan where they don't have to pay anything, but the doctor takes the losses. Many times those plans do not cover what the patient needs.

James: Why can't you refuse the worst plans?

X: One of the tricks that many insurance companies pull is that if you are on their indemnity plan or their PPO [preferred provider organization] plan that pays fairly well, you must also take the HMO that is capitated, and that pays for HIV care at a loss. If I dropped the HMO plan I would also have to drop the PPO plan that does cover its expenses. Often patients on PPO plans are subsidizing the care of those on HMOs, because when the insurance representatives look at the numbers, they say, yes, on our HMO you are losing, but on our PPO you are making a profit, and it all averages out so it's not so bad. So people who are paying extra out of their pocket for insurance are subsidizing those in the chair next to them who opted to get a cheaper plan -- because the treating physician does not have the choice to only serve under the PPO contract, but has to take both of them. The companies bundle those when they talk about a physician's contract.

James: Perhaps the press could tell HIV patients to stay away from HMO plans that don't cover cost?

X: But some people have little or no choice, because their employer signs up for a limited plan. Or it may be a year or two before the patient can make a choice to change that. Some employers do not realize the consequences to their employees of the plans that they sign up for. They may not know they have any employees with HIV.

James: And in cancer, for example, since rates for oncology have been negotiated, there's less of a problem?

X: Yes, standards for cancer treatment are well established. And the rates for HIV are not well established.

Since the HIV specialty has not solidified yet, you can have a family practitioner dedicated to HIV who is a much better HIV physician than the infectious disease doctor nearby who sees only a handful of HIV patients and does not dedicate his practice to HIV. But the HIV specialist may be paid a third of what the credentialed infectious disease doctor gets. We need recognition for the specialty of HIV care.


James: You mentioned retaliation by health plans against doctors who speak openly about these problems. How does this happen?

Dr. X: I once lost a major contract, which meant that suddenly hundreds of my patients needed to find a new physician, one who could treat their particular problems.

In another case, a managed-care company put a new-patient freeze on my contract, because I was adamant about the need for therapies that the health plan did not want to cover. So I could continue seeing patients already enrolled, but nobody else could come into my practice on that plan. The HMOs and insurance companies have ways of punishing physicians who are not good company docs. These problems are widespread.

I cannot afford to be identified for this article and take the risk that many of my patients will have to find someone else.

Other Concerns

Besides treating patients I teach medicine, and have medical students coming through my practice to learn about HIV. The comments I hear -- that they do not want to work so hard for so little pay -- are borne out by the small numbers of doctors actively going into HIV care rather than having it thrust upon them. Why would anybody spend eight to ten years of their lives in a very difficult training program, where they go hundreds of thousands of dollars into debt, to become a subspecialist in an area were you do not get respect from your colleagues or viable reimbursement from the insurance companies? You risk financial ruin by going into HIV therapy. Who is attracted to that?

In this state it is just accepted that if you are on Medicaid, there are only certain doctors you will be allowed to see. You have little choice; your Medicaid doctor is assigned to you. You may be assigned a doctor who has never seen an AIDS patient before. You may be assigned an HIV-treating physician who is under strict, regimented budget and control, and is overworked; you have somebody who is not allowed the tools you need, and who does not have the time. There are clinics where each doctor is seeing more than a thousand HIV patients, with very little backup or support. They are told what labs they can and cannot use, what drugs they can and cannot prescribe, and patients are going without standard FDA-approved treatment, because these doctors are not budgeted for it. We have this huge, second-class, institutionalized approach to HIV care, because it is supposed to save money for the insurance companies.

Redlining is another huge issue. Patients should be allowed to see whatever physician they want for primary care. Primary care physicians who want to contract with an insurance company should be allowed to. Patients should not be barred by insurance plans from seeing the doctor they want.

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Comment, by JSJ

HIV specialist care is known to save lives, and it actually costs less than care from non-specialists. We need a reimbursement system that supports quality care -- not one that creates incentives for health plans to make good care impossible in order to force expensive patients elsewhere.

This area needs much more attention from AIDS activists. One approach would be to share information and educate patients and the public about the consequences of the different plans available locally, so that patients could find out what the real problems are before they are locked in and learn when they are sick that they cannot get the care they need.

Also, activists can support institutional reform so that top HIV specialists will no longer be driven from practice by this race to the bottom among HMOs and other health plans.

ISSN # 1052-4207

Copyright 2000 by John S. James. Permission granted for noncommercial reproduction, provided that our address and phone number are included if more than short quotations are used.

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