Clueless in the Land of Managed Care


This article presents a first hand account of a pediatric physician working in an inner city clinic under a managed care environment. The frustrations, advantages, and disadvantages of the managed care implementation of services is described. The implications of managed care in this environment for the patient, the health care delivery system, and the physician are compared to a fee for service delivery system.

Key Words: Managed Care Programs, Pediatric Care, Physician Attitudes

It was a typical 10 P.M. call.

"This is St. Elsewhere calling. Will you approve Randisha Smith's ER visit for a suspected ear infection?"

Forced to be a gatekeeper, I leaf through the patient's managed care options.

"Sorry your ER isn't covered under her plan."

I ask to speak to the child's parent.

"I'm sorry Mrs. Smith, but your managed care plan only allows you to go to St. Other's ER unless it's a life threatening emergency.

"What? No one ever told you that you can use only certain hospitals or doctors? Yes, I know St. Other is across town. You have no transportation. Try giving Randisha Tylenol for her ear pain, and we'll see you tomorrow when our clinic opens."

After the patient vents her frustration and confusion, I chalk up another patient who appears clueless about what being a managed care patient means. Why the confusion? Several reasons come to mind.

First, the managed care system is so fundamentally different from the system most of my Medicaid patients used previously that it is hard to absorb. Before, Medicaid patients could be seen at any emergency room or clinic that accepted Medicaid patients. Now Medicaid patients must sign up with a managed care system that assigns them a primary care giver. This primary care giver must then serve as a gatekeeper monitoring ER and clinic visits, labs, referrals to specialists, and hospitalizations. While serving as a gatekeeper, the gatekeeper must also try to offer optimal medical care for the patient. To assure that the primary care giver is a prudent gatekeeper, either his salary or his institution's funds are linked in some manner to "cost containment."

In a capitated system, an institution is given an arbitrary monthly revenue for each patient, and costs for additional labs, referrals, and treatments all come directly from the institution's kitty. Prior to managed care, most institutions and many physicians were paid on a fee-for-service basis. Physicians like myself who worked in community clinics were salaried, with salaries mostly based on years in the system, rather than either "productivity" however that is defined or "cost containment."

...many patients do not understand their managed care plans. They go to the wrong ERs and walk in at clinics to find they can no longer be seen there.


Both systems have pros and cons, which I will discuss, but it should be clear that different mottoes characterize each system. In the pre-managed care system (perhaps called a free enterprise system) "More is Better." In a managed care system, "Less is Best."

In changing from a Free Enterprise system to a managed care system, there have been numerous logistic problems, most of which will probably be resolved. First, many patients do not understand their managed care plans. They go to the wrong ERs and walk in at clinics to find they can no longer be seen there. Continuity of care is disrupted when patients can no longer see their long-standing physician because they signed papers they did not understand. As some of my patients' parents are functionally illiterate, they cannot adequately comprehend the managed care brochures they're given. Other patients may understand the limitations imposed by managed care but try to "play the system."

In the rush to enroll all Medicaid patients in a managed care system, I now have a patient panel comprised of large numbers of patients who I have never seen and on whom I have no medical information.

In the rush to enroll all Medicaid patients in a managed care system, I now have a patient panel comprised of large numbers of patients who I have never seen and on whom I have no medical information.


They may have been followed for years by other physicians, but now I'm the physician asked to make decisions about their hospitalizations and treatment plans despite the fact that they are virtual strangers. I've also been asked to decide whether patients merit an ER visit without being given any medical information. One phone conversation from a clerical worker went like this.

"Will you approve Myesha Jones' ER visit for fever?"

"Tell me about her. How old is she? Does she have any underlying medical problems like Sickle Cell Disease or an immune deficiency that make a fever worrisome?"

"I can't answer those questions. Taking a history constitutes a visit."

"Well how ill does Myesha look? How high is her temperature and are her other vitals stable?"

"I can't answer those questions. Examining the patient constitutes a visit."

Fortunately, most hospitals are now more helpful and do not ask doctors to practice "Ouiji medicine" as we call it. Still under managed care the physician making medical decisions is often not the same physician as the one who is actually seeing the patient. This can be problematic.

Another logistical problem occurs with chronically ill patients who have been followed longterm by several different physicians, sometimes at different medical institutions. Now, only one of these physicians may be covered by the same managed care plan so that the patient must terminate at least some long-term relationships. This disruption is also frustrating for his primary care giver who has developed excellent professional relationships with specialists over many years, only to discover he can no longer use them. Since medicine is not an exact science and requires good judgement, it takes time to know which specialists you value. This cannot be done just by reading credentials or opening a managed care brochure to check which specialists are covered under a specific policy.

Confusion about managed care may arise in some cases by patients being misled by some managed care personnel. I remember a child who needed elective surgery. The same surgeon operated at St. Elsewhere, which was covered, and St. Other, which was not covered but was much closer to the patient's house. I explained to the patient's mother that I would approve his surgery only at St. Elsewhere as this was covered and St. Other was not. Angrily, the mother insisted that as the primary care giver I could approve St. Other if I chose to. She was told by her managed care agent that she had total freedom to go to any hospital or see any specialist as long as her primary care giver approved it. Sure enough, when I posed as a consumer and called her managed care plan I was told the same thing. Technically true, but misleading, given the fact that all procedures, referrals, and hospitalizations outside the system take money directly out of the physician or institution's pocket. The managed care company poses as wanting only what is best for the patient. Unfortunately, it is the primary care giver or the institution who is seen as acting out of self interest. However, what the managed care companies fail to reveal is that they will not reimburse any expenses incurred out of the system. In fact, when the primary care giver approves a hospitalization or referral outside the system, he knows he is doing it gratis.

Certainly this situation highlights one of my greatest reservations about managed care. There can be a conflict of interest between the patient and his physician. In this case the conflict was between patient convenience and the institution's pocketbook. As gatekeeper, the primary care giver sometimes must move from his traditional role of patient advocate to that of adversary. This compromises the physician's ability to establish a good rapport with patients and to provide optimal care.

I have spoken with peers who have said they've been asked to present only treatment options available within their own system.


Furthermore, it is easy to envision many situations in which the conflict between physician and patient may be more substantial involving treatment options. Although I have not personally been involved in situations in which I felt patient care was compromised, I have spoken with peers who have said they've been asked to present only treatment options available within their own system. If other and perhaps better treatment options exist elsewhere they are not to be discussed. The conflict of interest between patient and physician is only more pronounced, although more couched between the patient and the managed care companies. Managed care companies are for-profit businesses in existence to net the largest profit possible for stockholders. Many hospitals and clinics have traditionally been non-profit organizations. Unfortunately with all Medicaid patients being required by the state to contract with a managed care system, these formerly non-profit institutions must now also enter the age of managed care.

Not only is there an inherent conflict of interest between patient and shareholder in a managed care system, there is also the problem of medically ignorant bureaucrats dictating medical protocols. Medicine is not an exact science and many patients do not fit a classic textbook case of disease. When physicians are asked to diagnose or treat patients according to given protocols what happens to these patients who fall into a gray zone? Often this requires the primary care giver to negotiate with unknown bureaucrats, possibly with minimal medical background, over diagnostic tests and/or therapies. One colleague left his position because he got too tired and frustrated wasting his time arguing with bureaucrats. He felt, as do most of my peers, that efforts to reduce medicine into cookbook diagnosis and treatment are harmful.

The problems of medically unknowledgeable bureaucrats dictating medical protocols are most pronounced in the area of child psychiatry. Under some policies, a child psychiatry evaluation can take no longer than one hour. Professionals working with children know that this is ludicrous. A reasonable evaluation involves first establishing a rapport with the child and his family as well as meeting with the child and his parents separately. In this case good medical care is sacrificed to cost savings.

I know few physicians who feel favorably about managed care. On a daily basis it means much more paperwork, and time and effort spent on administrative tasks. Policies have to be checked to determine what labs, specialists, treatments, and hospitals are approved. No mean task given that patients may be on a variety of plans all with different policies. Reportedly, now 10-15% of our medical costs are spent on administrative fees. Also there are more administrative rules now. In my system, a specialist may be seen only 3 times before another referral form is generated. Not only did I prefer my role as patient advocate rather than gatekeeper because it made my relationship with patients more pleasant, but I also find it difficult to be a conscientious gatekeeper. I'm now being asked to monitor the specialist to determine if his plans are reasonable. The specialist must now get approval from the primary care giver for diagnostic tests and therapies. Certainly, if I knew exactly what tests and treatment plans were needed I would do them myself if possible. (Fortunately, I have not been asked as a pediatrician to perform pediatric surgery . . . yet!) I'm referring to a specialist because he has expertise I lack and yet I'm being asked to monitor him!

What grates against the spirit of my peers and myself the most is our loss of autonomy. We can't refer to specialists we most value, we can't make some decisions without consulting with bureaucrats we don't respect, and our finances are determined - at least partly - by forces outside our control. My salary is partly determined by the number of managed care patients on my patient panel (which is assigned by a bureaucrat somewhere), and my ability to be "cost effective". How little control physicians exert over cost containment is illustrated by my recent experience with a patient at a time when not all Medicaid patients were using a managed care plan. The patient came from a chaotic family situation in which she did not live with her parents, and it was not entirely clear who had legal custody. I left the problem of her medical coverage to the secretarial staff while I attended to her headaches caused by her florid papilledema which I discovered on physical exam. Other than her headache she was asymptomatic, with an otherwise normal neurological exam, so the neurologist and I agreed she should be seen first thing the next morning for a consult. Unfortunately, the patient did not come to her appointment. Knowing the seriousness of her condition, I called her listed phone number. Disconnected. I tracked down a relative and she told me where the child went to school. Finally, I spoke with the school principal asking that this child not be allowed in school until she saw the neurologist. Fortunately, my extra effort paid off and the patient underwent her necessary diagnostic tests as well as requiring drainage of her cerebral spinal fluid. Did I get a pat on the back for my careful exam and persistent follow through? No. Rather I got a doleful call from the neurologist that the patient's relative had lied abut her medical coverage and that now our institution was being stuck with an extensive bill that would come out of our institution's own pockets.

Have I witnessed any positive effects of managed care? Yes. Most pronounced is the decreased mis-use of the Emergency Room. Patients visit the ER less frequently now for runny noses and chronic diarrhea, knowing these visits will be rejected. Because all Medicaid patients must have a primary care giver, there is at least the possibility of greater continuity of care. Instead of getting all care via the ER, patients must now visit their primary care giver for illness, thereby also receiving preventive health care as well. Theoretically because "fee-for-service" will no longer drive hospital care, there will be more focus now on prevention of illness. In attending to preventing illness, some managed care plans now offer new services to patients, such as transportation to medical facilities. My peers and I also now practice medicine with greater attention paid to cost effectiveness. I'm looking more carefully at the labs I order, and the referrals I make.

While I appreciate the positive effects of managed care, and understand the need to control medical costs, I feel the benefits of managed care are outweighed by its many problems. Yes, someone has to monitor medical costs, but should the monitor be managed care companies competing for the largest profits? What's best for the shareholder is not always what's best for the patient, and in managed care you know who will win out . . .

© 1997 Online Journal of Issues in Nursing
Article published January 6, 1997

Citation: Physician, Anonymous. (January 6, 1997). "Clueless in the land of managed care." Online Journal of Issues in Nursing. Vol. 2, No. 1, Manuscript 2.