There is a sharp difference in approach between managed care and the traditional fee-for-service system. Under the former, members pay a fixed fee for health care. The HMO benefits financially by keeping its members healthy and its costs down. Under fee for service, physicians and hospitals levy charges to cover whatever treatment is provided. They can increase their incomes by providing more treatment, not less. This has sometimes resulted in unethical doctors padding their bills by ordering unnecessary procedures.
However, consumer groups fear that concern about cost will govern medical decisions in for-profit HMOs, with the danger of scrimping on treatment. Physicians' groups maintain that the focus on cost conflicts with professional ethics. HMOs say such fears are baseless because they control costs by eliminating unnecessary services. They say they reward doctors not only for controlling costs, but also for providing high-quality care.
The federal government is now addressing this concern. Washington has adopted a policy limiting the types of bonuses that can be paid to doctors as a reward for controlling the cost of services for Medicare and Medicaid patients.
The rules will apply only to HMOs serving patients under Medicare and Medicaid, the programs for the elderly and the poor, but in practice they will set a standard for the entire managed-care industry. The rules do not prohibit HMOs from paying bonuses and other financial incentives to doctors. However, they establish a new framework for regulating such payments.
The new rules come three weeks after the government declared that HMOs may not limit what doctors tell patients about treatment options. Doctors say such "gag clauses" discourage them from discussing expensive treatment options not covered by the HMO.
Just as patients have been victimized by unscrupulous practitioners of fee-for-service medicine, they can be victimized by HMOs. These steps should be welcomed by the industry as well as health-care consumers. They will enhance the credibility of all HMOs by curbing those prone to commit abuses.
The government's apology for its high-handed action hasn't satisfied the protesters. President Kim may have to find a way to rescind the parliament's action to mollify them and get the strikes called off. Massive labor unrest is the last thing the Seoul government needs.
Workers who are injured on the job should be provided with appropriate medical care, but abuses of the system by employees and care providers must be eliminated. This is not only a matter of fairness. It is essential to bring the cost of workers' compensation down far enough to make it bearable for Hawaii businesses.
Rupert E. Phillips, CEO
John M. Flanagan, Editor & Publisher
David Shapiro, Managing Editor
Diane Yukihiro Chang, Senior Editor & Editorial Page Editor
Frank Bridgewater & Michael Rovner, Assistant Managing Editors
A.A. Smyser, Contributing Editor