The Chilling Confessions of an Insurance Company Medical Director
One day, Dr. Linda Peeno killed a man. At least that’s what she thinks, and that’s what she’s told many people including the California General Assembly and the U.S. House of Representatives.
On that fateful day, Dr. Peeno was working as a case reviewer for a managed care organization in
“A lot of people were scurrying around trying to figure out what to do”, Dr. Peeno testified before the California State Assembly in 1997. “The goal”, she said, “was to find a way to deny the claim”.
Dr. Peeno did the job; she discovered a restriction in the man’s coverage that justified a denial. Then she denied the claim.
To her office, Dr. Peeno recalled, the discovery was a source of “jubilation”. To the patient, it was a death sentence. To Dr. Peeno, it was a step toward the end of her career in managed care.
“Once I stamped ‘DENIAL’ on that man’s form”, Dr. Peeno told the California State Assembly, “his life’s end was as certain as if I had pulled a plug on his ventilator. And if I knew his name, it was only for a fleeting second. I remember the details only because of the accolades it brought me from my employer”.
This patient was not Dr. Peeno’s only victim, she admitted to the California State Assembly with remorse. “Eventually, I made many more decisions, some of which I am equally certain caused additional pain, suffering, and even death for other patients – hardly the work, I believe, of a physician”.
In 1991, Dr. Peeno left the industry. She became what she calls, “an advocate for ethical managed care”. She insists that she is not anti-managed care, as she may be simplistically labeled. To the contrary, she originally entered the field due to her belief in the value of a managed care system.
Dr. Peeno currently chairs the ethics committee at the University of Louisville Hospital. She has provided testimony about her experiences in managed care to the U.S. House of Representatives Subcommittee on Health and the Environment, as well as many other organizations and courts.
When Dr. Peeno testified before Congress in 1997, she explained how managed care organizations profit from complicated contracts, hidden costs, confusing appeals procedures, apathetic members, and various other issues addressed in Making Them Pay. The following is an excerpt from her testimony:
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I am a witness to the rapid growth of a monstrous business whose economic success is based upon the micro management of medicine through avoidance, denial and control.
How does this happen? Let’s imagine that you are starting a new managed care organization and you have hired me to help you put it together. What do we do?
First, I exchange my traditional doctor’s bag for a health executive’s box of tricks. Second, we agree that we do not want just any group of patients. We will use all the sophistication of modern advertising and marketing to ensure that we avoid those persons who cost money. We have many ways to eliminate the old, the sick, the disabled, the malignant, the chronic, the risky lifestyles, and any other who may be a drain on our premium pool.
Presuming we get a pool of healthy prepaid members, what do we now do to ensure our maximum economic return – i.e., that we succeed in our business of health management?
First: We limit the network. We justify this based on costs and business necessity. It will be of no concern to us that we many not create something that requires patients to travel forty-two miles in the middle of the night with a sick child.
Second: We limit benefits, make exclusions, and create ambiguous language to give us the maximum power to deny services based on coverage issues. It will not worry us that we may eventually cause the death of some persons when they are told they do not have coverage for necessary treatments. We are doing business, not welfare.
Third: We create complex, inexplicable rules and procedures for navigating our managed care maze. This will be some of the simplest, least questionable “denials”, because we can just refer to our requirements for payment. We make the rules.
Fourth: We have our most versatile, authoritative, and profitable tool – our ability to make medical necessity determinations. Empowered with physicians employed by us, we become the final medical authority. Regardless of what any treating physician may want to do, we assume control and practice medicine our way.
Fifth: We cannot do everything directly, so we ensure that our physicians become our agents. We create financial arrangements that will encourage them to limit or deny directly without our intervention.
Sixth: We supplement this with extensive contracts devised to control physician’s power and authority. We profile them economically; we lure them with selection; and threaten them with de-selection once hooked; we usurp their power and authority with contracts full of clauses extracting performance, compliance, gag conditions, confidentiality - good managed care behavior. We make them our agents of denial.
Seventh: For good measure, we add a termination-without-cause clause to give us the ultimate power of ridding ourselves of inappropriate physicians.
Eight: Should anyone challenge our decisions, we ensure that the grievance and appeal process is closed and weighted against the member and in our favor.
Ninth: We add mandatory arbitration, in which there is no record of issue or outcome, giving no benefit to other members, case law, or public/legislative action.
Tenth: If all this fails, and someone should suffer from our tactics, nearly everything we do will be shielded from any liability thanks to our ERISA preemption.
Finally, we work to change medical education, creating from the beginning, manageable doctors to suit our purposes. Also, by not paying for things, and excluding everything, we can under the designation of “investigational”, diminish research, and slowly eliminate the availability of new treatments, slowing the prolonging of life, and thus the added expense of the care of aging persons.
Now, this is what is left…and if we are smart…we will think of ways to deny this as well. Then, we will have achieved the ideal health care business:
Money coming in and none going out –
A “Medical Loss Ratio” of ZERO.
Copyright 2001. Making Them Pay. Rhonda D. Orion.
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