Insurance and Healthcare: An Irresolvable Conflict of Interest

I have republished this from Dr. Joel Hochman's blog. Dr. Hochman has successfully defended himself, at last count, from 18 frivolous complaints (probably by the Texas Medical Board) at the TMB. This is how the TMB "protects the health" of Texans.



Insurance and Healthcare: An Irresolvable Conflict of Interest

J.S.Hochman MD, Executive Director, The National Foundation for the Treatment of Pain


Healthcare is about taking care of people. Insurance is about making money. The primary source of making money for “Healthcare” insurance companies is by denying, deferring, reducing or thwarting paying for the care that people need. There is no apparent resolution of this conflict of interest. It is inherent and fundamental. The only solution is to remove insurance companies from the business of providing healthcare. When insurance companies routinely make billions of dollars in profit, and pay their executives hundreds of millions of dollars in compensation, it is undeniable that those billions, and hundreds of millions, came from the denial of healthcare to people who need it.

The primary mechanism by which insurance companies achieve these profits is by the institution of the fiction of the “review” of claims and benefits. “Prior authorization” for services, treatments, procedures, medications and devices, is the modus operandi by which insurers generate profits. Insurers expend hundreds of millions of dollars every year to accomplish this.

In the process, they institute the moral corruption of medical professionals and insurance employees. As has now been publicized on numerous occasions and in numerous media venues, physicians are employed as “Medical Directors” for insurance companies, to oversee the process of “review”. Typically the financial compensation to these “Medical Directors” is directly tied to the number of denials they generate. As many of these “Medical Directors” have revealed, after leaving employment with insurers, the job is morally corrupt, professionally unacceptable as physicians, personally demoralizing, and in irresolvable conflict with their most profound duties as doctors. The management of insurance companies, almost universally non-physicians, has no such perceptible conflicts. This fiction of “medical” review, removes the management of insurance companies from much of the direct responsibility for the denial of care. Their captive physicians, nurses and pharmacists do it.

For the non-physician, non-medical employees of insurance companies involved in the denial of care, the corruption is more insidious. They are directly constrained by the procedures, policies, quotas, budgets and directives of their employers. They do not have the medical profession upon which to fall back for an alternative source of livelihood. Typically marginally paid, they have only two choices – they can abandon their secure income and seek alternative employment, or they can persist.

In the first case they must sacrifice financial security. This is not a step taken lightly for people whose financial condition is almost always precarious. Few ordinary workers have the financial reserves necessary to sustain their lifestyle for the months it may take them to find another job. Some manage their crisis of conscience by attending school in the evenings or on-line, retraining themselves for another career. Some manage by surreptitiously seeking another job outside the insurance industry. In any case, the tasks are daunting.

In the second case, the consequences are far more profound. Like all bureaucrats who are compelled by their employment to do things which are morally corrupt, the results are inescapable. They can suffer moral conflict – knowing that they are compromising themselves and their beliefs for money (and not that much money for most). Or, more dangerously, they can lapse into denial - inuring themselves, deadening their sensitivities, functioning without thought or awareness, as they proceed in the daily activities that they know, at some level, are reprehensible. (Lewis Yablonski analyzed this consequence decades ago in a book called “Robopaths”.)



· Returning to the process by which insurers accomplish their profits, the essence of the “review of care” is the “denial”. Denials are accomplished by a masquerade. Insurers pretend that they are simply responding to “guidelines” that have been constructed by captive medical professionals or which have been suborned from professional organizations. Using these sources, the process is then justified by the claim that the healthcare being sought is:



1. Medically unnecessary

2. Experimental

3. Dangerous to the patient’s well-being

4. An “off-label” indication for a medicine or device

5. Outside the standards of care provided by a professional association or governmental agency.



Never do the insurers honestly state that they are denying the request because it is an expense that will reduce their profit.



For physicians outside the insurance companies there are equally corrupting consequences to the involvement of insurance companies in healthcare. It is the sworn responsibility of doctors to provide their patients appropriate healthcare. Caught between their patients and their health insurance, the doctors find that:



1. They must expend a great deal of time dealing with the insurers to obtain “prior authorization”

2. The insurer refuses to compensate the doctor for this time so they are inclined to avoid doing prior authorizations

3. They may be pushed to avoid using the best treatment or best medication, device or procedure, to avoid the process altogether

4. Passing this cost on to the patient adds to an already precarious financial burden for them (almost half the bankruptcies currently filed in the United States are because of medical bills)

5. They are pressured by insurers to utilize less expensive medications and treatments, deteriorating the quality of their care

6. They may have to create fictions or tell “white lies” to secure approvals



· Beyond the matter of “prior approvals”, another corrupting influence in insurance driven healthcare is the refusal of insurers to pay “ordinary and customary fees” for health services. Utilizing the coercion of physician “panels” and “preferred providers”, insurers have created threats to the physicians of denying insurance coverage, altogether, to patients who see any physician other than those who have thus been coerced into joining the insurance company’s “Plan”.



The insurance companies have secured federal legislation (see below for the corruption of government) that forbids physicians from joining together to negotiate their fees from insurers. Therefore doctors find themselves playing against insurance companies on a field deeply inclined in favor of the insurers. The physician can either accept the fees offered, or opt out of the system. Their only other choice, in their need to maintain the financial viability of their medical practices, is to cut their services to patients, and increase the number of patients seen, to make up for their lost fees.



As a consequence, general practitioners are thus now compelled to see as many as 60 patients a day to maintain a financially viable practice. This has profoundly deteriorated the practice of medicine. 60 patients per day results in average patient contact times of 5 to 10 minutes. No physician can practice his ethical responsibilities to a patient in that amount of time. No doctor can establish and maintain the essential therapeutic alliance in that amount of time. For that matter, in initiating a new patient’s care, few physicians can accomplish the necessary extensive history, physical examination and formulation of a treatment plan, within the severe time restraints imposed on them by economic pressures and insurance company fee schedules.



The result has been a serious deterioration in the quality of medical care; an increase in the incidence of malpractice and malpractice litigation; a loss of patient confidence in the medical profession; a loss of physician self-esteem; and an increase in the incidence of complaints against physicians to State Medical Boards. It has also caused a very disturbing deterioration in the quality of hospital care - and the creation of a new category of physician providers called “hospitalists” – generally doctors who are willing to tolerate the low fees paid by insurers for hospital care in exchange for patient volume. The latter has subverted a decades-long initiative by the medical profession to provide “continuity of care”, to optimize the quality of medical treatment by insuring that physicians have a long-term knowledge of, and relationship with, their patients.



· Next, the intrusion of profit-driven insurance companies into health care has created corruption in government. Utilizing exorbitant profits to purchase the fealty of the United States Congress, insurance companies have co-opted healthcare.



1. The most recent healthcare legislation purchased by the insurance companies from the United States Congress is the Part D medication benefit under Medicare. Part D created the opportunity for hundreds of insurance companies to impose themselves between senior citizens, dependent children, and the disabled, and their need for medications. The legislation provides that Medicare is NOT allowed to negotiate the prices of medications with the Pharmaceutical Manufacturers. It also provides that Part D. Medicare insurers are to only pay for medication prescribed for FDA approved indications. This legislation also created a “doughnut hole” for the insured. That is, the insurance pays for medications initially only up to a maximum allowed amount of $2400. After that those insured by Medicare must pay the next $3600 (the doughnut hole”). Only after that is the Part D Medicare insurer again responsible for payment for medications.



This unusual arrangement therefore allows insurers to:

a. take a profit from the annual expenditure budgeted by the federal government for every Medicare recipient.;

b. directly collect an additional monthly premium from every Medicare recipient;

c. via the “doughnut hole”, essentially tax every recipient an additional $2600 each year;

d. protect the profits of the pharmaceutical manufacturers by guaranteeing that they will be paid full retail price for their drugs prescribed under Medicare;

e. Tax U.S. taxpayers for the additional costs that this protection causes.



2. The involvement of insurance companies in healthcare also engenders circumstances in which these companies make massive “Political contributions” to the members of the U.S. Congress. Although these contributions are “legal”, in that they are permitted by law, at best they cause the appearance of wrong-doing – and at worst they allow the purchase of undue influence upon legislation. “Lobbying” by professional lobbyists (often previously members of the Congress themselves) is the process by which “Political Contributions” are directed to members of Congress by these middlemen. Special influence is therewith expected, as part of the quid pro quo of lobbying. In many instances lobbyists, working on behalf of their clients, actually compose the proposed legislation, or convey it from their clients to the staffs of the members of Congress.



Of course the insurance companies are not the only special interest groups involved in the lobbying-political-contributions activities in the Congress. Virtually every special interest in the United Sates participates in this dubious but institutionalized process. But, the insurance companies are among the largest contributors [1]



3. The scheme of lobbying-political-contributions also creates a situation in which members of Congress are protected and insulated from the electorate. Confounding the objectives of the U.S. Constitution, members of Congress do not have to rely solely upon their annual salaries, personal assets, or the contributions of the voting public, to sustain their political activities. Political “contributions” permit the members of Congress to involve themselves in activities which would otherwise have never been tolerated or possible. For example, unlike the rest of the U.S. public, members of Congress have provided themselves a retirement scheme which pays them, after a single term in office, a lifetime pension of full pay, with cost of living increases, and 100% healthcare insurance - with no deductibles, no limitations, no provider panels, no prior approvals, and which pays their treating physicians their “usual and customary” fees, therefore guaranteeing the highest paid health care available.



· Further, insurance companies are specifically responsible for limitations in the types and amounts of specific types of medical care. The clearest example is in the area of medical care for intractable pain patients. Intractable pain patients constitute what is known in the insurance industry as an “uncontained loss”. That is, the patient is unlikely to get well, or to die in a foreseeable length of time. Therefore insurers cannot easily predict the length and cost of their medical treatment.



Further, the cost of medication for intractable pain patients is unusually expensive. Recently developed, sustained release opioid medications have quickly become the standard of care. It is not unusual, given the very high retail cost of these medications (not infrequently $10 or more per pill – with sometimes 2 to 5 pills required for each dose ) for the monthly cost of medication to exceed $10,000. Given that there is no desire or incentive for insurers to negotiate with drug manufacturers (high medical costs justify high insurance premiums) the insurers have approached cost containment in other ways:



1. They have attempted to institutionalize opiophobia, promoting scientifically indefensible claims that opioids inevitably lead to addiction, tolerance, organ toxicity, diversion and illicit availability and abuse by the public. Concerning intractable pain patients, scientifically sustainable data disproves all of these allegations.



2. They have institutionalized opiophobia in the procedures of their prior and utilization reviews. Reviewers in the employ of insurers commonly attempt to impose artificial limits on doses, schedules, drug regimens, and the types of drugs utilized. For example, most recently, Part D Medicare insurers have refused to approve the use of immediate absorption fentanyl products, uniquely able to stop breakthough pain instantly, because the FDA indications limit them to use in breakthrough cancer pain. These drugs were clinically tested originally only in cancer patients. Until the FDA grants them the indication of treating breakthrough pain in non-cancer pain, the insurers can refuse to approve them.



3. They have participated in, and sometimes funded, opiophobic, media disseminated, public hysteria over the abuse of drugs, and permitted, if not encouraged, scientifically indefensible hysteria about drugs. They have also used their lobbying influence to encourage draconian anti-drug laws and to block harm-reduction and drug law reform which would instead utilize a treatment approach to the abuse and misuse of drugs.



4. They have utilized their influence to incite government agencies and State Medical Boards to engage in campaigns directed at the punishment and prosecution of physicians who attempt to treat intractable pain. Protected by state laws which guarantee anonymity to initiators of complaints about physicians to state Medical Boards, they have often simply eliminated doctors who would prescribe to intractable pain patients. In the process they have helped achieve a catastrophic chilling effect on the medical profession, resulting in the denial of pain care to millions of patients.