In the HMO era, patients are giving up choice but still are being
saddled with the bills
By Lee S. Goldsmith, M.D., LL.B.
The author, an attorney and medical doctor, practices law as a
partner in Goldsmith Ctorides & Rodriguez in Englewood Cliffs.
Over the past three years our office has seen a tremendous increase in
calls from potential clients. The change has been notable in the reasons for the
If one were to review the intake files from the early 1990s, the basis of the complaint
would be seen usually to refer to a medical event. Our task would then be relatively
simple. We would evaluate the care and make a determination as to whether or not there was
a problem associated with medical negligence.
But as the decade advanced, the calls became more likely to be related to problems
associated with health insurance coverage, namely, denials of care by health maintenance
organizations and what can only be called "games" being played between the
provider and insurance carrier. The individual damaged by these games would usually be the
patient. While the nugget of a malpractice claim might be present, that was usually not
the presenting problem.
Depending on one's point of view, the health insurance complaints did not represent
large sums of money. However, the aggravation and harassment was great, and no physician
or insurance representative was interested in the problem. The patient could either
attempt to manage the problem or look for assistance. There is no state agency nor any
legislation that will effectively protect the patient. Lawyers, generally realizing that
the sums involved were small, were not interested. The patient was effectively alone
fighting a provider's collection agency, an insurance behemoth or both.
The problems take many forms and a few examples might be pertinent. Many current
insurance policies indicate that the presence of an assistant during surgery will not be
compensated unless necessity is shown. The patient does not make the decision as to
whether or not an assistant should be present nor does the patient select the assistant.
In Tod Coleta's case, he underwent a major cancer operation and his surgeon called in
an assistant. After the surgery was completed the company first denied payment to the
assistant indicating that none was necessary. After some time, the company agreed to pay.
However, the assistant was not a member of the plan so he would not be covered within the
plan with a minimal co-pay; instead, he was subject to the 80 percent coverage for outside
Not only was there no negotiation of Mr. Coleta's bill, but there was an additional
problem. This insurance carrier was having a dispute with the physician. The carrier felt
that it had overpaid prior bills to this physician and knowing that they probably would
not receive a refund, pointedly underpaid the current claim to recapture the funds.
The physician then requested the difference from the patient and when it was not
immediately forthcoming, sent the matter to collection. Mr. Coleta then contacted us.
Decision-Maker Not Responsible
What's wrong with this picture? The HMO-referred surgeon is making decisions on
staffing that go beyond the patient's input, yet the patient is being hit with the
The patient may have some input when the HMO gatekeeper refers him or her to a surgeon
-- selecting a surgeon and hospital covered by the plan. But the surgeon is therefore
making the decision as to whether or not an assistant is necessary and who that assistant
is going to be. Therefore, if there is no need for an assistant or if that assistant will
not be compensated for ancillary reasons, it should not be the patient's problem.
Similarly, when admitted to a hospital covered by the plan, the patient has no choice
as to the anesthesiologist. If the plan covers the hospital but not the anesthesiology,
the patient may be hit with an extra and unexpected bill.
A variation on this theme occurred to Theresa Becker. Mrs. Becker became a new mother,
but her infant had problems at birth. Her doctor belonged to her HMO and his bill was to
be paid 100 percent. The hospital in which the birth took place had a contract with the
HMO so that bill was going to be 100 percent.
However, the neonatologist was associated with a New York hospital with which the
delivery hospital had an affiliation agreement. The neonatologist suggested a transfer to
the New York Hospital and this new mother agreed, anything to help her baby. The
neonatologist did not transfer this child to either of two local hospitals with the
necessary facilities and where the HMO had a contract for 100 percent coverage of costs,
but rather to the hospital with which she had an affiliation. First, the HMO would only
pay 80 percent of the bill. This left a bill to Mrs. Becker for $3,000. The HMO did not
pay the bill within 60 days. The New York City hospital added a $1,500 surcharge for late
payment. Mrs. Becker is now expected to pay the additional sum of $4,500.
Had the appropriate selections been made, the Becker family would not be dunned for
$4,500. This is a sum that this hard working family, surviving on two incomes, finds to be
In another case, Kevin Connor suffered a medical injury and was placed into a
rehabilitation hospital for care. Subsequent to his discharge, he received a large bill
which his insurance carrier initially declined. While a partial payment was subsequently
paid, the hospital began its attempts to collect the unpaid funds from the patient. The
patient had complained that he never received much of the rehabilitation therapy
supposedly provided. Therapists would show up for 10 minutes and bill for an hour or not
even show up at all.
Who is to be believed? Do you believe a patient who might want to get out of a bill or
therapists who want to get in their billing hours and cut corners on the work delivered?
How many other plans and patients have been billed for work that could not be done on a
patient, was only partially done or not done at all?
Then there is the case of Judith Ferraro. Her medical gatekeeper diagnosed an ovarian
cyst and recommended surgical removal. The HMO approved the removal of the ovary and the
fallopian tube on that side. However, unknown to the patient was the fact that the
physician did not have hospital privileges to do such surgery nor proper credentials
within the HMO. With HMO approval and hospital permitted, this uncredentialed physician
performed the surgery. There was a complication.
At a subsequent point, the patient returned to the hospital in question and one
physician proposed admission. The HMO declined indicating that the patient could just as
easily be admitted the next morning. The patient left the hospital and when she returned
the next morning, fell into a coma. The patient had been asked whether or not she wanted
to be admitted, but was told that the insurance company did not feel it was necessary, and
so declined to be admitted.
The hospital had a policy of denying admission to a patient if the admission was not
precertified. The physicians knew that if they admitted the patient and the insurance
company declined payment, the patient would be responsible for the costs. However, they
also knew that the patient would raise questions about unnecessary bills. The hospital
does not want patients admitted when the insurance company declines to pay and would look
to the patient to pay. It is the rare case when the patient makes the decision involving
admission. The patient leaves that decision as well as the decision as to what is
ultimately done to the physician.
Most patients are medically unsophisticated. They do not and cannot be expected to know
when assistants are needed and appropriate during surgery. A particular surgeon might feel
more comfortable having an assistant in a particular case while a second might feel that
an assistant was superfluous. Would this mean that the former surgeon should be prohibited
from performing the operation because of the extra and "unnecessary" cost to the
patient? Should the HMO have responsibility to the patient for the qualifications and
capabilities of the surgeon performing the procedures under the circumstances that they
require? If the first surgeon decided to proceed without the assistant that he felt would
be useful and had a problem, should it be his/her responsibility or that of the HMO?
The federal and state governments are very concerned when providers bill for services
that are not rendered. Who is providing similar protection for the patient who is
responsible for the bills when other entities do not pay them.
It is necessary that the patient receive appropriate protection. The so-called
"Patient Bill of Rights" touches on only a small portion of the problem.
Finally, there is the example of inadequate treatment. A patient receives a
prescription for an MRI. The procedure is done on inadequate equipment or done poorly.
When the images are seen by the surgeon, a second MRI is requested. The insurance carrier
either denies permission for a second MRI or denies payment. Where does the responsibility
lie. The patient is requested to pay the bill. The HMO tolerates the inadequate care and
an inadequate entity is enriched.
There may be patients who are inappropriately delinquent on paying their bills. They
get dunned and sent into collection. There may be physicians who inappropriately bill and
abuse patients for funds. They can develop poor reputations and could lose their licenses.
When HMOs have problems, they raise their premiums.
Patients need protection from delayed payments by insurance companies, from phantom
treatments from providers and from becoming pawns in the never-ending fight between
carriers and providers. The proposed patient bill of rights and federal legislation will
not solve these problems.