Fresh Take by an HMO

Since World War II, medical insurers have gone from one extreme to another: first the “fee-for-service” system in the 1960s and ‘70s, which rewarded lavish spending by hospitals and doctors, then a “managed care” system in the ‘80s and ‘90s, which too often rewarded health providers who denied treatments in order to ratchet down company costs.

Congress hasn’t found a good middle ground, but now the nation’s second-largest health insurer is working toward it.

UnitedHealth Group announced Monday it will return decision-making power to physicians while retaining its ability to assess whether they are delivering cost-efficient, quality medical care. Beginning next week, the company, which has 800,000 members in California, will no longer require doctors to obtain authorization when choosing courses of treatments for their patients. UnitedHealth said it spent $128 million on a “utilization review” system last year but saw little benefit to the company in it--essentially, it was costing more to review care than to simply grant it outright.

Oakland-based Kaiser Foundation Health Plan also leaves its doctors free to order many tests and treatments without obtaining prior authorization, but United’s plan is unique for the way in which it will manage care by using a sophisticated computer-based “quality measurement” system. It will generate report cards that grade physicians not just on cost containment but on whether their care is within accepted medical standards and practices.

Health care experts have long agreed that the utilization review systems in place at most managed care plans, in which medically uneducated administrators often second-guess physicians’ decisions, do nothing to keep physicians from committing treatment errors. The most common errors include failing to prescribe beta blockers after heart attacks, monitor glucose levels of diabetic patients, give mammograms to women over 50 and minimize expensive hospital stays by reminding members with chronic ailments to take their medications.

When Paul Ellwood coined the term “health maintenance organization” in 1970 and sold the idea to the Nixon administration, his hope was that it would foster health care based on solid evidence about what works. Only months ago, Ellwood lamented that his vision was unfulfilled, but United’s new policy shows that it could still be realized, without risking a return to the spending without limits of the old fee-for-service system.