(This is a copyrighted book - Ó C. Phillips, 2001 - Version 4/9/01)

Chapter 1

While the general public is gradually getting fed up with "managed care" practice of rationing and down-grading medical care, people still get lured every day into trying yet another HMO (Health Maintenance Organization). They are hooked by slick ads created by hundreds of millions of dollars diverted from health care needs. These ads suggest that there still are HMO companies one can trust.

The very words of the HMOs are built on trusting ideas – MaxiCare, Kaiser "Permanente" (permanent), HealthNet, Secure Horizons, Blue Shield, MedicarePlus, MediGap, Senior Advantage, etc. Combined with the promise of medication payment – a 10% bonus – they are as irresistible and dangerous as the irresponsible airline "ValueJet," the latter willing to load poorly protected oxygen tanks in a hot baggage compartment against the standards of safety. Just as the Florida crocodiles dined on the ValueJet passengers, the ravages of disease are allowed to consume treatable patients fooled by HMO’s ad illusion of safe care.

What is promised and what is delivered are two totally different things. This book is about the great divide between the promise and the reality of "managed care." It is also a guide on how to survive in an HMO while together in the future patients and medical professionals build a better healthcare system.

Each chapter of this book starts with a true story illustrating the daily disasters of this business model of medicine, one meant to satisfy investors, bonus-chasing executives, and even "medical directors" who have wandered off their oath - rather than satisfying patients. In fact, patient care in this industry is referred to as a "loss ratio" – a loss of money rather than the delivery of promised care. The most clever rather than most skilled rise to the top of this managed mudpie and brag to each other of their ability to lower the "loss ratio" to some more dangerous and patient-unfriendly level.

* * *

Dying from Tums

"When the coroner opened my Dad’s stomach, he saw the undigested Tums," said Brian to his girl friend Mandy.

"A lot of good that does in a heart attack," she answered sympathetically. "I hope you have a good lawyer." The two students were sitting in the shade of a city college campus in the California.

"The best lawyer doesn’t get you very far when your HMO makes you sign an Arbitration Agreement before you start," said Brian glumly. "The HMO knows that care is they are giving is bad and want to limit options at the patient’s most naïve moment – the signature of enrollment."

"Can’t you use your own lawyer to help present your case?"

"Sure you can," said Brian, "but the HMO cancels out my lawyer with its lawyer. The split decision falls to the hired arbitrator."

"What’s wrong with that," asked Mandy. "I thought arbitration was quick, cheap, and fair. You get your answer right away."

"That’s what I thought," Brian replied. "But I was wrong on all three words. Arbitration is slower than the court system – some take 13 years to be decided. And it is often more expensive than court. Those arbitration judges, for example, often want $400 an hour."

"But, Brian, you said all three words were wrong. Now, I suppose you will tell me that a retired judge is not fair."

He nodded. "That’s right. The judge will realize that we are right but also will know that the HMO will only keeps a judge on the potential selection list when he continues to cooperate. So if you are an arbitrator and don’t go with the program, you will be retired. It’s a stacked deck against the patient. Arbitration should only be a possible patient or patient family’s choice once potential medical damage has occurred. The injured party or surviving relatives should always be able to get to a jury."

"Sounds like Kaiser doesn’t like juries. Time for them to go back to high school civics class. One of the rights my grandfather died for in the war was the right to jury trial of ones peers." Then she watched a few students walk by. "Brian, what happened? How did they miss the heart attack risk?"

"I think they miss hundreds – on purpose. In my Dad’s case they gave him two stress tests, each one abnormal but read as normal. It is about purposely under-reading tests so as not to have to give full treatment. It is a forced rush to Wellness when there is really Sickness."

"Are you sure the tests were abnormal?" asked Mandy.

"We have a cardiologist ready to carefully explain how my Dad’s two stress tests each showed a heart attack was coming. In fact, the cardiologist said that to simply repeat a stress test a second time was malpractice in itself."

"What could be wrong with repeating a test?" Mandy asked surprised.

"My Dad should have been given a higher-level test the second time, since the first test was already positive. Perhaps Kaiser should have gone right to the cath lab for an angiogram, like they do a mile away at the Catholic hospital. And instead of giving him cardiac treatment – you know, like Vice President Cheney got earlky in 2001, the HMO insisted that the problem was his stomach. And we were so trusting …" Brian’s voice trailed as he looked down looked at his shoes.

"So that’s why you went to the rally today carrying that banner about your Dad?" she asked. "Because you want to ban HMO’s from this illusion of care and rationing into killing fields. Today’s your focus is forcing arbitration on patients at the front door."

"Yes, just the first of many changes that are needed. And that is why trial by jury was such a fundamental part of our constitution. It is the right of a citizen to place before one’s peers a question of injury or no injury. Judges were only empowered to guide the argument and pronounce the sentence. In the end, the only people that one can trust are the people themselves."

"Boy are you fired up!"

"My Dad died a sudden and unnecessary death. Mom had to sell the home and move. She got taken in by the HMO ad – you know, the one in the Sunday supplement about ‘Fifty Years of Service to Patients.’"

"Sounds like Fifty Years of Fraud. Now you’ve got me fired up."

"My choice is depression or expression. When I am done, HMO will not stand for what it does today - Half Measures Only."

* * *

Cartoonists often reflect the emotional feeling that most readers have about life at any point in time. This particular cartoon speaks to the fraud of managed care ads.

Cartoon - Street Corner Sale

This chapter will delve into that which is promised in contrast to that which is delivered. Many different organizations will be examined to show that the problems are industry wide. This is not about bad apple employees in HMOs, but about a diseased barrels (the HMO industry) contaminating all of the apples within.

The reader may wonder while going through these next examples why the government allows such a gap between image and reality. How could attorney generals in state or federal government focus on whether or not endorsing athletes really eat Wheaties cereal and stand by as HMOs deceive millions through such ads, often enrolling patients into early death outcomes?

This simply a matter of professional courtesy between government and "managed care" as partners in crime. With the government having to pay for one-third of the medical costs occurring in this country each year, any clever scheme to save money in health care will be more protected than an endangered eagle. HMOs, we will see, in Chapter 3 were launched by Medicare to try to save itself. Government will be the last to challenge this system of betrayal. The killing fields are open for ethically challenged to make some big bucks at the expense of patients.

Promise #1: Congresses’ Term
"Health Maintenance Organization"

Before critiquing individual false ad strategies of HMOs, the reader really needs to start with the original big lie – the term "Health Maintenance Organization." The year was 1972. The original "Great Society" approach of President Lyndon Johnson with its huge addition of Medicare program for the elderly to the already existing Medicaid program for the poor was now six years later. Medicare bills were threatening to pull down the rest of the economy. Private medical care was posed as the problem.

The Assistant Secretary for Health, within the federal Health, Education, and Welfare Department, a Mr. Philip Lee, was looking for a way to cut costs. Prepaid health plans like Puget Sound in the Washington state and Kaiser in California looked like possible models to use. At that point in time both were trying to expand and had not become ruthless, since they had little protection from legal suit and had to work hard for their enrollees.

So a Dr. Paul Ellwood, a pediatric neurologist from New England, came up with the term – "Health Maintenance Organization" – as a national ad gimmick to put a new spin on the prepaid health plan, the latter really developing clever rationing strategies just past the understanding of sick patients. This Congressional ad slogan used to sell the new legislation set the stage of deception which has never stopped since. It set the stage for the passage of the HMO Act of 1973 – a solution for Medicare and a disaster for patients. All of this came through the back door of Congress, the legislature on "the hill" happy to see the public distracted by the Watergate Hearings, a supposed effort to make government more transparent. So Dr. Ellwood gets the title of the "father of HMOs" when he really should simply get the title of master ad crafter for prepaid health plans; he still consults on managed care, his home now being in Minnesota.

"… the term health maintenance organization was coined as a substitute for prepaid group practice, principally because it had greater public appeal. Dr. Ellwood, "sometimes referred to as the father of the modern HMO movement, was asked in the early Nixon years to devise ways of constraining the rise in the Medicare budget. Out of those discussions evolved both a proposal to capitate HOMs for Medicare beneficiaries" [pay the same amount per month for each patient seen] … "and the laying of the groundwork for what became the HMO Act of 1973 …" [Thus managed care is really only "managed cost" – disguised rationing of health care.]

p. 6 of The Managed Health Care Handbook – Third Edition
by Peter R. Kongstvedt – An Aspen Publication - 1996

The HMO legislation became the launching pad of the HMO industry with federal grant assistance at every level for those willing to get federal charters. It was a major step in the evolution of these death stars. (The expanded story of how all this came to happen starting with the Pearl Harbor attack and West Coast reactions is the focus of Chapter 3.)

HMOs have hurt many patients. And lawsuits are plentiful. But Congress also put in major shields to protect this industry which in turn would save the Medicare budget. And in June of 2000 the Supreme Court of the United States had to decide if the dismissal of patient rights to sue – a key to protecting HMOs - was constitutional. The decision rendered by the majority in the case called Pegram vs. Herdrich (98-1949) was a statement that Congress intended HMOs to be protected [really to be given diplomat status in a country founded on the opposite - citizen rights]. Patient rights were thus flushed down the toilet by Congress in 1973; now we have to have "patient rights" debates in 2001 to try to give the same rights back to the people!

"Since the provision of profit is what makes the HMO a proprietary organization, [Herdrich’s] remedy" … [of forcing HMOs to reveal how physicians are rewarded for withholding care] … "in effect, would be nothing less than elimination of the for profit HMO … the fact, in effect, is that for over 27 years the Congress of the United States has promoted the formation of HMO practices …" Thus, he continued, the court cannot condone suing HMOs for changing physician focus from patient benefit to organizational benefit. HMOs are "the creature of Congress," he concluded.

written majority decision by Supreme Court Justice David H. Souter,
June 2000

Thus the first and worst HMO ad campaign was that launched by Congress itself to try to convince people that a prepaid medical plan – intended to ration care and thus cost – was really a positive organization designed to "maintain health." And, indeed, these groups do like to score themselves on preventative care – like immunizations given, Pap smears obtained, mammograms done, etc. – without explaining that the money for all this is diverted away from the care of sick patients. When these same organizations are audited for the outcome of sick patients – neonatal care of sick newborns, handling of chest pain, stroke rehabilitation, chemotherapy for cancer, etc. – they fail. But these audits are hard to do and are quickly disregarded by the media.

Now we will focus on the HMO ads of the last few years including some new campaigns into the year 2001. Notice the trusting invitation to enroll.

Promise #2: "You, Your Doctor, and PacifiCare"

This ad slogan was part of PacifiCare’s folder for 1999. It suggested that the patient and the physician are unencumbered. PacifiCare is like a third friend in the room. This is the promise of the ad – one more helper to the patient-physician relationship.

But according to the California Department of Insurance, PacifiCare – based in Cypress, California - received the highest complaint rate per patient of any of the HMOs for 1998. Most of these complaints address situations resulting from HMO’s interference with a physician’s decisions concerning his or her patients.

For example, one diabetic PacifiCare patient became allergic to his brand of insulin called Novulin, manufactured in Denmark. His physician switched him to the brand Humulin manufactured in Indiana by the Lilly Pharmaceutical Company. It is a similar product, made from bacterial gene copying, but with a different technique. The difference between the brands may even be a preservative or production byproduct in the European medication; that preservative then acted as an allergen to the patient causing severe itching and discomfort.

PacifiCare fought against the change for six months until they finally gave up this immoral denial. Why should someone be forced to take a medication to which he or she has been diagnosed as allergic by both the patient’s primary and specialist physician? But the general ad says: "… having your prescription filled is easy." And it continues: "Compatible generic drugs will be substituted for brand name drugs." If the patient is allergic to the generic drug, how is the cheaper version considered "compatible?"

In another case PacifiCare denied rehabilitation for an older patient after a stroke. "PacifiCare had become tougher than MediCal or Medicare," said the exasperated, small hospital Utilization Nurse who spends ninety percent of her time auditing medical records and trying to keep them consistent with governmental and "managed care" policies.

"The patient down the hall was covered for rehabilitation from her stroke according to Medicare," she said angrily, "but when PacifiCare joined in as the supplemental insurance, they denied it all! And they used the criteria of the tougher HMO branch of PacifiCare, a lower level than her actual enrollment level. She is not even in an HMO - and yet, Utilization Review clerk is trying to limit her to HMO rules. We couldn’t believe it. The appeal will continue. I know the wording they will have to live up to; it is just the time lost getting there." This is the lost time of a full time registered nurse who could be giving patient care. And the patient is deprived of care while the hospital waits for the correct decision.

How does this connect to the PacifiCare ad slogan, "Remember How Good It Felt, To Know That There Were People You Could Really Count On?" It doesn’t.

In another case PacifiCare only allowed one day in the hospital for a patient with a new chest pain. The explanation given for denial of the second day was that no cardiac stress test was done. The case occurred in a small hospital, which does not have stress testing. On the other hand, the patient’s electrocardiograms (EKG) did change during he admission while chest pain was present. Later it went back to normal when the chest pain eased. This change in the "ST" segment of an EKG during chest pain is the medical equivalent of a stress test. Allowing an extra day to get the patient’s unstable heart protected was entirely justified, though it was unpaid by the HMO.

How does the PacifiCare denial of an extra day in the hospital fit the ad slogan, "Remember how good it felt to get more than you’d imagined?" It doesn’t.

Next, when one thumbs through the managed care pharmaceutical book comparing various plans formularies on hundreds of medications, PacifiCare often says "no" when MediCal (the California form of Medicaid) says "yes." No one ever thought managed care would get tougher than Medicaid, the latter allowing no muscle relaxants at all. Why promise patients the moon – as PacifiCare does - and deliver a nearly useless cardboard replica?

But, PacifiCare goes on in its ad to congratulate itself on earning "the Blue Ribbon Award from the Pacific Business Group in 1998." However, they do not bother to identify who the group represents, how many blue ribbons were given out, whether the group is independent of the others, etc.

On its Internet web site, PacifiCare public relations department follows up on a complimentary survey in Fortune Magazine. It quotes Alan Hoops, president and chief executive officer of PacifiCare Health Systems, who says "We are honored to know that our peers judged us favorably against criteria that rigorously measure the strength and culture of such an organization. We view this acknowledgement as a benchmark to measure our performance and will work hard to further enhance our reputation as one of America’s most admired companies." But the public is tired of hearing about accreditations and awards that are staged to demonstrate the capacity to give care but do not measure or match the actual delivery of care.

Promise #3: Kaiser’s Newest Slogan:

"We’ve Got You Covered"

In February of 2001, Kaiser started running its newest ad campaign – "When it comes to Medicare, we’ve got you covered. In more ways than one" (front page) and "Just a reminder, we’re terrific at covering what Medicare doesn’t." (See both sides of the ad on the next two pages.) This ad is sent out with newspapers – sometimes in Parade Magazine within the paper – with attached enrollment postcards. (Thus if these ads are untrue, then they connect to federal mail fraud as well.) Let’s do an anatomic dissection of the ad – phrase by phrase.

Kaiser Ad Assertion #A – " … when it comes to Medicare, we’ve got you covered. In more ways than one."

Analysis #A – there is clearly a promise to cover all of the health issues that Medicare does not. "We’ve got you covered" does not mean that you are enrolled, but that you can have the peace of mind that your health needs will be covered to the level of any good health care system in town. This would include admission to the hospital for a major stroke.

"Original Medicare was designed to cover you for a variety of medical services, supplies and doctor’s bills. But it doesn’t cover everything. That means you may have to fill in the gaps in your Medicare coverage."

The ad implies that all of the Medicare "gaps" that exist will be covered by Kaiser. But this ad will be discounted at the time of signing into Kaiser at which time all previous representations will be null and void. This is classic bait and switch technique. Whether or not it is legal depends upon the gumption of the state attorney general of California. But with Kaiser Permanente being the largest HMO in the United States with 8.6 million members, and about 6.5 million being in California, the state might well be called Kaiser-fornia.

The reality of getting care under Kaiser is grim. For example, Kaiser hates to admit patients with strokes to an acute care bed. Such patients use up nursing salary resources and are hard to discharge once securing a bed. The strategy is to head them off in the ER and send them home!

So after the required CT scan, the Kaiser emergency physician will usually come out to speak to the terrified family. "Your family member has a severe stroke and cannot move his left side. There is some chance for improvement over time – perhaps more with his leg than hand, so we need to place him in a convalescent hospital."

"You’re not going to admit him here, tonight?"

"No," says the doctor. "We cannot think of any skilled nursing procedure needed. So the patient cannot come in to this skilled nursing facility."

As the family gets angry, the ER physician says that he will let the admitting internist for the night come down and help decide. Another hour passes, the patient and family having been there for four hours.

The internist comes down and gives the same message. "This is a stroke. But we cannot admit the patient. Furthermore, Medicare benefits do not kick in for convalescent care unless there is a three day admission. So the cost of care will fall to the family. Wait and the ‘social worker’ will come and talk to you.." Another hour passes. The family is now in grief over the illness, depressed about Kaiser care, and terrified about having to become sudden medical professionals for family care – perhaps at home.

The "social worker" comes down to the emergency room and without empathy explains the cost of convalescent care these days and states that most families end up giving 16 of 24 hours of care per day and paying for one shift a day of home care support. This may only be about $88 a day. The family decides that they can only afford such help five days a week. All complaints about the promises of Kaiser to be there for the patient fall to trained but cold ears. Active listening on the way to say "No" is a carefully learned skill in "managed care."

The family takes the patient home, beaten by the system. The poorly funded Kaiser home visits begins - if the patient does poorly – coming from the nurses to slide the patient down into hospice and expected death. Sick patients are "loss ratios" which pull down at Kaiser (facility) benefits for managers and Permaente (physician) profits for physician managers.

Kaiser Ad Assertion #B – "Senior Advantage is good for your financial health too … You don’t have to pay for hospital stays when you have Kaiser Permanente Senior Advantage."

Analysis #B – that is true, but then the whole system tries to keep you out of the hospital if at all possible. In the emergency room of Kaiser, perhaps one out of three patients with chest pain can be reassured and sent home as non-cardiac. The other two-thirds get seen by the admitting physician, an internist. These patients would generally admitted in most hospitals. But that physician sends half of these patients home knowing that cardiac disease may be missed in early tests. This is not the standard of care of the rest of the medical community around Kaiser. And when Kaiser does admit patients with chest pain, stress tests the next morning are under-read so that a positive test is called negative and the patient sent home – often with stomach acid pills.

But Kaiser does not care since suing for terrible care and bad outcome is so difficult for patients. First of all, patients must sign arbitration agreements on the way in – never mentioned in the $100 million ad campaign. Secondly, the federal government makes the HMO suit proof through legislation called ERISA, a legal shield still allowed by the Supreme Court in June of 2000 – source given earlier in this chapter. Third, California limits the cost of medical malpractice suits to $250,000 for pain and suffering even if five physicians schemed up the bad care; most of this $250,000 can be used up in expert witness testimony. Plaintiff attorneys are thus unable to help patients redress error. As one attorney put it in March of 2001, "if I do find a good physician expert witness, then Kaiser will depose the physician 20 times to use up my potential fee for the case."

The arbitration paragraph used by Kaiser is as follows:

"Except for Small Claims Court cases, any claim arising from or relating to a violation of any duty arising from or relating to your Agreement with Health Plan, including any claim for medical or hospital negligence, for premises liability, or relating to the coverage for, or delivery of, services or items pursuant to this Agreement, irrespective of the legal theories upon which the claim is asserted, is subject to binding neutral arbitration. This means that, except for Small Claims Court cases, all parties give up their rights to a jury or a court trial."

1998 Kaiser Permanente "Personal Advantage" Disclosure

Booklet [where is the advantage to the patient?]

Clearly, the patient is signing a blanket agreement absent the informed consent about how Kaiser operates as a rationing, mean machine organization.

Here is a summary of the arbitration system as described by an attorney familiar with the system. On March 1, 2000 Attorney Arlan Cohen wrote to Marianne O’Donnell of Dateline NBC the following:

"I do medical malpractice law in California. I am an MD/JD, and was in medicine for 23 years before going to law school at Harvard. I deal with arbitration problems all the time, usually relating to the conduct of Kaiser Permanente, which has a mandatory arbitration clause in its subscriber agreement, …

"The bottom line is this: in California, since one particular entity, Kaiser Permanente, controls virtually all of the appointments of medical malpractice arbitration ‘neutral’ arbitrators, any judge who wants to earn a living in retirement from the bench as a neutral arbitrator has a personal financial interest in finding in Kaiser's favor, and will be penalized greatly, personally and financially, for finding against Kaiser in any very large case. It is therefore impossible to get a fair shake on any large case against Kaiser, and this is precisely why Kaiser has insisted on arbitration with all its subscribers…

"In more detail: In California, Kaiser Permanente is the defendant (‘respondent’ is the proper word for the arbitration defendant here) in probably 90-95% of all medical malpractice cases that go to arbitration.

"These arbitrations are binding, i.e. are the final resolution of the case. They also are virtually unappealable, since usually there is no reporter's record to use on appeal, and since the only grounds for overturning an arbitration award is gross abuse of discretion. Most of the grounds for appeal accorded a plaintiff in a true court are inoperative.

"In the past ten years or so, increasing numbers of retired judges have turned to work in mediation or arbitration to fund their retirement incomes. The competition for ‘neutrals’ to serve in such proceedings has become fierce. Judges can earn anywhere from $350 to ... $800 an hour for such proceedings. One former California Supreme Court judge is reputed to charge $1,000/hour.

"In this setting, some unusual characteristics of arbitration outcomes have come to light. The judges who want this income understand that in any arbitration and in any mediation, both sides must agree on who will be the highly paid ‘neutral.’ No one plaintiff's attorney, and no one organization of plaintiff's attorneys has the clout or the resources to keep close track of the outcomes of mediations and binding arbitrations. But Kaiser does. It has become increasingly obvious to the judges who seek to earn a retirement income that any large judgment they render against Kaiser will penalize their own ability to earn a living at least as much as it penalizes Kaiser."

To make matters worse, when Kaiser does lose and settle for its serious errors, it insists on keeping the problem and the award sealed away from the public’s eyes. This is the same approach that let Firestone Tires and Ford Motor Company killed so many people worldwide who had bought Ford Explorers and trusted the system to divulge known errors. So the cost of hurting patients is simply part of doing bottom level business. As of early 2001 no legislator in California wanted to run with a bill against arbitration, clearly unwilling to go up against the Colossus of Kaiser.

Kaiser Ad Assertion #C – "You want medical decisions made by medical professions? You’ve got it."

Analysis #C – New physicians signing on to the Kaiser Permanante system also sign into some strange things. They sign into health policies developed at the swank headquarters in Oakland by those senior physicians and pharmacists that who are more interested in the business value of their own "vesting" retirement plans than the outcome of patients.

The physicians, nurses, and pharmacists coming on board must also sign to arbitrate any problems as well. Thus a new physician will quickly discover that, for example, the prescriptions that he or she writes can be altered by "policy." One serious alteration is that a whole pill written for 20 mg will generally be given out at the pharmacy window as a 40 mg pill with a splitter.

The physician complaining will be told the following: 1) this savings will help you with your own yearly bonus of 3-8% because it will lower the costs you generate including prescriptions and thus improve your "productivity"; 2) you have already signed to cooperate with pharmacy policy; 3) the patient will do fine even if the split fragments vary in size; 4) you need to complain through channels – your department head, then the Physician in Chief, then the non-physician regional director, this all before you can get to the head of Kaiser – a physician; and 5) you’re new here and on probation – you can be fired at will for the first few months just as you could when you were only hourly.

The physician suddenly learns that this is like the movie The Firm. It is also hard to get out. Much of his salary is in the form of a delayed payment requiring him or her to stay two years (to become Kaiserized). The same physician had to give up all outside work to be allowed to formally join the staff and start into the sign on bonus.

But pill splitting is evil. The Trial Lawyers for Public Justice filed a suit against Kaiser in Oakland superior court in December of 2000 asking Kaiser to give back the profits (? $200 million) made from this step alone. This case became the lead article in the magazine Public Justice that came out from their Washington, D.C. office in the Winter of 2001. Meanwhile, the American Medical Association has not only condemned this practice of mandatory pill splitting but has – with the blessing of the Surgeon General – sent off a letter in October of 2000 to Medicare asking that this practice be stopped. Kaiser could care less.

All of this means that the patient’s own physician in Kaiser – if still trying to practice the standard of medicine in the community – will all but be forced to compromise that care. The threat is financial loss or even getting fired. This is hardly equal to the promise in the ad that your physician is not presured to make bad decisions. The idea that "you don’t have to worry about who’s making decisions concerning your health care" is a lie.


Kaiser Ad Assertion #D – "$1600 annual prescription benefit with a low $10 copay …"

Analysis #D – This is the biggest hook of all as seniors have a terrible time coming up with the cost of modern medications. In fact, seniors pay a lot out of pocket even with supplemental insurance.

"Thus, about 85 percent of Medicare beneficiaries have some type of supplemental coverage. Even so, Medicare beneficiaries tend to pay more for their health care than do most other Americans – both in absolute dollars and as a share of their total health care expenditures. At present, the average beneficiary pays more than $3,000 out of pocket each year for health care (excluding long-term care)."

Page 928 – New England Journal of Medicine Volume 344, No. 12 – March 22,2001 – www.nejm.org Article "Health Policy 2001 – Medicare" – the fact was abstracted from the Commonwealth Fund January 2001 report "Growth in Medicare and out-of-pocket spending: impact on vulnerable beneficiaries." New York

By authors Maxwell, Moon, and Segal

So the medication hook is an enormous temptation to seniors weighing food versus medications.

But Kaiser does not try to use the best medications of the last decade. More commonly they reach backward to the 1980s and try to get by with blood pressure medications like Capoten (captopril). The reason that most of the non-HMO physicians in the country have gotten away from Captoten is that six hours after you take a dose the blood level of the medicine is already dropped to half. So its effect ("half life") is short. The pill must be taken at least three times a day causing many to forget or have uneven effects.

Kaiser has another trick. Their physicians give a medication that might be helpful but give it at such a low dose that it is not really effective. The doctors know that they are audited about giving every one with heart failure a "beta blocker" pill but then chose a low dose even broken in half to keep their own pharmacy score low. The patient’s own pharmacy co-pay may actually cover most of Kaiser’s costs for most pills.

One nurse joined Kaiser and asked to be kept on the same cholesterol pill. Her Kaiser doctor spent six months trying to get her on a cheaper medicine until the experiment in cheap treatment failed. She finally got back on the right cholesterol medicine only because as a nurse she knew better.

Kaiser also tends to give cancer patients one try at chemotherapy. If the patient either has a bad side effect or lack of response, the oncologist is quick to say – "time for hospice." Hospice is then used as a time to withdraw curative efforts. It also brings into Kaiser new Medicare monies as costs of care actually go down.

Kaiser Ad Conclusion – the Kaiser ad campaign for 2001 is very deceptive about what the patient will experience once inside. But once enrolled, the patient finds that it is hard to change. One patient trying to get out of Kaiser found that Medicare still had her on the Kaiser roster even after Kaiser had told her she was off and stopped honoring her refills.

Promise #4 – Quality is a Top Priority at "Health Net"

Sometimes the deception occurs in ads aimed at employers. Here is an example.

"Quality is a top priority at Health Net. That’s why we created the Quality Initiatives Division with the goal of realizing quantifiable improvements in the quality and efficiency of care … With more than 40,000 private practice physicians and referral specialists, many members find that their doctors are already part of our plan … your employees are covered virtually anywhere that they live, work or travel, something that’s not always available with smaller regional health plans." Health Net – California’s Health Plan – "The Plan of Choice" - "Your small business doesn’t have to settle for less" brochure of March 1999 – issued from the headquarters of Van Nuys, California (only post office box specified). Distributed through insurance brokers to employers.

It sounds good…bit some of these problems only show up in review:

"HMO actions designed and intended to interfere with an existing doctor/patient relationship constitute extreme and outrageous behavior exceeding all bounds usually tolerated in a civilized society." – And this was a quote from a California arbitration panel in 1995 after a review of treatment denials of Health Net members.

Page 321 – Bleeding Edge an Aspen publication,
Gaithersburg, Maryland, 1998 – J.D. Kleinke

In Fresno, California on Friday April 14, 2000 both of the Health Net hospitals had an estimate time of 48 hours of emergency room waiting before some of those needed admission could be admitted. One patient died in the ER waiting over 24 hours to be admitted. This was because the Health Net affiliated hospital was not paying nurses enough to staff all of the beds possible. So the "Plan of Choice" chooses not to have sufficient beds ready to handle the patients who get sick. It does not meet its own promise of "a full range of plans to meet the needs of your patients."

Health Net contracts with physician groups called Independent Practice Associations (IPA). One such group is called Sante. The "Medical Director" supervises the attempt to stop patients from getting through the gate to out-of-service care, since utilizing physicians outside of the IPA group lowers profits. In one case the medical director first told a patient in a letter that he did not have cancer. Then he tried to block a referral to Stanford to get the cancer – which was present – properly diagnosed and staged. And next he tried to block the patient from seeing the Stanford oncologist to get the right treatment – four medications rather than the one used by the HMO.


Perhaps the first step in the patient empowerment revolution is to focus on false advertising. Managed care is not about more choice less choice. It is not about maximum care but rationing. Managed care is only accredited in its capacity to give care, not the willingness to give care.

But as the next chapter will explain, managed care has finally created so much anger that the gathering forces within a democracy may yet topple the giant:

"Of course, imminent legislation that imposed legal accountability on MCOs [Managed Care Organizations] for their meddling in the care process may make all of this moot. In 1997 [and more so in 1999] numerous bills were introduced into state legislatures and Congress that would hold MCOs liable for medical malpractice, if their refusal to authorize care was tantamount to negligence; so much for having your cake and eating it, too. Absent such laws, MCOs have been able to direct physicians’ clinical decision-making, but at the same time be immune from lawsuits when those directions go awry."

Page 330 – The Bleeding Edge again

So the question is why is this the only protected industry in the country? And when will it be time to restore, not just to pretend, to give patients rights? Perhaps time is now.