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Tufts HMO reverts to managing care

Some are resisting hard line on costs

Tufts Health Plan is trying to revive the company by returning to old-fashioned managed care: The insurer has put its own nurses into hospitals to monitor patient stays and is requiring doctors to get permission to perform hysterectomies, back surgeries, and certain other procedures.

The focus on cutting medical costs is the centerpiece of an aggressive plan to save an estimated $170 million a year. Tufts, the state's third-largest health insurer, hopes to get its premiums more in line with those of the health plans offered by the larger insurers and to attract urgently needed new members.

But the cost-cutting effort is meeting stiff early resistance from doctors and could backfire with patients as well. The new approach is reminiscent of managed care controls from the 1980s and 1990s, which have largely gone out of style because they enraged patients and the medical community.

The program is the first major initiative by new chief executive James Roosevelt Jr., who took over the struggling HMO in June. He said Tufts must curb annual double-digit premium rate increases to boost its membership.

''We've had premium costs that were higher than competitors' because our medical costs were higher," Roosevelt said.

If he is successful, it could provide some welcome rate relief to consumers and businesses. No one is predicting insurance premiums would actually fall soon, but rate increases might slow and Tufts could force the state's other big insurers, Blue Cross Blue Shield of Massachusetts and Harvard Pilgrim Health Care, to do the same to remain competitive.

Tufts has 650,000 participants, mostly in Eastern Massachusetts, and has lost about one-quarter of its members over the past five years.

Doctors say the new bureaucratic procedures do not benefit patients. They are particularly incensed by a policy that went into effect last week requiring them to receive authorization from Tufts to perform back surgeries and hysterectomies.

''I'm getting a lot of calls from concerned members," said Dr. Alan M. Harvey, an anesthesiologist at Brigham and Women's Hospital in Boston and president of the Massachusetts Medical Society, a physicians' group. ''Their blanket programs for hysterectomy and back surgery are unacceptable. We're mindful of costs, but if every procedure has a hoop you have to jump through, it's an incredible hassle. At some point you'll have physicians saying to patients, 'You need to change your insurance, because we can't keep up with all the hoops we need to jump through.' "

The requirements are similar to earlier managed care strategies, which sharply curtailed patient options and imposed strict limitations on doctors. Consumers ultimately rejected the approach and, starting in the mid-1990s, health plans responded by offering more choices and greater access to medical care. Healthcare premiums have been rising at steep rates ever since.

''We object to these unilateral decisions by Tufts to put up a barricade," said Richard Parker, an internist and medical director of the Beth Israel Deaconess Physician Organization. He questioned whether the measure will reduce costs.

Joyce Shannon, senior vice president of Lahey Clinic in Burlington, also criticized the Tufts program. ''We absolutely do not need health plans practicing medicine," she said.

Starting Sept. 26, doctors will have to call National Imaging Associates, a radiology consulting firm based in Hackensack, N.J., which will review requests for advanced procedures such as magnetic resonance imaging and nuclear cardiology, which creates heart images.

The program will apply to outpatients receiving nonemergency care and procedures will still be performed at local facilities. National Imaging will begin denying payments for unapproved procedures next spring.

Dr. Allen J. Hinkle, chief medical officer for Tufts, acknowledged that doctors are unhappy with the changes.

''We're getting push-back from providers," he said. ''They don't like when we infringe on their office practice. They don't like the radiology and prior authorization plans. But if costs are left unmanaged, it will break the system."

Hinkle said the majority of the savings will come from disease management and by more effectively controlling patient stays in hospitals, rehabilitation clinics, and intensive care wards for newborns, not from the programs requiring prior authorization for specific procedures.

The presence of Tufts nurses in 10 teaching and academic hospitals has also proved controversial since the program began in June. Although most of the hospitals already have nurse case managers on their wards, Tufts said its nurses have more detailed knowledge of patients' insurance coverage, and make detailed preparations for their care after they are discharged from the hospital.

A dozen Tufts nurses are assigned to Massachusetts General Hospital, Brigham and Women's Hospital, Children's Hospital, New England Medical Center, Boston Medical Center, Beth Israel Deaconess Medical Center, St. Elizabeth's Hospital, UMass Memorial Medical Center in Worcester, Baystate Medical Center in Springfield, and Lahey Clinic in Burlington.

Some hospital officials believe the outside nurses will create conflicts.

''Our preference is not to have the inefficiency of nurses from different places doing the same kind of work," said Jeff Levin-Scherz, chief medical officer of Partners Community HealthCare Inc., the dominant hospital network in the Boston area.

Levin-Scherz said Tufts pays hospitals for each day a patient is hospitalized, while other Massachusetts insurers pay a flat fee for specific treatments. Partners' case management nurses already monitor patients and set up discharge plans. Now they might have to argue with Tufts nurses to extend stays for some patients, Levin-Scherz said.

Harvard Pilgrim Health Care last year employed a similar strategy of stationing nurses in hospitals to manage members' cases, but eventually stopped using them. Last year, Harvard Pilgrim also began a radiology oversight program with National Imaging Associates.

Blue Cross is the state's largest health insurer with 2.8 million members and Harvard Pilgrim is second with 881,000.

Tufts chief executive Nancy Leaming resigned in June and Roosevelt, the general counsel, took over. The plan has a comfortable cash cushion of $700 million, so it is not in immediate danger of failing.

But outside healthcare analysts said it must increase membership if it is to survive long-term. In the second quarter, Tufts had revenues of $488 million and posted a loss of about $800,000 from its operations. But it earned $6.8 million on its investments for a net profit of $6.2 million.

Some medical institutions said they have not yet agreed to the plan's cost-cutting initiatives.

''We're in discussion with Tufts about this," said Levin-Scherz. ''Our concern is to be sure that patients aren't adversely impacted and these programs don't cause extra and unnecessary work and cost on the provider side."

Hinkle said Tufts may renegotiate the implementation date of some measures, but will not abandon the effort to trim spending.

''It's not just Tufts that needs to address some cost issues," he said. ''This is about the underuse, overuse, and misuse of healthcare."

Jeffrey Krasner can be reached at

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