Brad Honoroff and Christopher Honeyman

This article was first published in Alternatives, October 2001.

We all know health maintenance organizations and their customers experience plenty of conflict. But ask where the center of the problems might lie, or even what these conflicts cost, and you’re going to get heated, poorly documented, and hopelessly contradictory answers.

The most knowledgeable observers on all sides will admit that the scale of these organizations, the variety of issues that cause conflict, and the variety of ways they are addressed—or not addressed—make any current estimates essentially guesswork. Designing means of identifying the major locations, sources, issues, and players in conflict in managed health care is the key to parties’ recognition of the problem’s true scale, pervasiveness and costs. That recognition, in turn, is the essential prologue to the major effort at systematic dispute prevention and resolution which, up to now, has been elusive.

As an early and deceptively simple part of an effort to build sophisticated tools for analyzing managed health care "dispute streams," the authors of this article organized an unusual initial discussion for a selected cross-section of health care professionals, scholars and dispute resolution practitioners. This article will briefly describe the process used and some of the things the authors and the participants learned.

The origins of the effort are twofold. First, the Program on Negotiation at New York University’s Wagner School of Public Service, in collaboration with The Mediation Group, referred to here as TMG, in Brookline, Mass., recently received a grant from the Robert Wood Johnson Foundation in Princeton, N.J., to build an "assessment protocol" to help managed care plans take stock of disputes, which usually are between consumers and the plan. The protocol also would look at existing dispute resolution systems, their effectiveness, and potential improvements.

A first step in that project is developing an understanding of the impact of the disputes on the parties and the organization, as well as the important issue of appropriate measures of success. For measuring effectiveness, for example, it seemed wholly inadequate merely to count up numbers of grievances, and numbers, or even quality, of resolutions. Does an increase in the number of grievances, for instance, mean that a plan is doing a worse job, or is it an indication of greater access to the system? Also, does a dispute resolution system have an impact on the quality of medical care delivered? These were just two of a rich set of issues the effort sought to address.

The second sponsoring group was the Theory to Practice project, a Hewlett Foundation-funded effort (see www.hewlett.org) that seeks to build better discussions and better working relationships between scholars and practitioners in dispute resolution.

Theory to Practice already had sponsored a number of new conversations affecting a variety of parts of this sprawling field, and among the techniques the project had developed was a structured short encounter—in this case, a working dinner—known as a "moveable feast." See "Advancing Practice and Research With a ‘Moveable Feast,’" 17 Alternatives 106 (June 1999)(also reproduced at www.convenor.com/madison/moveable.htm). The moveable feast is a device for ensuring that the most productive possible conversation occurs among people whose time is at a premium and who will be difficult to round up for any long-term commitment.

The dinner we describe here was the first such conversation in the health care arena.

The two dozen people invited to participate in this discussion were from diverse backgrounds. Three managed care firms—Harvard Pilgrim Health Care Inc., Tufts Associated Health Plans Inc., and the Blue Cross/Blue Shield Association—contributed teams of three to five people each, including not only senior operations and planning officials but call center managers, appeals directors, a chief of surgery, an ombudsman, and others who are intimately familiar from the inside with the disputes, how they are handled and the impact they may have.

Also participating was a cross-section of dispute resolution professionals—both practitioners and those who have thought about theory and how it relates to practice. A third group was people who had creative organizational change experience in other settings, as well as those who have worked in the managed care field.

The entire group spent most of the time in small groups of five or six, arranged so that each covered a diversity of experience and viewpoints. At each table, a dispute resolution professional agreed to serve as a reporter so that the NYU/TMG study, and this article, could draw from extensive and detailed notes of conversations . . . which otherwise might raise important insights and intriguing possibilities, only to have them vanish as a new subject came up.

Meeting attendees who had experienced HMOs only from a customer’s point of view were immediately struck by the sheer complexity of these organizations. The smallest of the three served 800,000 New England clients. Each call center—certainly the first port of call of many conflicts—employed 300 people or more, and handled at least 150,000 calls each month from patients and others.

I. The groups began by identifying disputes seen as particularly difficult.

There were tales of tragic illnesses that caused wrenching disputes within the managed care organizations. There were descriptions of instances where health plan consumers felt caught between a doctor and another "provider" (i.e., medical care practitioner.) There also were tales of disputes over far more common situations where consumers seemed to misunderstand their benefits, or where different parts of a plan’s organization gave conflicting information. And the moveable feast participants heard about countless hours spent by many people throughout the organizations over these difficult questions.

With some reflection from the facilitators and contributions from participants, a few important themes about difficult disputes emerged.

The most difficult disputes between a consumer and a health plan seemed to be those with other disputes underlying or embedded within them. These embedded disputes could be of several kinds:

• Family and inter-generational conflict is commonly interwoven with what is presented on the surface as a "health care dispute." When the health plan’s decision carries implications about the extent of care for an elderly parent, for example, and the parent’s family has its own deep conflicts over the responsibility of caring for their parent, the health plan can be pulled in, its processes for resolving the dispute can seem inadequate or unresponsive to the real problem, and the conflict can escalate.
• Disputes often embody larger societal questions of how to allocate resources in health care properly, or questions of medical ethics. Health plans are regularly asked to fund experimental treatments for terminally ill patients, despite an exclusion in many benefit plans for experimental or investigative services. Which treatments should be considered experimental, and how extensively they should be employed, are questions about which there may not be a scientific or social consensus. When there is no consensus, the health plan finds itself to be the site for that larger conflict.
• A special type of resource allocation question may be those involving children. Every subgroup at the moveable feast mentioned child-related decisions as some of the most challenging. We all seem to have great difficulty in denying any care to an ill child, yet often, a child is subject to explicit--or worse, implicit--limits in the parents’ health care coverage. Plans struggle with making exceptions to benefit limitations for children, or in stretching their guidelines about experimental procedures when children’s lives are at stake. They worry about the cost, and perhaps more about the precedent of granting an exception; yet they are pulled--by the views of many of their own personnel, who often are parents--and pushed by parents to offer whatever care might be available, regardless of the stated plan limits.
• What appears to be a dispute between a consumer and the plan may really involve a hidden dispute with one or more health care provider. Some of the most difficult disputes between health plans and their consumers seemed to the group to be proxies for disputes with physicians or other providers. Thus, a doctor or a hospital might tell a patient that their professional judgment is that a service should be covered, e.g., that it isn’t experimental, or is medically necessary rather than cosmetic. When the plan denies the claim, the physician continues to disagree, but the dispute remains formally between the consumer and the health plan, raising questions as to whom the real parties are and how the issue might ever be fully resolved. See Christopher Honeyman, "The Wrong Mental Image of Settlement," Negotiation Journal (January 2001).

Disputing Inherent Characteristics

A second theme about difficult disputes, which emerged at several tables, focused on characteristics inherent in the disputing relationship between the consumer and the health plan, which intensify many disputes. These sometimes were seen as imbalances of power; at other times, as problems that a dispute resolution system would have to address.

First, there is time and its lack of neutrality. Since the advent of managed care, disputes often arise before services are provided rather than after; in these situations, time may be of the essence for the consumer.

Second, consumers were seen to be at a profound information and knowledge disadvantage. Consumers often know little about the medical procedures, alternatives and, significantly, about the plans’ grievance, complaint and appeals procedures. In addition, consumers may feel that much of the real decision-making is out of their control because it is their employers that enter into contracts with the HMOs, which determine what is covered and who their providers will be.

Finally, many consumers do not even have a plausible ability to "exit the system"; their choice may be limited to one plan, or to sufficiently few and similar plans as to give them little real choice.

A third theme suggests that some of the difficulties are caused by plans struggling with the early stages of treating disputes in a systemic way. Thus, one group suggested that what makes a dispute difficult is not the cost of an individual service—even if large—but the precedent it might set. Others mentioned a related point: Plans find themselves investing considerable time and angst over making exceptions to benefit limitations. Some worried that such decisions may only benefit the "squeaky wheel." Others noted the difficulties within the organization created by those decisions, but the group overall began to realize that these concerns could be viewed as harbingers of treating their grievance and appeals cases as a full system for resolving disputes and ensuring fairness.

II. The facilitators asked the groups to note how these disputes may affect the managed care organization, and whether there were any surprising impacts.

Participants gave examples of disparate parts of the organization being pulled in to particularly contentious disputes, from medical directors to business people to providers. But what emerged, especially for participants who had worked in dispute resolution in settings other than health care, was just how complex and far-flung are the parts of these organizations, along with the outside players in the dispute resolution "systems" the plans are constructing--even if unwittingly.

At the center of the disputes we were examining were consumers and the health plan. But the health plan is a more complex organization than simply the sum of its administrative employees who may make these decisions, and its dispute resolution system includes other important constituencies.

Thus, providers may have a variety of types of affiliation to plans, from staff physicians, to complex group affiliations, to individual contracts. Physicians’ recommendations often form the basis of a consumer’s complaint, and the health plan’s decision may have implications for the physician’s professional judgment and livelihood.

Meanwhile, the consumers’ employers contract with the plans, and the terms of those contracts set policy for benefits coverage and exclusions. The managed care firm’s plans are not necessarily uniform. Some employers contract for special coverage or exclusions; some self-insure and use the plans merely as administrators. Employers therefore have a deep interest in how those policies are carried out and in how disputes about them are resolved.

A second point soon emerged about these complex organizations, relating to the remarkably different perceptions about the quality of the current dispute resolution decision-making within each system. Those not directly involved in dispute handling in a health care plan were skeptical as to the quality of those systems.

But with very little dissent, those in charge of and those working in some capacity within the grievance and appeals systems were quite proud of the work done to date. They saw many of the decisions and issues as difficult, and believed that overall, these systems do a fine job given the constrained circumstances. Yet at the same time, these insiders recognized the bad press that managed care organizations are receiving and the public cynicism about the decisions they make, which often permeates to their own members. Those involved in dispute handling in these systems felt that they were often stuck with difficult questions that others in society were not willing to tackle, and that the public’s disaffection was most often the result of misunderstanding of this difficult role.

Finally, the plan staff members related that as individuals they have struggled with their appropriate role in disputes with their consumer members. Some reported that when a disputed claim arises, they take something akin to a consumer advocate position; others felt that their organizations now recognized that such staff served the organization better in the long run by construing their role as objective analysts, rather than as advocates for a restrictive interpretation of the contracts.

The views of the people actually processing the grievances reflected the conflicts built into their position. Part of their job requirement seemed to be to assist their consumer members in making an effective claim. Another part was to serve as a consistent analyst of the health care plan’s rules. Yet another role was, at least in part, to defend the written specifications of each contract against unfunded benefit inflation. Not surprisingly, many of our participants expressed constant worry over the collisions between these imperatives.

III. The facilitators asked about the costs of conflict to the organization.

While participants quickly noted that the costs can be high, they recognized that none of the plans had yet devised an accounting method for these costs. The most typical cost mentioned was a correlate of the care devoted to much of the decision-making: The considerable time spent on many individual coverage decisions was seen as a significant drain on resources, but also as an "opportunity cost" that impeded forward planning.

Participants were particularly concerned about decisions that were reviewed many times and which required repeated involvement by senior-level administrators and medical directors. Other types of costs that were mentioned were those that seemed to result either from misunderstandings within the organization, or more often, from consumers’ misunderstandings about their benefits. Several participants pointed to the many appeals for items like orthotics—services simply not covered by the typical insurance contract. They noted the number of appeals and yearned for clearer understanding among the public of what’s covered and what isn’t. Yet they also worried about the costs of constantly saying no to their own members.

IV. The facilitators asked how success or failure in dealing with disputes might be measured.

This was a difficult question for the end of an evening, and in several of the groups the conversation on earlier topics was so rich that little time was left to tackle it.

But at a few tables, very interesting ideas began to be generated. First, some participants outlined creative ways of measuring costs. At one table, for example, participants built on an idea they termed "flagging the rework." After noting that one significant cost of poorly handled disputes was repetitive decision-making and large amounts of personnel time devoted to this "rework," they began to devise a notion of accounting for those costs. It was based on the concept that a plan should be able to identify that rework and then devise ways of measuring it, either consistently within a plan, or even across plans.

Second, this set of questions seemed to inspire thinking of dispute resolution in a more systemic way. For example, several participants offered the idea that a way of measuring the success of dispute resolution might be in policy changes inspired by a dispute. Thus if a particular set of disputes kept recurring and were redressed by a change in coverage, the resolution system would have been successful.

A parallel suggestion said that another measure of a dispute resolution system’s success was if the health plan learns of provider practices that need to be addressed through the system. The participants recognized that to accomplish a change in so embedded a setting first demands thinking about the many parts as a complex dispute resolution system, and then devising procedures to make sure the larger organization can learn from the disputes.

* * *

Because of the press of other work, the first complete draft of this report was completed some months after the moveable feast was held in Boston in March of last year. But the delay has had one benefit: It can be reported that the ideas and relationships developed that evening have already had some significant effects, on a small scale.

First, several of the participants’ insights have helped refine the questions asked by the NYU/TMG team in its Robert Wood Johnson Foundation-funded study, which continues to examine dispute resolution systems in managed care plans.

Second, the evening produced previously unrecognized constituencies that should be pulled into the conversation, and have been under the RWJF grant.

A third consequence was more general: When the Commonwealth of Massachusetts recently passed its version of a managed care/patient protection statute, which required promulgating emergency regulations, TMG was asked to help facilitate an informal process bringing contributions from all of these constituencies to the regulatory body. In substantial part, the request was made because of the state’s recognition of the relationships TMG developed through these projects.

Finally, several plans’ participants from that evening have expressed a desire to find other ways to continue the discussion which began at that evening’s meeting, as it seemed to touch a need to develop ideas which cut across plans.

Honoroff is a managing partner in The Mediation Group, a private firm providing mediation, training, consulting, and arbitration services in Brookline, Mass. He is a faculty member at the Graduate Programs in Dispute Resolution at the University of Massachusetts--Boston.

Honeyman is a mediator who is president of Convenor, a dispute resolution consulting firm based in Madison, Wis. He is also director of Theory to Practice, a national project funded by the Hewlett Foundation to improve communication between conflict resolution scholars and practitioners, which is discussed in this article. Honeyman last wrote about the project in the April Alternatives. See "Boston Meeting Has Practitioners Designing New ADR Materials," 19 Alternatives 4 (April 2001).