Interview with Dr. Jerry Reeves

Hedrick Smith: We're talking with Dr. Jerry Reeves, Senior Vice President and Medical Director for HUMANA.  Dr. Reeves, the last time  we talked you referred to managed care as a revolution sweeping the American health care system.  What do you mean by that?

Dr. Jerry Reeves: The changes that are happening each day for each one us individually are dramatic.  They're more dramatic in health care today then they were for Russian citizens in the Russian Revolution in 1917.  The things that are happening impact the decisions that I make about my care and that you make about your care and who decides in those decisions many times a year.  It's up close and personal. 

Hedrick Smith: What are you talking about here?  Are you talking about a cultural change?  Are you talking about a financial change?  Are you talking about a change in people's mindsets?

Dr. Jerry Reeves: The intensity of focus; the amount of time that health care is in the news; the number of stories that you are reading about or hearing about at work that are about health care; many things that are unlikable are creating a lot more attention about health care today than has probably ever been the case.

The number of hits on health care websites is higher than [on] any other subject matter.  Everybody cares about health care and a lot of change is going on. A lot of the rules are changing very fast.

Hedrick Smith: What's driving this change, this momentous change that you call a revolution?

Dr. Jerry Reeves: I think that thing that is driving a lot of the change is the fact that resources are limited.  The way our American health insurance is put together by design creates conflict.  So we are experiencing a lot of that conflict personally now and it engages us in what counts the most to us and that's our health.

Hedrick Smith: What's HUMANA's mission?

Dr. Jerry Reeves: Our mission is to provide care and service for our members by covering the health insurance benefits for that.  It's reaching out and touching people.  We need to work within a budget, within the constraints of what is paid, and we need to coordinate the care and services so that the best health improvement can happen within that set of budget constraints.

Hedrick Smith: Does that mean that [the] quality of your members' care is always number one in your considerations?

Dr. Jerry Reeves: I believe that quality of care is number one in our considerations because fully 30% of the costs of health care are frittered away today with substandard or inadequate quality.  There are a lot of holes in health care, and we are in the process of identifying missed opportunities and mending those holes.

Hedrick Smith: Do you find yourselves as a health plan caught between employers who want to hold costs down and patients who want everything?  Do you find yourself in the middle?

Dr. Jerry Reeves: I mentioned earlier that there are inherent conflicts in the way health care insurance is designed in America.  The patient wants everything that might help.  The doctor wants to grow his practice profitably.  Think how that all plays out.  Somebody is not going to win a hundred percent of the time for a hundred percent of their desires.

Hedrick Smith: How do you balance the competing pressures when they collide, because cost sometimes is in collision with quality?

Dr. Jerry Reeves: How we manage this is that we all have to work together.  The patient has role.  They have to exercise good decision-making, preferably fully informed about what are the best choices.  The employer has to be compassionate and be willing to pay for those things that really will help. 

The physician needs to be effective and make right choices that are going to be the most helpful choices.  The hospitals have to make sure that that's a safe environment for the patients while they are there so that they don't end up with the patient being sicker then they were when they came in.

Hedrick Smith: Talk about a specific group of patients.  What percentage of your members wind up with chronic needs and what has that caused?

Dr. Jerry Reeves: We at HUMANA focus a lot of energy on the chronically ill.  Because we find that much of the burden of illness for our whole population we serve is within that small subgroup that have multiple chronic diseases.  One chronic disease doubles the amount of medical costs per year.  Two chronic diseases in the same patient triples their medical costs per year.  We're finding that of those patients who are our highest 3% for medical costs they on average have three chronic diseases. 

So we have implemented major programs to identify those that have serious chronic conditions, to reach out to them with registered nurses and certified professionals who have special capabilities in their illness, to improve their health and to help return them to work and get them back to the lifestyle they choose.

Hedrick Smith: What is disease management?  What is medical care management? What does that mean?

Dr. Jerry Reeves: We believe that disease management is really the engagement of care support teams to improve health for members.  It takes a team to make care better. In disease management what we are doing is identifying the key needs, the medical treatment needs, the prescription needs, the education and understanding needs and organizing how we reach out to these people.

Hedrick Smith: I think the impression that is afoot among some of the specialists in the field is that HUMANA, like other health plans, has bulk contracts or large volumes of care with skilled nursing facilities.  The judgement is not being made on the patients' need.  The judgement is being made on the basis of the way the contract is written for volume of care.  I just wondered what your response to that is.

Dr. Jerry Reeves: The simple answer to that is sometimes, depending on the particular plan and the particular location, we have 1,250 different health plan options.  We have PPO insurance where some of these things might not even be a covered benefit.  We have HMOs where they are a covered benefit.  We don't only contract in bulk.  We always have patients who are in special centers, transplant centers, special cancer centers, special stroke centers, who are receiving specialized care because that's what best matches the needs of that patient.  But we do organize the way we allocate our resources and try to do this as efficiently as we can.  

Hedrick Smith:  Is the health plan making the medical decisions or is the doctor?

Dr. Jerry Reeves: The doctors are making the medical decisions for where patients should receive care.  The insurer is paying for coverage services and is informing the patients where those covered services [are].  Effectively if you as HUMANA say to this patient, I'm sorry, we don't do business with that center.  That's not covered.  In effect you're saying to them they can't get the care there.  You're making a medical decision even though it's only a financial decision.

If you go out of the network and you don't have your attending physician refer you to that location, your out of pocket costs will go up because it's not covered.  That's the nature of that HMO certificate. 

Hedrick Smith: That's the individual patient.  When you are forming and you as the medical director are overseeing the formation of the treatment networks that your patients and your members are going to get in any given area, are you going to go for the best quality institutions or not?

Dr. Jerry Reeves: We're going to go for the best who are willing to contract with us.  We have a balance.  We talked earlier about our needing to balance.  We are not able to meet everybody's demand.  We can't be all things to all people.  Our niche or our focus is affordable, quality health care.

Hedrick Smith: But when you put that qualifier in it makes me wonder whether or not the word affordable means maybe you're not going to get the top quality care at the top quality center if it's too expensive.

Dr. Jerry Reeves: Anything is possible I suppose, but what we are finding is that when we are going in and setting up our credentialing criteria for who will be, who qualifies in our network, that we are choosing physicians and hospitals who are achieving the results and many times superior results compared to those who are not in the network for the health results.

Hedrick Smith: So you buy top quality if it can be obtained for a reasonable price.  If top quality costs too much then you won't buy it.

Dr. Jerry Reeves: In America what is going on is that we have a surplus of physicians.  We have a surplus of hospitals and we have runaway inflation within the health care world as compared to the rest of American society.

Meanwhile we are still working within a constrained budget trying to improve the access to care for as many Americans as we can.  Forty-three million Americans are uninsured right now.  For each one percent increase in health insurance cost 400,000 Americans lose health insurance.  That's a right now thing.

These are very tough choices that somebody has to step up to the plate and make a decision.  So we are trying to balance as best we can, taking in the input of our members with consumer advisory panels.  Our physicians with medical consultant panels, physician advisory groups within each of our plans, and our hospitals in hospital meetings that we have with them to try to bring all of our parties together to make the best decision we can within the constraints of what we have to work with.

Hedrick Smith: What do you see as the future of managed care?  Where is it going?

Dr. Jerry Reeves: I think that it's very much focused on more and more disclosure, reach out, touching, explaining, assuring that more and more of our members understand what's the nature of their insurance coverage.  How does this work and how can they get the care that they need at the right time, right place by the right doctor or the right provider?

So there is a constant improvement that comes from listening and feedback from improving our communication technologies that make it so, with Internet and phone and web TV and all of these other approaches, that our care management and disease management programs now have new technologies that make it easier for us to reach out and touch our members, help them to understand their diseases and their health and how they can take care--take control--of their own care.

Hedrick Smith: You're talking about not just about healthy patients.  But you're talking about patients with real illness.  Listening to you it sounds great.  It sounds like we're all going to be masters of our own health care in a better way than possible. But there's another way to read it and that is that families are going to have to carry a lot more of the burden of care--the individual and their family, even people with very serious conditions that last over time.

Dr. Jerry Reeves: The people that I'm describing are the baby boomers who are insisting that they take control and they take charge.  They're not passive about this.  They're not willing to say this authority figure will be the sole decider of what I'm going to do with my health.

They are looking to all kinds of places to receive understanding, knowledge, and advice about what they can do to make their health better.  What I'm trying to describe is that organized care is focusing more on enabling these people to do what it is they want.  That is they want to understand and they want to make these decisions for themselves.

It's very fine to have an expert physician who gives them advice, but they're going to check.  It's kind of, trust but verify.  They're going to check, and they're going to seek multiple sources to get that information.  I don't think they're going to use only our information. 

I think that this group that is coming up into the health services needing group have a very different set of expectations of their health care than did my parents.  My parents were really quite happy with accepting the advice of their attending physician and trusting that that was all they needed to know.

The ones who are seeking this information now are not satisfied with a one-stop shop source.

Hedrick Smith: As a long-term practitioner in the field of health care management have we wrung most of the savings out of our health care systems that can be wrung out and now there are going to be marginal gains and we're back on the escalator of costs again?

Dr. Jerry Reeves: We talked earlier about the revolution in health care.  Part of that revolution was the speed and the intensity during the '80s and the early '90s, that we brought new pressures to bear on decreasing the runaway inflation of medical costs. 

Those changes were so impactful to people individually they started pushing back and resisting.  It's some of the same kinds of things that have happened over and over.  Insurance started back in about 1870.  If you look at the history of health care this is not new what we're going through. 

This pushback, saying no, you're setting up too many restrictions and I want to have full freedom to do what I want to do, we saw that full freedom when everything was on a fee-for-service basis, and the build charges, the usual and customary charges, were whatever the doctor deemed to be usual and customary [that] led to runaway medical costs.

There was then this intense pressure from the people actually paying the bills saying, enough already.  Can't deal with that.  They pressed hard to set up a lot of restrictions.  Now in our booming economy we think, hey, let's go ahead and start writing checks free and clear again.

But this too shall pass.  There will be this phase where there is again an understanding that the total resources are limited and the total amount that our society is willing to devote to drugs and to health care will again undergo pressure to say, I don't think we can afford to be spending that way.

Hedrick Smith: So you've got several other things going on.  Number one, you've got an aging population so you've got more people living beyond 65 in the health vulnerable years.  They stretch on longer.  Number two, medical technology begins to--goes right on generating new findings and particularly in the field of pharmacology that you've already mentioned.

Finally, we're in another health care market in Massachusetts.  The health plan over there, one of the three big health plans, just went bankrupt.  You can't find a hospital in that city that's making any money.  Undoubtedly there are savings to be made.

The patients are complaining.  The doctors are complaining.  The health plan is going broke and the hospitals say they can't make any money.  I don't know how much further down you can squeeze.  That's the reason I'm asking you the question.  There are people in that market that are saying that.

Maybe in HUMANA's market that's not the case but we're hearing that more and more. 

Dr. Jerry Reeves: I don't believe that we're going to be able to continue to squeeze unit cost.  I think we've squeezed all the unit cost out that is squeezable.

I think that where most of the focus is now is to look at the holes in health care.  Where is it that the handoffs get dropped?  Where is it that people are lost to follow-up and by the time they're found to follow-up they've already accumulated a larger burden of illness?

Where are the things that are not organized and facilitated well or coordinated well?  We're finding in each of our disease management programs that typically by putting these interventions in and focusing on the holes, those things that should have happened that didn't happen when they were supposed to happen, and focusing there, that the overall costs are going down twenty to thirty percent.

Hedrick Smith: So you're getting a twenty or thirty percent savings overall from your disease management program?

Dr. Jerry Reeves: For those folks who are enrolled in our disease management programs.  I mentioned the HUMANA Beginnings Program where the babies are needing neonatal intensive care unit admission 56% less frequently then those in the same geographic location who were not enrolled in this program.

In some of the other programs the impact is not as great. You know they're not 60%, but when you average all of these out for chronic disease there's still a lot of loose ends that need to be tied up, and that I think is where we're focusing most of our energy, starting from the earliest phase with our health education and clinical reminder programs and twenty-four hour advice nurse programs and member newsletters.

We're basically flooding our members with information about how they can take better control of their own health decisions to improve their health.  For those that are at the more severe end of the scale we have nurses that are reaching out to them, developing relationships with them, talking with them regularly, listening to where the holes are in their care and addressing those holes so that they get the service they need sooner.

So by increasing some of those [patients in actual] compliance with recommendations by their doctor, their overall health care costs go down because they have less of the complications that result in these needs for hospitalization.

Hedrick Smith: Given the pressures there are on everyone to control health costs, do you ever get to the situation where you say to them, Hey look it cost you so much last year.  Let's make it so much, less 2% or 3%, next year?

Dr. Jerry Reeves: It's common that a pre-payment rate will be a little bit lower then it was when you were processing all the claims because of the administrative cost of hassling with the claims.  When every single unit of activity generates a piece of paper that someone has to look at and has to get a check arranged for, [for] each one of those there is an administrative cost with doing that work.

If you say, let's go ahead and focus on the care rather than the administrative aspects of your getting paid, there's a benefit both to the physician or the entity that is going to deliver the service and to us to say, let's let bygones be bygones about how much we were spending and processing claims and answering questions and disagreeing about whether they were supposed to pay this amount or that amount and let's just agree, here's what it was.

Let's take some amount off that that we negotiate and we'll let bygones be bygones and we'll do it within this rate.

Hedrick Smith: It won't surprise you that I want to ask you about a case that's just come up recently and that's the Caitlin Chipps  case down in Florida on which there was a judicial decision last week.  Caitlin Chipps as I understand it was enrolled in a medical case management program for cerebral palsy in Florida.  It worked apparently very well for her.  She was terminated along with a bunch of other young folks in December of '95.  What I understand from reading the testimony of the court, from people on your own staff, on HUMANA's own staff, was that HUMANA's own procedures weren't followed.  That is her doctor was not consulted in advance, and that a number of closure or termination procedures that were set up by HUMANA were not followed in this case.  Why was that?

Dr. Jerry Reeves:  I really can't venture a guess not being there in that particular setting.  There are a lot of factors that go into enrollment or non-enrollment in case management.  The way we design our case management programs are to have entry criteria.  That is, we have a reason to believe they would benefit from these interventions.  An exit criteria, that is, we believe that they have achieved the majority of the benefits they can gain from that and they don't need that intervention now.  They may need more later but they don't need the intervention now.

Hedrick Smith: You did mention earlier when we were talking about [the] congestive heart program that you set up with HUMANA that it had begun in '95 and '96.  I wondered if there was any connection between the start of that program and the phasing down of this medical case management for children.  That's been the allegation in this court case.

Dr. Jerry Reeves: I really don't have the ability to say one definitely ties to the other.  They are an interesting set of simultaneous activities.  I frankly don't know.

Hedrick Smith: June Brighton was the case manager for 40 children in this area with chronic diseases.  She testified that she was called to Louisville and given guidance to "weed out the peds" was the phrase she used in her court testimony, to weed out pediatric patients because she was going to get a load of senior patients and HUMANA did not have enough personnel to handle the senior patients.  So she made in her testimony a direct connection between the need to move the children out in order to make space in her time, her schedule, her facilities for the senior patients. In the light of that testimony do you want to rethink your last answer that it may or may not be happenstance.  This woman is saying it was a deliberate HUMANA policy to move out the kids to make room for these other case managements.

Dr. Jerry Reeves: Let me just clarify some of the responsibilities and the timing that relate to this.  The oversight of case management for patients in the South Florida market is the responsibility of the medical director in the South Florida market. The point, though, I believe, is that do we believe that we should be making decisions about where we're going to devote our energies if we have limited resources, and we're going to try to deploy those where they can have the most good.  I don't think that I would favor doing some abrupt change all in one fell swoop if I'm making the decision today and going forward.  There is still however the need for us to rationally allocate and deploy the resources where they can have the most benefit and to then make arrangements for keeping the care that is helpful going on.  But I think that we try to deploy the resources that we have within the budget constraints as best we can to improve the health of our members.  We cannot do all things for all people.  We do the best we can and we try to constantly adjust to what is the best deployment.

Hedrick Smith: In the course of that you used the word stable.  Kids get to a condition where they're stable.  I'm not quite clear what the word stable means for somebody who's got a chronic condition.  That sounds odd because it sounds to me like those kids are continuing to be sick.  Why are they now being phased out?

Dr. Jerry Reeves: I think it's very important to remember the total care that's going on. Remember that these children have ongoing care by their attending physician, by their pediatrician who've taken care of them and meeting their on-going health care needs. It's just part of improving the care and outcomes or health improvement of the patients I'm serving. Then you have to say, okay what are the things that are covered and what are the expected benefits from those coverages and how much will they improve the health of that patient.  In Caitlin's case we're talking about a child who was receiving speech therapy, occupational therapy, physical therapy as I recall.  There was a brief hiatus where that wasn't going on and then it was reestablished.  I still wonder where's the harm and where's the foul.

Hedrick Smith: The family says she regressed.

Dr. Jerry Reeves: How is she now?  Is she doing--do we have any evidence that she is really--is she really in trouble medically?  Is there something that's bad that's happened to Caitlin and she hasn't recovered from that.  I haven't gotten any of that testimony or any evidence that Caitlin is ill as a result of that hiatus in speech therapy.

Hedrick Smith: So you're saying that if she's okay now, even if you went through a period of several months where she was walking into walls, where her attention span was not as good, where she was having all kinds of frustration and her manual dexterity--her mind, body coordination--that that doesn't matter because she's okay now?

Dr. Jerry Reeves: I would always like for everybody to be as perfect as possible.  As a pediatrician, I see children that have things that they could be helped with additional services that would be awfully nice to have.  The question is whether those take priority over those where someone is going to be admitted to an intensive care unit or they have other heavier burden of illness.  So all I'm saying is that we as pediatricians try to meet the health care needs of the patients we serve and make arrangements for those services. 

The health plan provides a range of services that are covered and those things that are not covered the family pays for if it's not a covered benefit. Those children grow up to be citizens that vote and have jobs and are very productive. 

Do I wish that she had received all of the services?  Do I wish that every child would receive all of the services that they might be benefited by?  Yes.  Do we have the resources nationally to provide everything that's beneficial for every person?  We can no more do that than we can provide everything that might be beneficial for every child receiving an education.  I think all of us are trying to work together to do the best we can.  We still have work to do.