By Amy Goldstein
Washington Post Staff Writer
Monday, April 5, 1999; Page A1

In the two decades after he became a doctor, Glenn Littenberg had fit into his schedule a few patients each week who couldn't pay their bills. But not long ago, he began encouraging people without insurance to look elsewhere for care.

The local hospital would no longer allow Littenberg to bring occasional patients for free tests. And in the heart of Southern California -- where nearly everyone who has insurance belongs to a managed-care plan -- Littenberg's own income was falling even as he squeezed more patients into his days. Sometimes he feels guilty, but he also is a realist. Speaking as one pinched for money and time, Littenberg says that "charity care has pretty much gone by the wayside."

It has been suspected for the last few years that, in the privacy of their offices, doctors across the country, such as the 50-year-old Pasadena gastroenterologist, quietly have been cutting a lifeline to the uninsured. But nobody had documented their actions. Now, the scope of that phenomenon is evident for the first time in research, which suggests that managed care systematically erodes physicians' willingness to treat people without insurance or money.

Based on a survey of 12,000 U.S. physicians, a study published in the latest issue of the Journal of the American Medical Association finds that doctors whose income depends most heavily on health maintenance organizations and other managed-care health plans, on average, devote only half as much time to charity care as do their colleagues who don't participate in managed care.

Even more striking, the study finds that physicians who work in communities where managed care is most common tend to spend significantly less time treating uninsured patients, regardless of how many HMO patients are in their own practice.

The findings are the latest evidence of a bleak aspect to health care in the United States: Even as the nation enjoys an era of sustained prosperity, more Americans are being pushed to the margins of the health care system. And managed care, the private market answer the nation has grasped on to in hopes of curbing medical costs, sometimes has adverse ripple effects on the people its long tentacles have not embraced.

"I think the system is on the verge of a major breakdown, " Littenberg said.

Throughout most of this decade, the number of uninsured Americans has increased by about 1 million a year to more than 43 million today.

In the face of this swelling demand, doctors are not the only ones feeling the strain. Charity care by physicians is eroding at the same time the dominant facilities that care for poor patients -- the community clinics and public hospitals that traditionally have formed the nation's medical "safety net" -- are themselves resting on increasingly shaky ground. In many communities around the country, those clinics and hospitals are less able to take care of their clientele of uninsured patients, as they struggle to cope with changes in states' Medicaid programs and new limits on financial help from the federal government.

Although no one knows the results for sure, some physicians and public health officials are starting to worry that, as a result of these new economic stresses, many poor people in America are getting less medical care.

Few believe that patients are being turned away when they have strokes, asthma attacks or other medical emergencies. But Mohammad Akhter, executive director of the American Public Health Association, said more routine care "is being denied all over the place. . . . This large burden of disease is being built up among the uninsured people of this country."

The group that sponsored the research into charity care, a Washington-based nonprofit called the Center for Studying Health System Change, released another study last month indicating that Medicaid managed care is, indeed, squeezing out medical resources for the uninsured. In states where Medicaid programs rely most heavily on managed care, this second study found, uninsured patients were less likely to have a regular physician or to have visited a doctor or clinic in the previous year.

The main author of both studies, Peter J. Cunningham, and other health policy experts believe the reason behind these patterns is simple: HMOs and other managed-care plans, eager to constrain medical costs, tightly control payments to doctors, hospitals and clinics. As a result, those physicians and facilities have been forced to abandon their longtime habit of "cost-shifting" -- that is, making enough profit from their insured patients to cover the expense of treating the uninsured.

Traditionally, doctors have not offered as much charity care as hospitals or clinics, but they have played an integral role. About three-fourths of all physicians treat at least some uninsured patients, often because they continue to treat patients who used to have insurance or because they accept an indigent patient who needs specialized treatment as a favor to a colleague. According to the most recent estimate a few years ago, compiled by the American Medical Association (AMA), doctors performed about $11 billion worth of free or discounted care in one year.

The new study does not document whether that volume has dropped or how many individual doctors have abandoned patients. But its findings are highly problematic for the simple reason that more doctors are getting more of their income from managed care. According to the AMA, the percentage of doctors who held contracts with managed-care plans increased from 61 percent at the start of the decade to 92 percent in 1997. Among doctors with such contracts, the proportion of their income coming from those plans rose from 35 percent to 40 percent between 1996 and 1997.

As doctors provide less charity care, the trade group representing HMOs resists the idea that the industry is to blame. "This is not a managed-care problem," said Karen Ignani, president of the American Association of Health Plans. She said employers and states -- not health plans -- are responsible for the pressures to cut medical costs. And she said managed care actually has helped to promote care, reasoning that more Americans would have lost insurance coverage if managed care had not helped to hold down medical costs during the past few years.

Marc Edelstein, a senior vice president at AvMed Health Plan, a large HMO in Florida, noted that the average incomes of primary care physicians in the United States has risen in the era of managed care, even as discounted rates have squeezed the pay of certain kinds of specialists. In addition, he said that physicians, in part out of fear of malpractice suits, may be replacing charity care in their offices with pro bono work at community settings such as homeless shelters.

Edelstein and other health plan administrators say they are striving to widen access to care. Kaiser Permanente Health Care Program, the nation's second-largest HMO, has dedicated money to treat uninsured children, sent doctors to volunteer in clinics for migrant workers and helped small businesses in California band together to buy insurance at more affordable prices, said Francis J. Crosson, executive director of the Permanente Federation, the physicians group affiliated with Kaiser.

Many doctors, however, have a distinctly different perspective. "I think the health plans have some culpability by . . . not understanding the impediments to care that have been created by the managed-care techniques," said Thomas R. Reardon, the AMA's president-elect.

Barry Smith, a family practitioner who has worked since 1980 in a relatively poor Washington neighborhood next to Greater Southeast Community Hospital, said he has continued to treat uninsured patients even as managed-care plans have cut his fees. But when he needs to refer an uninsured patient to a medical specialist, "it requires a few more phone calls than it used to in the past."

And Caryl Mussenden, who has been an obstetrician-gynecologist for two decades and works in downtown Washington and Falls Church, said she and her partner were forced to stop giving patients discounts after signing up with several health plans. When she received a call recently from a longtime patient with no health insurance and a serious bleeding problem, Mussenden referred her to a clinic for low-income patients at Columbia Hospital for Women.

"We've been really cracking down," Mussenden said. "At one time, I would have said, 'Oh, honey, you don't have insurance, you're between jobs. I won't charge you anything.' Now that we have been cut so bare-bones by insurance . . . there's no way I could do that. I cannot give away free care."