Direct contracting comes to the HMO heartland – Minnesota’s Business Health Care Action Group – Column
In 1993, the first full year in which HealthPartners administered a self-insured network for the Business Health Care Action Group (BHCAG), members’ costs were 11 percent below what other employers in Minnesota paid for comparable coverage. In 1994, expenses rose only 2.5 percent, less than half the increase statewide. Why, then, would BHCAG announce this year that it intends to bypass the big managed care plans and contract directly with providers?
Missing from the Twin Cities’ well-developed managed care market, BHCAG executive director Steve Wetzell contends, is economic accountability for providers. The costs that they generate do not have an impact on consumer decisions. Consumers see only the premium rates that health plans set. What’s more, the plans sign up as many providers as possible to preserve market share, which means no provider is the captive of a single plan.
The situation provides little incentive to control cost and increase quality, Wetzell maintains. As evidence, he points out that only 20 clinics in BHCAG’s network are collaborating on practice guidelines. “The providers are saying, ‘Why are we doing this when we don’t get treated any differently than those who don’t use the guidelines? Why is it worth the effort?'”
To rectify the problem, BHCAG is moving toward a system that would eliminate the middleman and expose providers directly to 250,000 covered lives, about 10 percent of the local market. That share will eventually be increased by 150,000 state and local government employees, because Minnesota’s Division of Employee Relations last month joined BHCAG as an associate member. Although the state group hasn’t decided when it will begin purchasing through the coalition, Wetzell says it has endorsed BHCAG’s provider contracting concept.
Phase-in will begin in January 1997, when provider-led groups will start making their own decisions about what premiums to charge, how utilization will be managed and which specialists and hospitals their patients will use. Employees will be presented with detailed information about various provider groups and a list of their rates, although each group will offer a standardized package set by BHCAG. That, says Wetzell, will finally make providers directly accountable.
Employers will benefit in the long run, he argues, because providers will have incentives to closely manage costs to obtain market share. And consumers will be able to make decisions about providers, with less worry about having to switch because their employer changed managed care plans. Plans will retain a consulting role, helping providers decide cost and how to maintain and improve quality rather than engaging in a constant battle over reimbursement levels.
Needless to say, the scheme is stirring controversy in the Twin Cities and beyond. HMOs and other insurers argue that such large-scale direct contracting is unrested. Regulators, including the National Association of Insurance Commissioners, say provider groups that accept risk–even for self-insured employers–are in the insurance business and should be subject to state regulation. BHCAG members respond with two main arguments. First, they’re all self-insured, so their arrangements are protected under ERISA. Secondly, providers would be compensated not by capitation but on a modified fee-for-service basis, with future payments based on retrospective utilization review. That, Wetzell asserts, would avoid disputes about whether employers are shifting risk to providers.
Amid the debate about legalities, other aspects of the plan are often overlooked, such as how Health-Partners would be involved. A more crucial question is how BHCAG would assure that enrollees get the detailed information they need to make informed choices about provider groups. Consumer Choice, an interactive computer program that HealthPartners is about to begin using, contains at least partial answers to those questions.
During the open enrollment season that begins next month, consumers will be able to use the touch-activated, user-friendly computer program at 10 to 12 workplace sites. HealthPartners officials say it will offer an unparalleled amount of information about the providers in its network. Among the details Consumer Choice will provide:
* survey results, including details on satisfaction levels and waiting times, for the network’s 200 clinics
* cancer screening and childhood immunization rates and other HEDIS-type measures
* protocols for accessing specialty care
* the hospitals or specialists each clinic is affiliated with
* operating hours and accessibility to public transportation
* details about the credentials of the doctors, along with photos and personal statements.
By early next year, HealthPartners plans to put the interactive program on employers’ internal networks so new employees, for example, could access it from their desktop computers, says Mary Brainerd, executive vice president for care delivery. She also envisions putting it on the Internet for use by employees who are on-line at home.
But the most significant enhancement should come in 1997 when BHCAG makes the transition to provider groups. Then, Brainerd points out, the program will have to help consumers determine not only which clinic has the most convenient hours or a particular specialty service, but whether it’s worth it to pay a little more for a particular provider group.
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