Eliminating the middleman: Buyers group bypasses managed care plans
Eliminating the middleman: Buyers group bypasses managed care plans
Self-insured coalition rewards quality, reduces cost, widens choice
We’re used to hearing about employers shopping managed care plans for employee health care benefit packages. But in the Twin Cities of St. Paul and Minneapolis, a group of companies has cut managed care and insurance companies out of the loop and is dealing directly with health care providers. Providers set their own fees, workers don’t have to change doctors every year, and the companies save a lot of money on their benefits packages.
It’s really a reversion to simple market economics. "We wanted to drive the competitive forces down to the providers," explains Patricia Drury, MBA, senior consultant for quality measurement and consumer information for the employer coalition — the Buyers Health Care Action Group (BHCAG).
BHCAG is one of a number of employer groups that purchase health services directly from providers. Others include the Dallas-Fort Worth (TX) Business Group on Health, the Pacific Business Group on Health in San Francisco, and the Chicago Business Group on Health.
The adventurers here are 27 self-insured companies who banded together in 1993. Membership includes American Express, Land O’Lakes, Honeywell Inc., Target Stores, and 3M. The health plan package, Choice Plus, covers 130,000 members. While they share buying decisions, they do not comingle funds. Each company assumes the insurance risk for its employees.
Co-adventurers are the 25 care systems that contract with BHCAG. Care systems consist of 500 ambulatory and more than 2,500 primary care physicians in groups of four to 100-plus. Hospitals, pharmacies, and other providers participate as well. The care system network reaches across Minnesota, North Dakota, and Wisconsin.
BHCAG works with employer representatives and the provider network to enact practice guidelines and contract for the administrative functions of submitting claims, and track performance based on provider-developed guidelines and outcome-based data.
"These employers really do care about quality," Drury says. "It comes up in every conversation. If something doesn’t support quality, they don’t want to do it." (To learn how the employers underline their quality commitment with cold cash, see related story, "BHCAG underwrites quality commitment with cash," p. 151.)
All share incentives, rewards, accountability
In a healthy market economy, buyers and sellers have plenty of inherent checks and balances on each other. And so it is with BHCAG. "We’re trying to set the incentives and then get out of the way," Drury explains. "Our employers are willing to let people make stupid choices and let them pay for it."
o Providers.
They set their own fees, practice according to self-designed guidelines and enjoy freedom from added layers of administrative and compliance record keeping. BHCAG handles that function for the whole network. Providers compete with each other for business from Choice Plus members.
Responsibilities of participation include adoption and implementation of one practice guideline per year. They’re developed by physicians who design them through BHCAG’s Institute for Clinical Systems Integration (ICSI). The guidelines cover preventive services through rehabilitative services. While derived from national sources including the Agency for Health Care Policy and Research and professional societies, the guidelines are often given a local twist. Female Choice Plus members, for example, are eligible for one pap test every three years.
Patient satisfaction and cost play off of one another. "Physicians love it," Drury exclaims. "They understand that if they do the right thing for their patients and if the patients think they’re worth it, they’ll have a lot of business. But if they give mediocre care and charge a high price for it, patients will find out about it."
o Consumers.
They receive extensive information about prices of various choices. An office visit to a network provider incurs a $10 copay while an out-of-network office visit incurs both the copayment plus 30% of covered charges.
BHCAG’s annual Customer Satisfaction Survey Results offers consumers extensive, reader-friendly ratings of satisfaction with adult care and children’s care. Items covered include:
— ease of seeing a doctor;
— attention paid to what you say;
— outcomes of care.
In addition to favorable cost experience, Choice Plus consumers have the satisfaction of dealing with a stable network of providers. In 1999, BHCAG will renew all of its existing care system agreements and bring in four new ones as well. Almost every primary care physician in the Twin Cities area participates in Choice Plus.
o Employers.
They engage in direct collaboration with and establish accountability measures from their "suppliers" of employee health care. They receive meaningful data on the value received for their investment. For instance, each care system must study and report annually on their performance regarding an outcome of their choice. The measures providers use vary according to their existing systems and data management sophistication.
Such latitude builds in value for the providers also. "They choose outcomes to implement and report depending on where they want to get insight into their clinical practices," she says. One system, for example, tracked the rates for recurrence and missed complications when they adopted the guideline of prescribing antibiotics for urinary tract infections without requiring urinalysis for every episode. "They were all clear on both counts," she adds.
"We’re not acting like HMOs, where we would require providers to comply with our guidelines and measuring requirements," Drury emphasizes. "We don’t want to choose the top three systems and limit employee choices to those. We want the employees to choose according to their experiences and outcomes." Employers’ estimated expenditures for health claims will increase by 3.5% to 5% in 1999 — a bargain when compared to national trends.
BHCAG buys health care services at retail prices, unlike the wholesale model where an insurance company or managed care plan brokers services and charges the buyer for its piece of the action. That close buyer-seller link can’t help but improve quality, notes JD Kleinke, a Denver-based medical economist and author of The Bleeding Edge: The Business of Health Care in the New Century (Aspen, Gaithersburg, MD). "Employers are far more enlightened than short-term stakeholders like HMOs," he argues.
HMOs "have to get through the next quarter" with a positive profit-and-loss statement, he explains, whereas employers have a longer term stake. "They represent the best of both worlds — buying power and a long-term interest in the employee’s health.
"Of course, employers don’t have the infinite interest of the individual for his or her own health. But the individual is powerless at the bargaining table,"Kleinke says.
Employers have even greater influence on quality — and incentives to wield it — than accreditation organizations. "NCQA and JCAHO are score keepers, but they’re not directly involved with patients. Their standards are a good starting point for employers. But if employers are directly engaged with providers in implementing the measures, then the employer has real power to affect quality," says Kleinke.
"BHCAG is among the few employers moving forward to provide employees with information about quality they can use to help them make better health care decisions," says David Lansky, president of FACCT — the Foundation for Accountability in Portland, OR. "Despite the fact that a growing number of employers are requesting HEDIS data [NCQA’s performance measurement system for HMOs] in their selection of health plans, a recent survey conducted by KPMG revealed that only 1% of employers provide data on health plan quality to their employees. BHCAG should be applauded for their efforts in this area."
Health care or microchips: Still suppliers
Sharon Donahue Hellwig, EdD, RN, echoes Kleinke’s optimism in expecting positive benefits to come out of employer-provider collaborations. Hellwig is associate professor at St. Peter’s College in New Jersey and president of The Hellwig Group, a quality consulting firm in Lebanon, NJ. In her travels as a member of the Malcolm Baldrige National Quality Award board of examiners from 1995 through 1997, Hellwig noticed how many employers like Motorola are treating health care providers as suppliers. They use the same acquisition processes for microchips or manufacturing parts as for employee health care services. In the bargain, they teach their health care suppliers proven ways to reduce wait times for appointments and reduce error rates in billing or drug doses.
In return for the free training, however, these employers are saying, "You’ll have to establish the processes to integrate these improvements, and we will be looking at your results when we choose our health care suppliers next time."
Hellwig adds, "In health care, we’re still struggling with the concept that techniques applied in business and manufacturing can improve patient care."
She’s watching another trend that’s still in its infancy but growing rapidly. "Employers are starting to look beyond the published quality indicators like those around cardiac care. They’re beginning to look at others, like how soon people can return to work after back injury."
Needless to say, meaningful comparisons of such outcomes involve practice guidelines. While it might sound too good to be true, BHCAG has found a way to win nearly unanimous support from physicians for practice guidelines and have them clamoring for more. (See related story, below.)
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