Provider choice among 1999 managed care issues
Provider choice among 1999 managed care issues
Some say payers becoming less rigid
As medical groups ring in the new year, it’s tempting to look for predictions of the shape of things to come in the managed care industry. Here is a short sampling based on an informal survey Physician’s Managed Care Report conducted of consultants and practice leaders:
1. After a year of skimpy financial earnings among MCOs, many are passing along premium hikes to employers.
The amount of premium increases varies depending on the importance of the employer as an MCO customer and market conditions, says Peter Kongstvedt, MD, a partner in Ernst & Young’s Washington, DC, office. Most premium increases are in single digits, although in rare instances small employers with high-risk employees or a history of high medical costs are seeing premium hikes as high as 20%. Kongstvedt expects this trend to continue. Huge employers (called "marquee clients" by some consultants) may be able to keep cost increases down to a few percent, but some larger employer groups whose medical costs have increased significantly can expect premium hikes in the neighborhood of 8% to 10%. In response to provider choice issues (see point No. 4), medical costs for most companies are rising, and employers are more willing to pay the corresponding hike associated with greater choice.
2. Many payers are lessening provider cutbacks.
Although this trend certainly will not lead to a corresponding increase in physician reimbursement, practices can expect payers to back off somewhat from previously inflexible negotiating tactics. "In terms of contracting, we’ll always see pressures from health plans to lower reimbursements. That is not going to be as much of the case as in the past," Kongstvedt says.
Gary Erskine, FACMPE, executive director of the 125-physician Arnett Clinic in Lafayette, IN, says he has noticed an increased flexibility among payers in his market. "We had one payer that we were butting heads with for four to five years. Now, we are seeing an openness to see how we can work together," he says. Both Erskine and Kongstvedt are quick to note, however, that conditions vary greatly from market to market. "Payers will have to find ways to improve administrative and medical efficiencies. There’s plenty of room to go in both of these, and anyone who doesn’t think so is dead wrong," Kongstvedt says.
3. Employers are passing along an increasing percentage of medical costs to employees.
Because the economy is doing well, companies don’t want to cut back on benefits despite rising premiums, Kongstvedt says. But many have decided to pass along more medical costs to employees through increases in copays, deducti bles, or payroll deductions.
4. Most payers will adjust their provider panels in response to increasing consumer demand for provider choice.
In response to market pressures, HMOs are broadening their networks, Kongstvedt says, but that will come at a price to employers. There are costs associated with collecting the data required by groups like the National Committee for Quality Assurance, and more providers means more administrative work in data collection and other paperwork required between health plans and providers. At some point, the cost cycle, if passed on to employers, may lead to health plans "reintroducing" products with tighter physician networks. This essentially is just recycling the HMO products that have been out there for years to see if employers are driven away from open-access health plans due to cost constraints.
5. The managed care backlash over the past year will make employers even more leery of HMO products.
"We’ve got the biggest [provider] choice of any health plan in our market, but the HMO name is a problem," says Erskine, whose clinic operates its own HMO in addition to contracting with other payers. "People hear things about HMOs and the backlash kicks in." Erskine believes there is more antipathy toward HMOs in his market among employers than consumers. "We finally got one employer contract [after several years of trying] with a company that offered us as one of several options. But we got 70% penetration among their employees."
6. Practice guidelines will become more popular.
Guidelines that offer a preferred treatment pathway for the major type of cases a practice handles are becoming more important, says David Astles, executive vice president of OB/GYN Management in Dayton, OH. His practice, which also provides management services to other OB/GYN practices, has guidelines for cesarean section, Down syndrome, and fetal fibronectin cases. He admits that the guidelines took a lot of work, but he says he believes more practices will implement them given the cost and utilization pressures of managed care. "The intent is not for them to pull the guidelines out when they’re next to the patient’s bed, but to keep them in mind as they are treating [patients]," he says.
7. Disease management will become increasingly common.
Astles says many practices are trying to grasp this concept, but few have implemented it to date due to the changes in methodology and processes. Although his practice is not doing it yet, he sees it as an important consideration for many practices in the future.
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