Provider ballot gives employees a wide range of care options

System a bellwether for employer health initiatives

One of the ongoing criticisms of managed health care has been that it limits an employee’s choice of providers. Now, the Minneapolis-based Buyers Health Care Action Group (BHCAG) seeks to change all that, allowing employees of participating firms to select their health plan by provider instead of by health insurer. By putting this decision in the hands of employees, rather than the employer, it gets benefits managers out of the middle when it comes to driving health benefits choices.

"Now, [employers] can step aside and let the patients drive the marketplace," notes Steve Wetzell, executive director of BHCAG.

The new Choice Plus system, in operation since January, works like this: Employees of each of the 29 BHCAG member firms are given aprovider ballot that lists the names of 19 health care systems in the Minneapolis area. In addition, alongside the competing providers’ names is a report card that summarizes patient satisfaction results from the year before. (See charts inserted in this issue for sample measures included in the report card.)

Each employee is given a premium allowance by his or her employer — say, $120 a month. Every system provides a per member per month budget for standard coverage. The employee can select any provider who falls within his employer’s budget. Since this is still a self-insured program, the employer pays the incurred claims. And fees may be adjusted periodically based on performance.

"Our goal is to get providers to organize into accountable networks and create a retail model where consumers choose a provider based on relative price and quality," explains Wetzell. "The care systems tend to be smaller, they are provider-governed rather than using a TPA [third-party administrator], and there is no overlap of primary care providers — you can only be part of one system."

Responding to the market

Wetzell says this new direct contracting model arose as a response to local health care market forces. "We were concerned about the number of mergers and consolidations that were occurring and that it would undermine competition," he explains. "This model will stimulate competition."

The model, says Wetzell, is a move away from the more typical managed care model, where there are large networks but a limited ability to distinguish between the performance of the various plans.

"We wanted to introduce risk adjustment into the process," Wetzell asserts. "Under the traditional model, the budgets providers got were predicated on how much clout they had at the table and did not take into consideration variations in illness burden."

Wetzell predicts the new model will benefit both employees and employers. "One thing it hopefully does is eliminate brinkmanship," he observes. "If a doctor asked for a high capitation rate, our only option in the past was to kick him out. In this model, the employee can now lose access to the doctor if quality drops or even if they just don’t like them anymore."

How qualified are employees?

While giving employees such a wide range of choices sounds good on the surface, do employees have the necessary expertise to make such an important choice? Don R. Powell, PhD, president of the Farmington Hills, MI-based American Institute for Preventive Medicine, is not sure.

"I think it will create some confusion for employees, with almost 20 health care systems and all sorts of ads and promotions," he says. "Sometimes it’s tough for a consumer to discern the difference; advertising can influence you above and beyond the quality of services. As for the report cards, will the employees take the time to read them, or will they be swayed by a free coffee mug?"

"That’s a good point; employees may not have the expertise because they’ve never been in a position to have it," Wetzell responds. "But if there is any place consumers want to take an active roll, it’s health care, and we believe they’re getting engaged."

But Powell remains unconvinced. "Quality may not be apparent to the consumer; how much time will they spend analyzing relative quality?" he asks. "In the past, when you had the employer narrow it down to a few providers, you knew there was a human resource person involved whose job description included being able to do that."

"At the very least, we’re giving them more information so that they can consider quality," Wetzell retorts.

Putting provider choice in the hands of employees might seem to be a logical extension of self care, which has proved to be extremely cost-effective. But Powell, whose organization is actively involved in self-care programs, notes an important difference.

"When self-care is offered, the employer has already selected which guide they want to use," he notes. "If you say the employees can choose from among 19 different guides, I’m not sure you’d get the same effectiveness."

There could also be problems from a wellness perspective, he adds. "Employers are increasingly looking at managed care companies to provide wellness programming," he notes. "If you have 19 plans, how do you coordinate one kind of wellness activity?"

While admittedly this new model has not had time to fully prove itself, representatives of providers and employers believe it will catch on across the country. "We know it is a bellwether of future employer initiatives," says Audrey Hanson, director of outcomes measurement for the Stillwater Group, a 22-physician group in Stillwater, MN, that is on the BHCAG ballot.

"Employer groups are forming, and they will drive change," adds Robert E. Neese, MD, associate director of family medicine at Mayo Clinic in Rochester, MN, which is a participating health system in the BHCAG initiative.

Lawrence Schwanke, vice president of human resources for Bemis Co., a local plastics company and a BHCAG member, gives the concept a big thumbs up. "We believe this is a major step toward our ultimate goal of offering a health plan that gives consumers more power to take an active role in selecting providers based on their quality, service, and cost," he says.

But Hanson is concerned that choices will sometimes be made for the wrong reasons. "Say Stillwater has a patient satisfaction score on mammography rates that’s lower than some other group’s. Consumers might respond by saying, ‘What? You call yourself a health care system? Don’t you care about women?’ So we will have a perceived value; that’s what we’re being judged on." Despite those potential problems, Hanson admits she would rather compete for patients than for insurer contracts, as is the case under today’s typical managed care market model.

As for Choice Plus, "It’s really too early to draw conclusions on this consumer approach," says Wetzell. "The lower cost providers did gain market share — which indicates that employees are willing to change doctors to get health care at a lower cost." (For a summary of the latest patient survey, see story, above.)

Provider response, he adds, has exceeded expectations. "We’re seeing 95% participation," he observes. "This says that philosophically, physicians like what they see."

The Choice Plus model can be duplicated in any area "where employers are organized and willing to come up with the necessary clout," says Wetzell. "It involves getting the demand side to come together on a similar agenda. The main question is, to what degree are other providers on the curve, in terms of a willingness to organize and have managed care accountability. This varies with the maturity of the market."

[Editor’s Note: For more information on the Choice Plus program, contact: Steve Wetzell, executive director, Buyers Health Care Action Group, Norwest Financial Center, Suite 2420, 7900 Xerxes Avenue South, Bloomington, MN 55341. Telephone: (612) 896-5186. World Wide Web:]