Oxford quells patient worries with direct access

MCOs that choose this route see cost savings

Several months ago, Physician’s Managed Care Report alerted you to the sweeping backlash against the HMO gatekeeper model, and the rising tide of options that will allow patients to access specialists directly. The increasing popularity of point-of-service products — which lets patients access specialists directly by paying greater out-of-pocket expenses — is one example of that trend. But a Northeastern health plan’s new approach has payers and brokers nationwide watching to determine if provider-driven specialty teams can provide quality, cost-effective care with less hassle for consumers.

Norwalk, CT-based Oxford Health Plans is giving patients direct access to a specialty team via a case-rated system. Its prices are pre-established by the specialty team, which includes not only the specialist but the radiologist, laboratory, surgeon, anesthesiologist, therapist, and a designated hospital. The team manages the patient’s care from initial diagnosis to final outcome for a predetermined case fee, using protocols approved by clinical advisory panels. The advantage for providers: No preauthorization of care from the health plan is needed, and reimbursements are made based on the team’s ability to meet cost and outcome objectives.

Managed care analysts interviewed by PMCR offer mixed opinions on whether Oxford’s approach will catch on in markets where managed care is more firmly established. However, an examination of Oxford’s approach to direct access can show physicians one approach to the increased freedom specialists have been clamoring for.

Oxford’s approach works as follows, according to Todd Farha, chief executive of Oxford Specialty Management:

1. The patient accesses an in-network specialty team one of two ways: by referral from his or her primary care physician, or by calling Oxford directly for a list of specialty teams. For example, a patient with knee problems could visit a team authorized by Oxford to perform an outpatient knee procedure.

2. Specialty teams approved through a request-for-proposal process oversee specified types of cases (i.e., coronary artery bypass procedures), and can choose the patient’s course of treatment without obtaining health plan approval for each individual procedure.

3. Reimbursement to specialty teams is based on a fixed price per procedure. The fixed price for the entire continuum of care is determined during the request for proposal stage. The team will propose a fee schedule based on what it projects the cost of managing its patients to be. Any cost overruns should be anticipated as part of that fee, says Farha. Factors influencing a team’s reimbursement rate may include severity of illness in its particular patients.

"This is actually point of service with paternal guidance," comments Uwe Reinhardt, PhD, a public health economist and professor of political economics at Princeton (NJ) University. "What Oxford has done essentially is contracted with centers of excellence," he says. "They are smart to do this in a market that has the advantage of having world-renowned medical centers and sophisticated patients."

Like the centers-of-excellence model used by major teaching hospitals for procedures such as organ transplants in the late 1980s, Oxford’s approach is based on the assumption that patients will want to go to a provider and a team of doctors that have established rates of success in certain medical areas, Reinhardt explains.

Oxford initiated the specialty-team concept in April 1996, and to date is actively contracting with teams on 24 cases in 11 specialty areas:

• behavioral health;

• oncology;

• orthopedics;

• urology;

• obstetrics/gynecology;

• cardiology;

• gastroenterology;

• neonatology;

• neurology;

• nephrology;

• ophthalmology.

Cases include coronary artery bypass, mastectomy, chemical dependency, outpatient mental health, end-stage renal disease, and others. (See example of a case and how patient will move through the system, at left.)

Advisory panels comprising physicians in both private practice and academic medicine in the Mid-Atlantic region are developing practice guidelines or clinical requirements for each of the specialty cases.

The advisory panel also has input into Oxford’s specialty team selection process, reviewing the proposal as well as the practice patterns and credentials of possible team members.

Can this approach work in all markets? David Plocher, MD, partner in the managed care group of Ernst and Young in Minneapolis, doesn’t think so.

While agreeing with Reinhardt that the Oxford approach is a prudent marketing and management tool, Plocher says this model would never work in his backyard, where managed care and global capitation are the rule of thumb.

An Oxford executive says this shortcoming is by intention. "Our goal is not population-based capitation, but positive outcomes," says David Snow, executive vice president of Oxford Health Plans. In fact, teams are paid in stages, based on when they meet pre-established outcomes criteria. Payments will be made to the team in these three installments:

• after the patient’s initial workup is completed;

• following surgery/and or treatment;

• following the patient’s complete recovery.

The final payment is based on predetermined clinical outcomes, as well as on the patient’s satisfaction with the care. There are no bonuses and no incentive compensation, explains Farha.

"Not all specialists will be able to compete under this new system," he admits. The specialists must be motivated to achieve certain outcomes for patients and to work with other multidisciplinary team members, he explains.

But is the motive for making specialists more accessible to patients purely better patient satisfaction? Company officials at Oxford say their MCO is lowering costs while simultaneously enhancing patient-provider relationships. "Our prices for specialty care under the specialty-team approach are 15% to 20% lower than the usual costs," says Farha.

"We are finding savings in the efficiency that this system creates, not in the overall fees," he says. In many cases, the average length of stay for an inpatient procedure has dropped from six days to four days, he explains. "With the specialty team in charge of the patient’s care from the beginning and predetermined outcome goals for the patient’s care, we feel that patients will have a much better health care experience overall," says Farha. The system establishes predictable costs for common conditions and reduces paperwork and time delays in patient care, he adds.

Despite the shift in decision making for primary care physicians that this plan may bring, Farha says Oxford expects its PCPs to welcome the approach as a way to actually complement the current management of their patients.

Farha says it is too early to predict whether the number of specialists in the plan will increase or decrease. He predicts that most specialists currently contracting with Oxford will eventually be absorbed into the specialty team approach. The plan will be fully developed through all of Oxford’s markets within the next two to three years, he says, and will be expanded to indemnity insurers and self-employment insurers that express an interest.

Nearly three-quarters of all company spending is for services provided through specialists, and more than 500 different episodes of care could potentially be case-rated. Specialty team cases will be approved depending on a priority established by the needs of the MCO’s current patient population, says Snow.

Oxford plans to switch most of its specialty care to the specialty-team approach or to a possible two-pronged approach where more chronic conditions such as chronic obstructive pulmonary disease are managed by a specialty team and by Oxford’s disease management subsidiary, he explains.

Will other MCOs follow Oxford’s lead? "Com pa nies in other areas where this approach will work will watch Oxford carefully," says Reinhardt. "If this ends up being a good marketing and management tool, you can bet they will copy it."