Consumers win the physician choice battle in managed care products
But victory may lead to headaches, belt-tightening for capitated practices
"If it sounds too good to be true, it probably is." This adage is particularly appropriate when it comes to analyzing the impact of the latest marketing effort intended to regain the trust of wary or disgruntled HMO members: the open-access HMO plan.
Peter Kongstvedt, partner in Ernst & Young's Washington, DC, office and a national expert on managed care, says he has seen increasing consumer interest in open-access products because they offer direct access to specialists. Both United Healthcare and Oxford Health Plans are offering open-access products, Kongstevdt says, although both companies have recently written off tremendous financial losses in terms of systems problems. "I'm not sure I see them [open-access products] going anywhere" because of the financial problems involved in managing them, he says.
Open-access plans are slightly different from point-of-service products, which have been around for years. Open-access products require enrollees to use physicians within an HMO's network (which is typically fairly narrow), but do not require enrollees to get a referral from a primary care physician before visiting an in-network specialist. Point-of-service plans, on the other hand, allow HMO members to seek care outside the managed care plan's provider network and even access specialists directly without a referral from a primary care physician. The out-of-network option usually involves greater out-of-pocket costs.
Although no data are available on open-access products, there are figures to show the increasing popularity of open-access health products that emphasize choice of providers.
A 1997 study released in the Hoechst Marion Roussel Managed Care Digest series reports that more than two-thirds of HMO plans (67.9%) offered point-of-service products in 1996 (the latest year data are available), compared to 54.1% in 1995. (See chart on p. 146 for specifics on point-of-service enrollment among the country's 25 largest HMOs.) Among the HMOs surveyed that did not provide open access in 1996, 22% said they planned to provide the service in 1997. In addition, enrollment in POS plans rose 43.2% to 14.2 million members in 1996, from 9.9 million in 1995, the Managed Care Digest reports.
A 1997 William M. Mercer Inc./Foster Higgins survey of 4,000 employers with 500 or more employees found that 13% of companies surveyed offered an open-access product. When the data were expanded to cover companies with 10,000 or more employees, the report found that 24% of companies surveyed offered open-access products.
Although the Mercer/Foster Higgins survey does not have comparison data for open-access products (the question was included for the first time in 1997), the firm says anecdotal data from its clients reveal that open-access products are an increasingly popular option.
In the past, clients east of the Mississippi have been willing to pay more for open-access products, although cost flexibility depends to some extent on whether the company is in a globally competitive industry and how healthy the company's local economy is, says William M. Mercer principal Bob Coburn.
Primary care practices that aren't careful can be held accountable for out-of-network costs that get out of control, say practice leaders and consultants interviewed by Physician's Managed Care Report. Although open-access products have not become popular in the New Orleans market, "we try not to participate in point-of-service [networks] . . . there's very little way to control risk when patients have the accessibility to go where they want to go," says Robert Goldstein, chief administrative officer for Browne-McHardy Clinic, a Metairie, LA-based 50-physician multispecialty group with about 50% of its patient base in capitated contracts.
But Goldstein has one or two point-of-service contracts in place out of competitive necessity, and he considers the contracts problematic for two reasons:
· They can be "an unending drain on finances when there is no control" over out-of-network costs.
· Practices are at the mercy of managed care plan administrators who decide when and when not to hold a primary care physician or internal medicine physician accountable for medical expenses related to his or her patient panel.
Because of this concern, Goldstein insists that language limiting the practice's liability be included in Browne-McHardy's point-of-service contracts with managed care organizations. The agreements call for a 5% to 10% withhold from the per member per month payments that are designated to cover out-of-network costs incurred by a plan's point-of-service members who have designated a Browne-McHardy physician as their primary care physician.
"You have to be cautioned against going into a contract and having an open-ended potential expense that you have no control over," he explains. "When we take risk, I know if a patient will need a lot of services. So if I'm responsible for a patient who needs a transplant, I know that going into [the contract] and know I need to get a certain amount of money to cover those services. I'm able to find the best place to have it done. [But] when patients have the ability to opt out of network and access a myriad of other physicians who may refer patients to other physicians . . . you lose the ability to control utilization management on tests and other things. My group should not be responsible for that [cost]."
Other medical groups have yet to feel the effects of the open-access trend, but have concerns about the future. "We haven't seen it much in our market yet," says James L. Walker, MD, medical director of Seton Medical Management, a physician-owned medical group affiliated with Providence Hospital in Mobile, AL. "The dominant player is Blue Cross Blue Shield, and they are promoting a gatekeeper product. But I am concerned about it for an [upcoming] Medicare risk product."
Seton plans to launch its own Medicare risk product to compete with a product currently in the marketplace, Walker explains, and needs to have a good handle on utilization and costs. Walker's main concern is finding an information management system to track whether patients are utilizing their primary care physician or going directly to specialists or outside the network, he says.
The increasing popularity of open-access plans actually is part of the managed care backlash that has simmered among consumers during the past several years, says J. Leonard Lichtenfeld, MD, FACP, a former practicing internal medicine physician who is now a health policy consultant and national capitation expert. "The original plan [among managed care organizations] was to get people into PPOs, then move them into point of service to increase their comfort level with managed care, and then move them into an HMO. But exactly the opposite of that has happened; people are moving away from HMOs" due to consumer dissatisfaction, he says.
A 1998 study of 81,000 health plan enrollees by The MEDSTAT Group and J.D. Power and Associ ates found that the largest factor influencing how consumers rated health plan performance was provider choice (see chart, p. 147). This item was ranked ahead of areas such as physician care, personal cost, and customer service.
But managed care organizations' efforts to keep current members and draw in new ones by increasing provider choice has come at a cost, Lichtenfeld says. "It's the old law of unintended consequences. The good news is open access is increasing. And the bad news is open access is increasing," he says.
In some cases, capitated providers or the patients themselves may be held responsible for cost overruns, Lichtenfeld says. For example, a point-of-service contract may state that the plan will pay 70% of allowed costs incurred when a member sees a provider outside the network. But the key phrase is allowed costs - which may be as low as $400 for a $1,000 service. "A lot of times, there is no way for someone to find out what that allowable rate is ahead of time," he points out.
But there are solutions to the open-access dilemma. Lichtenfeld suggests that primary care practices need to be more proactive in reaching out to patients. "If a patient comes into your panel on Sept. 1, you need to have someone call the patient and screen them with regard to health risk. If you find out that the patient has congestive heart failure, get them in to see your physician."
A nurse or a nonclinical practice employee can make this call with some guidance, Lichtenfeld adds (although a nonclinical person obviously cannot give clinical advice over the phone). Some practices contract with call centers to perform this activity.
Coburn of Mercer says the open-access trend may even be an opportunity for savvy practices in some markets. "There will be an employer backlash against the costs of big HMOs and [employers] will look for alternatives," he says. "The best-functioning plans on an ongoing basis will be integrated systems owned and run by physicians. I'm defining them as better plans based on patient satisfaction, physician satisfaction, clinical excellence, and low costs."