Unsuccessful attempts to fight Health Care cost increasees
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October 27, 1999ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Dismayed by HMO Rates,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Employers Start to Take Action
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ By CAROL GENTRYÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Staff Reporter of THE WALL STREET JOURNAL
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ When they're being slammed by doctors, patients, Hollywood and Congress,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ HMOs can always count on support from the business community. But
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ behind closed doors, that relationship is starting to fray.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "Employers are frustrated," says Laurel Pickering, executive director of the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ New York Business Group on Health, an employer group. "Managed care
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ doesn't seem to be working."
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ As of Jan. 1, rates charged byÿ health-maintenance organizations are going up
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ between 8% and 12%, consultants say, while other types of insurance plans are rising at a
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ slower pace. Stunned by the HMO increases, employer groups from San
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Francisco to Boston in the past few months have been summoning
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ managed-care executives to meetings where they are demanding big
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ changes in the way the HMOs do business.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The original promise of HMOs -- hassle-free service, top-notch care, prompt
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ payment and reliable information -- got postponed in the stampede to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ consolidate, business groups say. "We've looked for efficiencies to come out
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ of the mergers, but we've yet to see any," says Emma Hoo, senior manager
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ for the Pacific Business Group on Health, a San Francisco employers'
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ coalition.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Beginning around 1992, HMOs cut medical inflation by using their
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ contracting power to push down fees to doctors, hospitals and other
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ health-care providers. Now fees have bottomed out and it's getting harder to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ find savings.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The next step: finding out which medical regimens work best and getting
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ doctors to adopt them. But most plans have not done this.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Antiquated Technology
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ One big employer gripe about HMOs is antiquated technology. In trying to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ buy market share through acquisitions, health plans ended up with a crazy
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ quilt of computer systems that couldn't talk to each other, slowing down
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ payments, test reports and the flow of other vital information. This year,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Harvard Pilgrim Health Care in Boston discovered it had 18 separate
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ databases littered with hundreds of homegrown codes and 20 different
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ payment plays for doctors. The plan recently contracted with Perot Systems
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Corp. of Dallas to straighten things out.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Dolores Mitchell, director of benefits for state employees in Massachusetts,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ believes HMOs are reluctant to crack down on wasteful habits. "It's not that
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ they're practicing bad medicine -- it's just not as good as it could be," she
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ says. "Because sometimes it involves saying no."
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ HMOs say that criticism is unfair, since saying no is what got them in trouble
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ with the public in the first place. Employers often undermine HMOs'
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ attempts to reduce overspending when workers complain, says Susan D.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Emanuele, vice president for care management at the Northeast division of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Physician Health Services in Neptune, N.J. The HMO is owned by
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Foundation Health Systems Inc. of Woodland Hills, Calif.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "When you say no," she says, "you get a call from the benefits manager or
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the CEO saying, 'Why'd you turn this down?' You can't have it both ways."
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Some large employers are using their buying power to get the benefits of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ managed care without the overhead of HMOs. Merrill Lynch & Co., Sears,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Roebuck & Co., Circuit City Stores Inc., Sony Corp., Hartford Life Inc. and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Marriott International Inc. jointly worked with David Rahill, practice leader
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ for health and welfare at New York consulting firm William M. Mercer, to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ do just that.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The group contracted with Empire Blue Cross & Blue Shield to create and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ manage a nationwide care network employing groups already vetted by
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ other Blues plans. Employees can go outside the network, though they have
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to pay more if they do, and they don't have a "gatekeeper," the primary-care
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ physician who must see an HMO patient before granting permission for tests
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ and referrals to specialists.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ A central part of the plan is its supervision by Active Health Management in
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ New York, a closely held company run by a physician, which monitors
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ clinical data to make sure patients get the best care.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Most plans pay attention to two extremes -- healthy people who get
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ preventive care and extremely ill patients in the hospital, says Kenneth J.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Reifert, director of global benefits for Merrill Lynch. But this plan, Mr.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Reifert says, also monitors those in the middle, to catch illnesses early. |
