As part of a strategy to gain market share, Kaiser Permanente has started to offer new products in conjunction with its well-established HMO plan in several regions.
In late April Kaiser's Kansas City region joined its Northern and Southern California regions in promoting a PPO. Kaiser is calling this a "dual choice" product because it lets employees in large groups decide which they prefer, the HMO or PPO.
Last year Kaiser introduced a point-of-service plan across the country, giving patients the option to find a provider outside the HMO panel if they pay more of the cost. It also started an out-of-area plan, under which firms that had bought the Kaiser Permanente HMO could insure employees living far from any Kaiser office through a managed-care indemnity plan.
Most recently Kaiser's Southern California region unveiled a new rate structure on individual plans. For the first time in this region, Kaiser has abandoned pure community rating in favor of rates based on age.
"Our customers and our sales force have been asking for a health plan designed and priced to meet the needs of younger people," said Dean Kemp, small-group marketing manager. "We believe these lower rates give us an opportunity to increase our market share."
Market share is what Kaiser needs to boost across the country. Enrollment has leveled off in most regions in which Kaiser operates, and the richly capitalized for-profit HMOs are making inroads into Kaiser's traditional core market.
In California the PPO is offered through Pacific Mutual Group Life Insurance Co. In the Kansas City area Kaiser teamed up with Preferred Health Professionals, a large PPO. Allianz Life Insurance Company of North America will underwrite the new product in a traditional indemnity insurance arrangement with Kaiser.
"This new venture with PHP allows Kaiser Permanente to be a full replacement product," said Kathryn A. Paul, president of Kaiser's Kansas City region. "We can now offer Kansas City-area employers an HMO plan, a PPO plan or a point-of-service plan."
Competing insurers in that market have been making gains at Kaiser's expense because of its stodgy product line. Many companies want to deal with just one insurer for all health benefit needs. Kaiser's one-size-fits-all HMO did not suit employers who might have wanted to offer a staff- or group-model HMO but were unwilling to force all employees to join that kind of plan.
"`Choice' is the key word and concept here," said David Pockell of Kaiser's Northern California region. "We still firmly believe in managed care, but we also believe that our members and all the American public should have more than one healthcare choice available to them."
Kaiser executive Michael M. Dudley said that in some areas the second product is a simple indemnity plan; in others, it is offered only through a PPO network. The PPO will have slightly higher premiums and out-of-pocket expenses than the HMO.
Kaiser's total enrollment is 6.6 million, of whom 4.6 million live in California.
Soon Kaiser will gain even more flexibility. A new organization, the Kaiser Permanente Insurance Co., was licensed Jan. 1 in California, and before long will be operating in the rest of the country. "With that combination of three insurance companies, we will have significant risk-bearing capacity," said Dudley, president of the new insurance company.
That extra capacity could soon come in handy. "The whole product flexibility is being driven by the requests of the marketplace," Dudley said. "In the past couple of years, Kaiser Permanente has tried to become much more focused on client needs and customer needs. We're beginning to demonstrate our ability to listen and respond."