Direct contracting on a grand scale is nearing reality in the Twin Cities with a high-profile project of the Buyers Health Care Action Group.
The business coalition is to buy healthcare services for 24 employers and as many as 400,000 people. Its intent to bypass HMOs and work directly with providers was reported last year by MODERN HEALTHCARE*(July 3, 1995, p. 28). However, one big portion of the potential pool remains uncertain. The state of Minnesota, with 150,000 employees and dependents, isn't sure whether collective bargaining issues will prevent it from joining the initiative.
So far, 19 "care systems" have submitted partial bids, said Steve Wetzell, BHCAG's executive director. Financial proposals are due May 10.
A care system is a group of providers, such as hospitals, physicians and clinics, that have allied to provide a continuum of services.
The business coalition will decide which systems meet its criteria by June 1; contracts take effect Jan. 1, 1997. Employees can spend their premium allowances at any eligible system, but they will pay the difference for
The contracts are meant to make sure providers take business risks without becoming insurers, Wetzell said.
Here's how: Systems' proposals include a targeted per-member, per-month payment. Although the business coalition will pay fees for each service, it will set them to meet systems' per-member, per-month targets. Each quarter, it will take another look at fees based on the past 12 months of utilization. Thus, systems with lower utilization receive higher fees.
Nationally, there has been much debate over whether direct contracting turns providers into insurers. The BHCAG plan seems to have cleared state regulators' scrutiny. "They've given no indication they consider it an insurance relationship," Wetzell said.