What's the cure for HMO-itis, that confined feeling of being network-bound?
While the American Association of Health Plans unveils policy statements and information on how HMOs work to deliver quality care, individual plans are responding to consumer and physician unrest by offering open access and alternative products for an added cost.
Such changes by individual plans may do more in the long run to improve customer and physician satisfaction than a truckload of policy statements.
But the open-access products leave open the question, "Where's the managed care?" A more important question may be, "Where's the managed cost?"
For some time, HMOs have offered point-of-service products, which allow enrollees to go out of network for an additional charge. Recently, they have introduced products that allow enrollees to bypass their primary-care physician gatekeeper and seek care directly from specialists. Even some Medicare HMOs are allowing enrollees to go out of network to seek care from physicians with whom they have established relationships.
The HMOs are "hearing their customers who are telling them they want choice," says David Friend, M.D., global director of the healthcare consulting practice at Watson Wyatt Worldwide in Boston.
"HMOs want more customers. Everyone who wants a gatekeeper has one already," he says. And there are debates about whether the gatekeeper was useful in controlling utilization because many referrals are routinely approved and studies show that specialists treat chronic diseases more effectively, Friend says.
Products without a gatekeeper cost a little more. But "the jury is still out on whether, if you loosen up the system, you're going to get a price increase," he says.
Watson Wyatt is predicting HMO prices will rise about 10% next year. "What will the price impact be of opening up the system? No one knows," Friend says.
"Where's the managed care? No one really knows that either," Friend says, but the market is saying we want those products. So some HMOs are "cannibalizing their market before someone else does," he says.
The changes are even more problematic, he notes, because once networks are opened up, how are HMOs going to justify their existence?
"We seem to be going back to fee-for-service," observes one HMO executive, who asked not to be identified.
Despite treading in unknown territory, the open-access products keep coming. San Jose, Calif.-based Lifeguard, a small not-for-profit HMO, last month unveiled what is believed to be the first acupuncture-benefit package in California, which will be combined with its chiropractic benefit.
Also, David Jones, Humana's chairman and chief executive officer, says the Louisville, Ky.-based HMO will open its first open-access plan this summer in a city he declined to identify. Humana will offer "every specialist in the city the possibility of participating in the plan. We'll abandon the gatekeeper concept," Jones says.
"To make that work takes a tremendous effort in connecting with the physician community because in return for complete referral freedom, the physicians have to work out among themselves the distribution of money," he adds.
Minneapolis-based United HealthCare Corp. developed an open-access plan as early as 1974 and now offers it in 20 states. The company, which says its experience with the product allows it to manage cost and quality, has been upstaged by newer entrants.
Based on media coverage, no one does a better job of devising and promoting products that give consumers more freedom than Norwalk, Conn.-based Oxford Health Plans, which was first to grab media attention with a series of announcements. Using slick promotional materials, Oxford calls one open-access product its "Freedom Plan" and another its "Liberty Plan."
Oxford is also negotiating contracts with teams of specialists who will be responsible for comprehensive disease management. Enrollees will get simple report cards allowing them to shop for specialists based on outcomes and affiliations (March 31, p. 21).
Oxford also was the first plan in the country to offer a comprehensive network of alternative medicine providers, including 1,500 chiropractors, acupuncturists, homeopaths, yoga instructors, massage therapists, nutritionists, dietitians and naturopaths. "This is how we differentiate ourselves in the market," says Hissan Rifaat, M.D., manager of alternative medicine at Oxford.
Still, Rifaat conceded in a presentation at the National Managed Health Care Congress in Washington last month that underwriters don't yet have the outcomes data needed to accurately price the alternative product. Oxford is attempting to collaborate with an academic institution to get that data.
It's a crucial part of opening up a network to alternative providers, as Blue Cross of Washington and Alaska learned. In a pilot alternative program in 1994 and 1995 to test consumer demand, Seattle-based Blue Cross lost money when utilization was "a lot higher than we expected," says Richard Winner, vice president of marketing for healthcare services.
In January, Washington mandated that all health plans regulated by the state have to offer access to "every category of provider." Early this month a federal court in Seattle ruled the law does not apply to employer-sponsored health plans but still applies to individual plans. Washington's insurance commissioner believes employer plans are not off the hook since the issue will be decided in a higher court.
Meanwhile, Washington insurers are scrambling to comply by offering alternative networks and working up clinical protocols and guidelines.
Time is needed to test the claims of alternative providers that they can, in many instances, deliver more effective care at a cost lower than traditional providers, Winner says.
A big challenge is just getting traditional doctors to relate to providers such as naturopaths and herbalists, Winner says. "The younger, more progressive doctors see the pros and cons" of alternative physicians, while some of the older doctors view them as "quacks," he says.