HMOs in select markets around the country are practicing a growing philosophy that can be summed up this way: Let the docs do it.
Health plans used to control cost and quality by employing their own doctors. Now, eager to offload risk and build market share, they're delegating more and more functions to contracting physician organizations. Sometimes the plans foist these duties on physicians, sometimes the physicians want to take more control of their destiny, and sometimes the physicians agree to perform the tasks in return for a greater share of the premium dollar.
Claims payment. Physician credentialing. Quality improvement. Network creation. Preventive health. Member services. Patient satisfaction. Utilization review. Pharmacy risk. All are tasks that have come under the purview of medical groups and independent practice associations.
Delegation is a way for physicians to regain control over healthcare cost and quality as well as extra income. For HMOs, it permits plans to concentrate on their main function: providing insurance.
It can, however, spark conflict over what tasks physician organizations should perform and how much they should be compensated.
Spreading movement. While there are no figures available on how widespread this delegation movement is among the nation's HMOs, it's already a well-established practice in California and Minneapolis and is starting to take hold in other markets. It has increased as the National Committee for Quality Assurance piles on requirements for HMOs seeking accreditation, allowing HMOs to concentrate on expansion.
Legislation regulating health plans, such as making them potentially liable for medical malpractice, could further the trend.
"The HMO can really go back to its core competency, which is selling an insurance product," says Sol Lizerbram, D.O., chairman of San Diego-based FPA Medical Management, which runs physician networks in 27 states and will soon add New York.
FPA signed nonexclusive contracts with three national HMO companies this year to provide, in addition to medical care, services such as utilization management, claims processing, provider relations and membership services. For example, patients can call an FPA phone number to ask administrative questions about their policies. The contracts could potentially bring in hundreds of millions of dollars in annual revenues.
Mounting evidence shows that with the right tools, physicians can manage costs and quality better than health plans.
In Minneapolis, the Buyers Health Care Action Group, a coalition of large employers, has arranged a direct-contracting model in which the HMO performs only administrative functions. This year, tasks such as arranging orders for home medical equipment and alerting enrollees about benefit and formulary changes are being passed to providers, says Jim Reimann, director of managed-care contracting for Saint Louis Park-based HealthSystem Minnesota.
Ultimately, health plans are still responsible for meeting quality and service guidelines for NCQA accreditation. But oversight could diminish this October when the NCQA plans to begin certifying physician organizations in six delegated tasks: quality management, utilization management, credentialing, preventive health, members' rights and responsibilities, and medical records (May 12, p. 19). The NCQA estimates 700 physician organizations do or soon will perform those delegated tasks.
But many medical groups, and particularly IPAs, lack sophistication. This year, the IPA Coalition of California went national, partly to educate IPAs nationwide about taking on new functions. The renamed National IPA Coalition, which has three national HMO sponsors, is partnering with health plans to foster "a spirit of collaboration," says President Nancy Oswald.
Delegation can be prudent business for physicians, according to NIPAC. The tedious function of claims processing, for example, gives them total control over how dollars are spent. Allowing a health plan to pay claims of a capitated IPA is essentially like handing over the physicians' checkbook.
Utilization management is another key area. According to a 1997 survey by the employer consortium Pacific Business Group on Health, large IPAs and medical groups in California, Oregon and Washington manage utilization of specialist referrals in 92.6% of capitated contracts.
Can we do it? In some markets, both providers and health plans are reluctant to jump in.
"The hesitation from the provider side is concern about whether they can actually do it. From the insurance side, it's a function they do and get paid for, and they don't want to lose it," says John Clough, M.D., chairman of the division of health affairs at the Cleveland Clinic Foundation.
Sometimes HMOs don't want to relinquish functions that distinguish them from consumers and purchasers.
"There are still turf issues," says G. Ronald Parker, president and chief executive officer of Health First Network, a Pensacola, Fla.-based IPA that cares for 55,000 prepaid HMO enrollees. It already credentials its doctors, processes claims and manages utilization of physician services-cooperation cited in one plan's NCQA accreditation, Parker says. Health First wants the right to contact one health plan's enrollees by mail to remind them to get regular preventive services such as a mammogram or prostate check. So far, the plan has said no.
"Many plans aren't ready to let go of member education," Parker says.
In Minneapolis, health plans recently started sending out health education materials, which in their market has traditionally been done by providers, says Reimann of HealthSystem Minnesota. He views that as an attempt to show value to consumers.
"The health plans are starting to wake up and say, if we let the (provider) system do everything for the individual enrollee, they might forget about us altogether," Reimann says.
Relinquishing authority. Even in areas where HMOs and physician organizations have long-standing cooperative relationships, HMOs can be skittish about giving up authority.
In California, physician organizations are trying to get HMOs to standardize their clinical protocols through the California Cooperative Healthcare Reporting Initiative, which is administered by the PBGH. This year, the group developed protocols for diabetes care, but two plans opted not to participate, says NIPAC Medical Director Richard Dixon, M.D.
Medical groups don't want to be forced to follow different protocols for patients in different plans. "I don't think it's constructive. It's bad medical care," Dixon says.
Healthcare gurus have excited doctors and investors in physician practice management companies by declaring that HMOs are losing market clout and eventually more of the premium dollar will flow to physician groups. It's a view many provider organizations would like to believe.
Reimann believes Twin Cities physicians and hospitals could someday control as much as 96% of the total premium dollar, compared with 86% to 90% today.
Fair share. But given excess supply of physicians and hospitals, it's doubtful that assuming responsibilities for quality and cost will lead to big profits for providers.
Often, physician organizations gripe that they aren't getting a fair portion of the premium dollar for their extra efforts.
"We want to do as much as we can, but it's also very expensive," says Yvonne Sonnenberg, executive director and chief operating officer of Pomona, Calif.-based ProMed Health Network, which manages 400 physicians. "In some areas we have (recovered costs), but across the board it's not a given."
For example, ProMed took on credentialing to eliminate the time-consuming process of having 20 HMOs retrieve information from its 400 physicians. It now has three full-time people handling credentialing.
Sonnenberg says the adjustment in reimbursement from HMOs was insignificant. "We justified it by making our physicians more available to see patients," she says.
Sometimes, physician organizations have eagerly accepted capitated payments for prescriptions, only to find the rates they negotiated were too low. As a result, very few physician groups are making money on pharmacy risk, says Jack Raber of Seal Beach, Calif.-based Clini-pharm Services.
Providing more services does enable medical groups to make a credible threat that they will contract directly with employers if HMOs don't pay reasonable rates, says consultant Doug Sherlock of Gwynedd, Pa.-based Sherlock Co.
"The one thing about the medical group is they are closest to the patient. All things being equal, people would swap the little plastic card faster than they would swap the doctor," he says.