One heck of a year
By christina p. o’neill
In the future, predicts Fallon Community Health Plan CEO Eric Schultz, 2006 will probably be referred to in the health care community as a pivotal year. And he’s not alone in his assessment.
Employers reeling from several successive years of double-digit increases in health care premiums are calling for these costs to be brought under control, even as they shift more of the cost of those plans onto employees. State lawmakers are also under a tight deadline from the federal government to draft a proposal by early next year that would provide health care coverage for virtually every Massachusetts resident.The year 2005 saw several significant developments on the health care front. First, an increasing adoption of consumer-driven health plans that earmark money to be used at consumers’ discretion. Second, the greater implementation of electronic medical records by hospitals, insurers and physicians, which promises to increase efficiency and improve care. Third, the emergence of quality benchmark and cost data that functions as a Consumer Reports medium, allowing consumers to measure the performance – and costs – of their hospitals and physician groups.
MAHP:You better shop around
While this year was supposed to be the year of the consumer-directed health plan, such plans had "a very slow takeup" in Massachusetts. In this state, we’re spoiled by the abundance of "first-dollar coverage," says Dr. Marylou Buyse, president of the Massachusetts Association of Health Plans, the trade organization that represents the state’s HMOs. Both employers and consumers are reluctant to give up what is familiar to them.
Buyse says that because affordability will continue to be the leading issue in health care, consumer-driven plans will gain ground here. But in order to make good choices, consumers will need more information on which hospitals, physician groups and doctors have the best records on quality of care. That information has recently become far more available.
This year, two significant benchmarking initiatives were launched. The first is on the federal level. It’s called Hospital Compare, and it evaluates the treatment of specific illnesses and conditions on a per-hospital basis. At the state level, the Division of Health Care Policy and Finance launched a web site comparing hospitals on cost and quality, using an approach similar to a restaurant guide, with dollar signs and symbols to indicate quality. Its finding: Though cost differs significantly, quality is generally in the midrange.
"Going to a high cost hospital doesn’t necessarily mean you’re going to get better care," Buyse says. She points to a study done last year that showed that community hospitals give the same level of care for normal births as teaching hospitals for half the price.
Fallon Community Health Plan: widening the net
As the information about providers becomes more open, so do the health care networks themselves. Case in point: the separation of Fallon Community Health Plan from the Fallon Clinic Inc. FCHP used to be a group model HMO with direct ties to Fallon Clinic, the for-profit group practice to which FCHP sent its subscribers. Now, FCHP is a statewide health care services company, offering more physician and hospital choice. And Fallon Clinic has gone on to open its practice to all the state’s insurers, not just FCHP.
FCHP expanded its low-cost Direct Care insurance product, first introduced in the Worcester area in 2002, into Metrowest this year. It also expanded its more comprehensive SelectCare physician and hospital network. SelectCare membership has increased 60 percent since its inception, and the network reaches to Cape Cod. Additionally, FCHP instituted a no-copay policy for its wellness programs, which encompasses routine health visits. "Prevention is a significant key to managing medical cost trend down," says FCHP CEO Eric Schultz. Higher copays, he says, may discourage consumers from seeking preventive services.
FCHP also partnered with Sovereign Bank to offer a Health Savings Account to complement its high-deductible product, Care Choice, which was introduced in July. The H.S.A., which comes from pretax dollars to pay for health-related expenses, will debut on Jan. 1. He predicts two different models of H.S.A.’s in the marketplace. In one version, the H.S.A. is integrated with the HMO high-deductible product. In the second approach, the consumer establishes the H.S.A. with his or her bank in connection with direct payroll deposit.
Schultz says 2006 "will mark a major transitional year for health care delivery and health care financing" in the state. Couple that with the most sweeping changes in Medicare legislation in more than 40 years, he says, and "this is going to be one heck of a year."
Tiered drug copays have made a significant difference in drug utilization over the last two years, he points out. Consumers can elect generics for less, or opt to pay more for a brand-name drug. He says pharmacy costs have come down during the last two years as a result.
Fallon Clinic: Taking all comers
For Fallon Clinic Inc., 2005 was a milestone year. As of Jan. 1, it became a completely independent physician group practice, ending its ownership relationship with Tenet Healthcare Corp. It also ended its exclusivity with Fallon Community Health Plan, and now takes patients from all insurers doing business in Massachusetts. And in October, Fallon Clinic converted from for-profit to non-profit status.
Additionally, Fallon Clinic embarked on a three-year project to adopt electronic medical records this year.
The practice has already "gone filmless", says Dr. Baltej Maini, president of Fallon Clinic. The practice offers digital radiology in all 27 of its clinical locations, so doctors can view film of a patient in the ER from their desk at the office or at home. The clinic’s new web site, for which it won an award recently, is seeing increases in "hits" in the thousands each month, Maini says, adding that the end goal is to establish direct connectivity between patients and their physicians.
Harvard Pilgrim Health Care: Jury’s out on healthcare reform
In the coming year, about half of the employees at Harvard Pilgrim Health Care will be enrolled in a high-deductible health product, says CEO Charles Baker; the other half will be in a more traditional copay product.
But on the outside, he adds, only about 70,000 members out of a total of 900,000 members are on high deductible plans. "There’s a lot of chatter about H.S.A.’s at this point but not a lot of takeup," he says.
Echoing Schultz’ observation on prescription drug costs, he says they "didn’t go up nearly as much" as they had in the previous four years. He credits copay tiers for increasing generic prescriptions to 56 percent of total usage, up from 45 percent four years ago. But a drought of blockbuster drugs and the transition of some big-name prescription drugs to over the counter status also plays a role. Additionally, he says, most health plans have gotten better at case management for members on multiple medications.
Chronic disease management is also an effective tool. HPHC conducts outreach on a voluntary basis to those members identified as being at risk.
The jury’s out at this point on the state’s health care reform initiative, he says, but whatever happens will be bound to create significant strategic, tactical and operational issues for all health plans doing business in the state.
Blue Cross Blue Shield: No one good answer for all
Consumer-driven health care works for some employers, but it’s not necessarily the answer for everybody, says Alan Rosenberg, senior vice president and chief marketing officer for Blue Cross and Blue Shield of Massachusetts. In BCBS’ variety of plans, some offer the member direct network access, while other products enlist the primary care physician to coordinate the care. Regardless of the method, he says, "working with your physician and being an informed patient, is the most important thing."
Cost continues to be a key driver for both employers and individuals, he says. But education is the key to controlling costs. Blue Cross’ 24 hour nurse and physician hotlines offer real-time advice to members on whether they can take care of a health-care matter at home, wait to see a doctor the next day, or go to the ER immediately.
UMass Memorial Health Care: Facing same pressures as employers
UMass Memorial Health Care Inc. saw an uptick in both outpatient and inpatient business during the first eight months of the year, but inpatient volume levelled off in the last four months. Outpatient volume continues strong, says President and CEO John O’Brien. That’s because the outpatient population is beginning to need more care as baby boomers age, and as access to health care improves.
Additionally, UMMHC’s expansion project will officially open in January. The recently-announced $94.3 million surplus for year ended Sept. 30, 2005 will allow the hospital system to continue its comprehensive modernization program and add more staff. The results include an operating gain of $88.1 million and $6 million in net investment income. Meanwhile, the rate of growth of utilization has declined over the last five months, from a 5 to 7 percent increase to a 4 to 5 percent increase.
The hospital faces the same health-care benefit cost pressures as all the region’s other employers do. It expects double-digit inflation in dental, health insurance and pension costs from 2005 to 2006.
O’Brien cautions that as first-dollar coverage declines and as H.S.A.s get adopted, some beneficiaries may, in the early months, be motivated to defer health services until their accounts are sufficently funded.
"I think all of us feel that when it comes to consumer-driven health care, the jury is out about how popular it will actually become," he says.
Christina P. O’Neill can be reached at coneill@wbjournal.com
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