West Coast group will offer managed care alternative

Large employers are motivated by higher premium costs to provide a plan that includes a mix of medical savings accounts and PPOs.

By Myrle Croasdale, amednews staff. Dec. 17, 2001.

The Pacific Business Group on Health, a corporate group, is signing on with Definity Health to offer an alternative to managed care.

The group's move may accelerate the acceptance of nontraditional health insurance in the marketplace, analysts say, especially in a market scrambling to find ways to fend off rocketing insurance premiums.

For doctors, less managed care may sound like welcome relief. Definity's Breakthrough Plan is a medical savings account wrapped around a PPO, which means physicians get their full fee until the savings account runs dry, then the PPO's physician reimbursement rates kick in.

Karen Nikos, spokeswoman for the California Medical Assn., said such alternative health plans are a positive move. "We generally think they're a good idea," Nikos said. Her organization has produced surveys showing physicians suffering under managed care, especially capitation.

The plan the Pacific group is asking Definity to design, however, also will include quality ratings for physicians and hospitals, which raises concerns about how a doctor's performance is measured.

Laura Morasch, director of medical practices for the California Academy of Family Physicians, said this was a worthy challenge. "To define quality is a slippery issue, but it is important," Morasch said. "Ultimately, there needs to be more transparency."

But Nikos said the business group's quality surveys weren't that popular with doctors. "We believe you need to do more than patient satisfaction surveys," she said. "All surveys are important, but you need to weigh other information."

Peter Lee, president of the Pacific business group, said that meetings with leaders in the physician community reflected such concerns.

Lee said: "The response so far is that many welcome better performance information at the physician level while being concerned that such a rating system account for the risk mix of a particular physician's practice."

A few Pacific group members may pilot the Breakthrough Plan in 2002, but most are not expected to offer it until 2003.

The Pacific Business Group on Health is made up of 44 companies, representing 3 million employees, retirees and their families, with combined health care buying power of $3 billion.

Definity Health, based in St. Louis Park, Minn., is finishing its first year running its medical savings account design. Membership is 6,200, with four firms using the plan. This will jump to between 50,000 and 100,000 members as of Jan. 1, 2002, with 10 additional companies offering it during their fall enrollment, according to Chris Delaney, Definity's vice president of marketing.

Definity is now designing the quality element of the Pacific business group plan. "Rating doctors is a challenge, and we're working on research techniques that are quantitative, not qualitative," Delaney said.

Clark Miller, senior communications manager at the Pacific group, said the group was motivated to offer the alternative plan to help push traditional health plans to change.

"The status quo won't serve," Miller said. "Premiums are up, but quality is not increasing. We are sending a message to producers and consumers that we believe that consumer-driven health care is the next wave."

J.D. Kleinke, a health care economist based in Denver, said he expects the Pacific business coalition's acceptance of a nontraditional plan to make employers and insurers take notice.

"This is unprecedented," Kleinke said. "Coalitions do a lot of talking, but few have the purchasing power or will to accomplish these things. This is good to see."