Tips on choosing the best health care plan

By Lawrence Bivens

In a world of many uncertainties, there is something refreshingly reliable about managed care: its unfailing ability to evoke strong opinions from just about everyone. There is the chorus of complaints from consumers who feel the system, with its limited choices and utilization controls, has failed them. Many politicians, sniffing a powerful voting bloc, are more than willing to agree. Employers still smarting from memories of indemnity plans' spiraling costs in the 1980s are once again feeling the sting of rapidly increasing health plan costs.

Amid the cacophony, how do doctors regard managed care? Without great affection, in most cases.

“Managed care as it's currently conceived has created as many or more problems than it has solved,” says Dr. Charles B. Rich, a Charlotte internist and chairman of the Managed Care Committee of the North Carolina Medical Society (NCMS). Rich and others at NCMS, a membership association of more than 10,000 physicians across the state, believe managed care has fundamentally changed the status-quo relationships between providers and patients — and with each other.

“It has torpedoed relationships between physicians and other providers,” he says. For many cases, Rich says he must send patients to specialists about whom he has scant knowledge or experience just because they participate in a given plan — as opposed to a physician whose work he knows well and trusts.

About three-quarters of the state's 16,000 licensed and active physicians are now under contract with a health maintenance organization (HMO) or a preferred provider organization (PPO), according to a report by Nashville, Tenn.-based Harkey and Associates. Most of these have multiple contracts with more than one organization.

Studies by NCMS to gauge physician opinion about the state's health care delivery system show most agree that managed care has increased patients' access to preventive services. But that has come at a cost, however. Physicians report that their workloads have increased because of the additional administrative duties that managed care imposes. The added phone calls and paperwork physicians face in meeting managed care pre-certification requirements, for example, mean less time spent with patients, they say. And administrative headaches are compounded by the fact that each managed care organization has a different set of guidelines, protocols and billing requirements.

“We have four full-time people in the office that do nothing but handle managed care paperwork,” says Dr. Bob Bilbro, a Raleigh internist whose 20-physician practice is under contract with numerous managed care groups. As for utilization controls, Bilbro is a realist. “We physicians complain, but we know we can't expect carte blanche to all the tools we have without any concern for their cost.”

“Managed care definitely reduces utilization but increases administrative costs,” says Chris Conover, Ph.D, an assistant research professor at Duke University's Center for Health Policy, Law and Management. “So the question becomes: Where do you find the balance?”

A Broader Conflict

That managed care means more administrative work for doctors is not a point that managed care organizations dispute. “A lot of the administration used to be done by patients themselves,” explains Paul Mahoney, executive director of the North Carolina Association of Health Plans, which represents insurers and managed care organizations. “Under managed care, the patient makes the co-payment, then leaves the doctor to work with the payer on the balance of the payment.”

Mahoney agrees that the current health care delivery system is not perfect, but he stresses that it has improved since the days of double-digit inflation a decade ago. The indemnity system in the late '80s, he says, was “both broke and broken.” Managed care stepped in as a way to provide “the right care at the right time in the right place.”

The big concern of Mahoney and his association is that the normal give and take associated with contract negotiations between provider and payer has spilled over into a broader conflict between the two parties. Although they share a common mission of serving patients, Mahoney says, “physicians and health plans are locked in an economic battle.” Once contracts are signed, he believes, the two sides should join together as partners.

HMOs and doctors could do more to improve communications, many contend. “Health plans could have done a better job of winning the hearts and minds of physicians,” admits Mahoney. “But many physicians are resistant to change no matter how it is presented, and the system had to change.”

Navigating such choppy seas is no easy task for health plans, which must constantly strive to keep employers, patients and providers satisfied. Larger, for-profit plans are expected to do all this, plus deliver profits to their shareholders.

Physician groups like NCMS worry that managed care in North Carolina has become less competitive, with only a handful of large companies dominating the market. After a wave of mergers and acquisitions, six managed care plans now hold an 85 percent market share. “This results in reduced bargaining power for both employers and physicians,” says Carol Scheele, associate general counsel at the medical society. The situation leaves some doctors feeling more like “captive vendors” than partners.

“We're seeing a winnowing down of players in the state,” agrees Mahoney. “It's a simple volume issue — the larger managed care organizations have some advantages because of their size.”

But while consolidation has occurred among plans, it's also happening among providers, Mahoney says, as hospitals merge and large physician groups band together to bargain on behalf of doctors. Balancing large-scale economies with competition among smaller players isn't easy, “and our health care system is still struggling to define what's appropriate.”

New Models Evolving

As the managed care industry consolidates, managed care models are also evolving. Gone are the “staff-HMO” models that employ physicians directly and severely limit patients' freedom to choose their own doctors. In their place have arisen “independent practice associations” — known in the alphabet soup of managed care as “IPAs” — which maintain contractual relationships with individual physicians.

“A lot of IPAs arose as a reaction to HMOs,” explains Duke University's Conover, who predicts managed care will continue to change, but won't disappear anytime soon. “Managed care is showing that it is sensitive to market pressures.”

Conover believes that adequate data sharing and decision-support are the missing links in improving the health care delivery system. Consumers, for example, measure cost, not quality, when selecting a plan. Other criteria are either unavailable or ignored. Employers typically look at increases in plan costs, not utilization data. For the most part, physicians don't spend a lot of time comparing data on outcomes vis-à-vis costs. Conover cites the renowned Mayo Clinic in Minnesota as a model of a tightly organized multi-specialty physician group that communicates and collaborates closely in patient treatment. “It's a very efficient model, even though it is not an HMO,” he says

Such thinking appears to drive leaders of Sandhills Physicians Inc. in Fay-etteville, a 257-member IPA founded in 1995. “We like to say we're a second-generation IPA, which means we learned from everyone else's mistakes,” says Rita Graves, the group's administrator, with a laugh. “We have a very cohesive community of physicians and that's been critical to our success.”

Sandhills Physicians emphasizes education and information on all sides — doctors, patients and employers. The group offers utilization reports to employers along with advice on how to adjust plans to maximize savings. It also works extensively with enrollees on helping them understand their benefits and what they can do to help keep costs in check. One of the group's clients, Cape Fear Valley Hospital, had not seen a utilization report on its 7,200 beneficiaries in 25 years. “It was particularly telling that a health care institution hadn't thought to look at utilization data on its own employees,” Graves says.

Collecting and sharing information about treatment outcomes and costs is the central ordering principal of the group. Instead of expanding coverage areas and reaching out to new providers, employers and patients, Sandhills Physicians is devoted to honing its current practice models. Its patients and physicians are limited to Cumberland and Hoke counties, and there are no plans to broaden that territory.

The Need for Knowledge

NCAHP's Mahoney also supports efforts to collect and use data on outcomes and costs. “We're still a long way from having the outcome-based measurements that we need.” Putting the best possible data behind medical treatment decisions is crucial, he says. “But some doctors consider the data threatening, and they need to move beyond that.”

He believes health plans are interested in fostering better physician understanding of the financial dimension of their treatment decisions. “For doctors, their love is medicine, and though most are independent business people, deciding how to find efficiencies isn't really their forte.”

But data doesn't always equal information, and information doesn't always mean knowledge. Other factors are needed in converting raw numbers into meaningful insight that adds value to treatment. “Decisions have to be knowledge-based, not theory based,” says the NCMS' Rich. “The notion that if we just have more data, everything will be fine is misguided. We've got to have the experience and wisdom to use the data well, and right now there's a disconnect between the data and the ability to use it wisely.”

Rich's preference is for a more direct dialog between health care providers and employers, many of which he feels are myopic when making decisions about plan coverage. “They should take a longer view,” he says, instead of kicking potential problems down the road in order to get through the next quarter. Progress may occur as a result of employers discussing cost issues with physicians, who may then, in turn, find alternatives that meet treatment needs inside given financial parameters. “What we need is a different kind of dialog,” Rich concludes.

“Employers for their part need to take a more active role in defining what `value' in health care means to them,” agrees Mahoney. “Some employers have made great strides in becoming more prudent purchasers of health care, and health plans are trying to assist in that effort.”

COPYRIGHTED MATERIAL. This article first appeared in the November 2000 issue of the North Carolina magazine.
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