Originally created 02/08/98

Managed care on the rise



When the Augusta GreenJackets were looking to lower health-care costs last year, it seemed only natural to turn to a bigger team.

The small, seven-person staff of the minor league baseball team joined a coalition of area businesses that in turn got the team covered under a health maintenance organization, which lowered premiums by more than $1,000 a year.

And while it means more restrictions on how staff members see doctors or use the emergency room, it has also freed them from insurance forms and rising health-care costs.

The GreenJackets were part of a trend last year that saw the number of people in Augusta who rely on managed care more than double. The team also became part of a trend that has led to bigger organizations fighting to control how Augusta employees see their doctors or visit area hospitals.

These trends will only accelerate when managed care becomes available to Medicare patients.

In 10 months last year, enrollment in managed-care organizations went from 15 percent of those with insurance in Augusta to more than 38 percent, according to the Georgia Managed Care Report. One of the largest parts of that increase was University Hospital enrolling its employees in John Deere Healthplan.

After years with the majority share of local business, University initially resisted becoming just a provider under managed care and attempted to partner with John Deere, which didn't work out when it became apparent it would cost millions.

University also looked at taking over the troubled Master Health Plan insurance company but balked when it appeared it wouldn't save much on the $10 million to $12 million it would take to start a company from scratch, said Lou Imbrogno, chief executive officer of University Health Link, University's physician-hospital organization.

Now, faced with companies with large pools of patients that can demand discounts, University and two other physician-hospital and physician groups are working on their own combined organization.

University Health Link, St. Joseph Hospital's Lifeplans and Aiken Regional Medical Centers are looking at forming Georgia-Carolina Health Partners, which could negotiate a single contract to include all three hospitals and as many as 500 physicians.

In 1991, the Federal Trade Commission blocked a potential merger between University and St. Joseph for fear it would cut down on competitiveness in the market.

But Mr. Imbrogno and Mike White, vice president for managed care at St. Joseph, say the new arrangement would not violate antitrust laws because all three organizations would remain separate and continue to negotiate separate agreements and prices outside the proposed organization.

"No one thinks, even if it were enormously successful, that all their business is going to come through this," Mr. Imbrogno said.

Though all three are negotiating with Aetna/U.S. Healthcare and the Greater Augusta-Aiken Area Healthcare Coalition, which represents more than 100 area businesses, those negotiations are being done through an intermediary where all three groups submit separate bids that are not discussed with the others, Mr. White said.

Business groups such as the coalition could become more common and gain power in the near future thanks to a new Georgia law that allows for regional health-care purchasing cooperatives, which allow businesses to join together to negotiate insurance, said coalition chairman Allen Roberson of Wackenhut Services Inc.

It sets up a potential conflict between increasingly larger groups, said Mickey Smith, a consultant to the coalition with the accounting firm Cherry, Bekaert and Holland.

"You've got physician groups or hospital groups trying to position themselves as special and you have to pay a premium for us, versus others saying with enough information, health care is a commodity and we can price it accordingly," Mr. Smith said. "It's that information piece that's missing in this market right now and that's a strategic objective of the coalition."

Both sides say Medicare patients entering managed care likely will ignite the current trends because the federal program is the largest source of payments for most providers.

"Any time you have a change in Medicare and the services it pays for, it changes practices and services for everyone," Mr. Roberson said.

For instance, Medical College of Georgia is considering becoming a provider-service organization, a group that could enroll Medicare patients and be paid like an insurance company to see to their care, said Thomas Kelly, associate hospital director for finance.

The approach has certain advantages in that it allows a hospital like MCG to ensure that Medicare patients, who make up 23 percent of its business, continue to come through the doors.

"Then you have a captive audience ... because those patients will only use your group," Mr. Kelly said.

It's those kinds of restrictions that cause headaches for newcomers to managed care, such as GreenJackets business manager Nancy Crowe and associate general manager Scott Skadan.

They are upbeat about joining an HMO because saving $1,200 to $1,800 a year on health premiums was important, as well as the fact that they didn't have to answer health questions that may have gotten Ms. Crowe excluded because of her breast cancer two years ago, she said.

It also has freed them from insurance forms and claims processes because the HMO, Aetna/U.S. Healthcare, handles that. But it has also meant some headaches -- though she still sees her oncologist for regular checkups to make sure the cancer hasn't returned, she has to get her primary-care doctor to refer her for those visits.

Even with that headache, she realizes the time of just waltzing into a doctor's office "is probably a thing of the past," Ms. Crowe said.

It applies to emergencies, too. When Mr. Skadan's 10-year-old son Sean awoke during a camping trip with an extremely painful ear infection, Aetna/U.S Healthcare almost didn't pay for the emergency room trip because Mr. Skadan forgot to call his primary-care doctor first to OK it, Mr. Skadan said. Once the company realized what had happened, however, the trip was covered, he said.

Yet even as managed care increases in Augusta, there is a growing trend for businesses to offer employees a "point of service" option that allows them a greater choice of doctors and hospitals at a higher premium than an HMO, said Tracy Moss, vice president for business development at Columbia Augusta Medical Center. Many reasons explain why, said Lew Yeouze of William M. Mercer, a health-care consulting firm in Atlanta.

"Naturally, being Americans, we don't want to be told we don't have the freedom or the choice to do anything," Mr. Yeouze said. And people fear being trapped in a system where they may be at the mercy of a company, the subject of horror stories of people who say they have been denied care.

That's one of the motivations behind U.S. Rep. Charlie Norwood's Patient Access to Responsible Care Act, which would ensure that employees have the option of choosing a point of service plan and having their physicians included in their plans.

A recent Mercer survey, however, points out that these plans often cost employers as much as $300 more per employee. Those higher costs could lead to higher premiums if that choice is mandated, Mr. Yeouze said, resulting in fewer people being able to afford their health insurance.

But in fact it is the managed-care companies who would be responsible if more people lost their insurance because of higher premiums, said Norwood spokesman John Stone.

"The No. 1 factor in health-care cost (increases) is a lot of managed-care companies intentionally underbid their premiums to get business," Mr. Stone said. "So this year, it's going to have to be catch-up time."

With all the changes predicted, catch-up seems to be on everyone's mind.

Insurance types

Indemnity, or traditional fee-for-service insurance

-- Pays for medical care after the patient uses the system. The patient must usually file claims for payment, and the plan pays a portion. These plans usually have no restrictions on whom the patient sees and ordinarily are the most expensive to employers.

Preferred Provider Organization (PPO)

-- A group of doctors and hospitals contract with an insurance company, or directly with employers, to provide discounts to the plan. Patients choose from doctors and hospitals within the organization and pay higher costs, or sometimes get no coverage, for seeing a doctor or hospital outside the plan. Some restrictions on patient choice but less expensive than traditional insurance.

Health Maintenance Organization (HMO)

-- A prepaid plan where the employer pays a premium that covers all health care to be delivered. The insurance company contracts for a certain price with doctors and hospitals to provide care for the patients. Patients are typically assigned a primary care doctor who must give them a referral to a specialist or approve an emergency room visit in most cases. These plans have the greatest restrictions on patient choice and are the least expensive to employers.

Point-of-service plans ([filtered word])

-- Combine elements of the PPO and HMO, where patients pay nothing out-of-pocket as long as they stay within the network of doctors and hospitals assigned to the plan. Members can go outside the plan and choose another doctor or hospital and pay more. More choice for patients than an HMO, and more expensive for employers than an HMO.