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Why Providence Should Not be Awarded the PEBB Contract

OPINION -- On March 11, members of the Public Employees’ Benefit Board (PEBB) will convene to consider proposals from a crowded field of aspiring applicants, each vying for the right to administer the lucrative PEBB contract beginning Jan 1, 2015.
March 5, 2014

OPINION -- On March 11, members of the Public Employees’ Benefit Board (PEBB) will convene to consider proposals from a crowded field of aspiring applicants, each vying for the right to administer the lucrative PEBB contract beginning Jan 1, 2015.

The eventual outcome of these deliberations will have a profound effect on the health and wellbeing of more than 130,000 of our fellow Oregonians and their families. But even those of us who are not public employees should sit up and take notice.

At stake is whether meaningful healthcare reform - aptly summarized by Governor Kitzhaber’s Triple Aim of improved access to treatment, better clinical outcomes and lower healthcare costs - will in fact change the way healthcare is delivered in Oregon or whether we will simply continue with business as usual.

Virtually everyone agrees that an essential component to realizing the goals of the Triple Aim is an idea known as “coordinated care.” The idea is fairly straightforward: providers should work together to prevent illnesses (wherever possible) rather than simply being asked to treat illnesses once they have occurred. In other words they should also be rewarded for keeping us healthy and out of the hospital or doctor’s office, and not only for patching us up when we get sick.

Governor Kitzhaber has recently gone on record stating he wants PEBB and, eventually the Oregon Educators Benefit Board (OEBB) as well, to follow the coordinated care approach, giving successful applicants a global budget to administer benefits for both PEBB and OEBB and provide physical, dental and mental healthcare, including management of pharmaceuticals.

As a former physician, our governor should be given due credit for grasping the core of the issue and pointing us in the right direction. The problem is, many of the current applicants to administer PEBB benefits don’t seem to have gotten the memo. Take for example Providence Health Plans, one of two incumbent PEBB administrators (along with Kaiser Permanente). Providence outsources mental health administration to a third party, based in California, called PacificCare Behavioral Health (PBH), a wholly owned subsidiary of United Behavioral Health. This is a practice known in the industry as a “carve out.”

Why does this matter?

It matters because carve outs essentially make a mockery of coordinated care. In the case of physical and mental health treatment, carve outs deliberately and arbitrarily - from the perspective of the provider or the patient - fragment treatment into two independent (and entirely uncoordinated) systems. From pre-authorization to ongoing clinical review to claims processing, everything is duplicated; once on the Providence or “medical” side, and again on the “mental health” side for PBH.

For example, if a PEBB member were to come to our clinic, we’d have to explain to them that, yes, we are contracted with PBH (for mental health services) but no, not with Providence (for physical health services). So on the same day you come in for treatment (for the same illness!), if you are seeing our doctor you are "out of network,” resulting in a higher out-of-pocket charge to you; walk down the hall to one of our family therapists’ offices for counseling and, presto, you are magically now "in network!" Outside of the insurance industry, I have never met anyone for whom this made the slightest sense.

But few people appreciate the consequences of this until faced with it themselves; and when they do they invariable become confused, incredulous and angry (in that order). "Why would my insurance not consider these mental health services in-network too, even after treatment was deemed medically necessary by my own doctor?" Why not, indeed.

It’s an entirely reasonable question, of course, and one PEBB board members hopefully will put to applicants like Providence (and we can only hope their answers are made public so the rest of us, in our innocence, can be made to understand their logic).

Meanwhile, the inconvenient truth is that practices such as mental health carve outs can have real and lasting negative effects on patients’ health by preventing truly coordinated care, creating bureaucratic barriers to treatment, and leading to inferior clinical outcomes and higher out-of-pocket costs. In other words, carve outs embody the very opposite of the Triple Aim.

Of course, Providence and similar health plans would likely respond that providers need only to contract with both Providence and PBH in order to deliver coordinated care. Or that, anyway, folks have “out-of-network” benefits, so services are "covered" (albeit, they invariably neglect to mention, at a higher cost to them).

But why should that be? The whole point of coordinated care is to remove obstacles to receiving treatment from a single team of providers, not to create them.

And why should providers have to seek separate contracts to do so? Even when contracted with both, providers still have to duplicate every single activity, from verifying benefits (two calls, one to Providence, another to PBH), gaining authorization for treatment (again, two calls), claims (two calls), and so on. You get the picture. This is decidedly not a recipe for cost reduction, never mind improved access or better clinical outcomes.

Perhaps most importantly, why should PEBB members have to worry whether they are getting “physical” or “mental health” services (as defined by insurance companies rather than by medical necessity), or whether their provider team is "contracted" with two separate companies when they (as members) have been led to believe they have a single, unified insurance policy? It's complete nonsense, of course, and a perfect example of everything that consumers - and providers, too - have come to hate about healthcare in America.

All Oregonians should come to understand how poorly served they are by carve outs and similar business practices; practices which only serve to undermine the very basic premise of coordinated care and, ultimately, contribute directly to the dysfunctional and ruinously expensive system of healthcare in this country.

Luckily, public employees are not stuck with the current arrangement. There are a number of local and national health plans applying to administer PEBB benefits that offer coordinated physical and behavioral health services without the “benefits” of carve outs. This time around PEBB board members have a golden opportunity to make a better choice for their members, and, eventually, for us all.

Morgan O’Toole moved to Portland in 1989 to attend Reed College. After living and working in San Francisco, New York and London, he returned to the Rose City in 2005 to take the position of CEO at Kartini Clinic, which provides physical and behavioral health services to children and young adults with anorexia nervosa and other so-called eating disorders. In the interests of full disclosure it should be noted that Kartini Clinic holds provider contracts with several entities applying to become administrators of PEBB benefits. Kartini Clinic is an active member of the Tri-County Behavioral Health Providers Association and the Portland Clinic Coordinated Care Association. O’Toole’s opinions are entirely his own and should in no way be construed as official positions of Kartini Clinic, its employees or representatives.

Comments

Submitted by Donald Thieman on Thu, 03/06/2014 - 13:54 Permalink

Mr. O'Toole's concern about fragmentation of care, caused by fragmentation of benefit coverage, is well-founded.  Speaking as a medical director who has functioned for many years on the "medical" side of coverage and in medical insurance department head roles: no matter how well-intentioned and good the people are we still have situations where through no fault of a patient's own, an expensive care episode can (and not that rarely) be denied for coverage under one set of benefits, with the comment that the care provider should consider asking the party administering the "other" set of benefits to see if they will pay.

That kind of thing is hard for even a medical professional who is the patient to deal with, let alone someone else who has been seriously ill physically, mentally or both. Sometimes the parties play well together to resolve things, but sometimes not.  

Coordination of care SHOULD extend to the coverage administrator, as well as to the professionals providing the care.  A case manager is too often a voice in the wilderness trying to get it all to work for a plan member/patient, in our old way of doing things.  There is much work left to do, to form a customer-focused big system rather than the internally-focused non-systems we still too often deal with.

This is not at all theoretical in Oregon; the Portland area entities attempting to get coordinated right now are far from settling all their differences and resource wars. Hospitals, physicians, specialists, primary care, physical-mental-substance abuse care providers, public and private entities.....  One sometimes wishes for a 300 lb. referee to knock a bunch of heads together and lock the room until everybody settles on solutions!  So far that gorilla is not on the scene.  If we eventually have a single payer system, this unresolved disorganization and fighting will have a lot to do with bringing it about.