Employers Lead in Designing Insurance

Under the plan, patients would pay more for low back surgery

May 6, 2009 -- Large employers could get a break in their insurance rates next January under a plan being designed by a health leadership task force.


“We’re trying to lower premiums in the 8 to 12 percent range,” said Denise Honzel, a consultant who’s been hired by the business community to develop a value-based benefit plan. “Our goal is to keep premiums closer to CPI (consumer price index).” Large employers are defined as having over 50 employees.
 
Consumers could feel it in the pocketbook, however, particularly if they want medical care that’s not considered “effective,” according to researchers, such as surgery for low back pain, hysterectomies or imaging procedures. 
 
Health insurers should know the final pricing of this new plan by mid-June, giving them plenty of time to prepare a marketing campaign. “With evidence-based guidelines and value-based plan design, this is the industry’s effort to give employers some relief,” said Jack Friedman, CEO of Providence Health Plans, who chairs the value-based benefits committee. “It came about because businesses were upset about the growing increases in their rates.”
 
The cost for health insurance would be broken into three components – each with different co-payments, deductibles and co-insurance.  
 
Under the first tier, employees would receive full coverage for six chronic conditions: coronary disease, congestive heart failure, COPD, diabetes, asthma and depression. They could visit physicians, receive drugs and diagnostic tests proven effective in managing their care – without any additional charge.
 
People will be identified through a health risk assessment, which is common practice, Honzel said. The goal is to remove barriers that might inhibit people from seeking care and, at the same time, reduce emergency room visits and hospitalizations.  
 
When it comes to seeking care for services that have “little clinical value,” such as elective MRI and CT scans, surgery for low back pain or hysterectomies, people may wind up paying up to $5,000 in out-of-pocket costs. That’s because such medical care “can potentially be harmful for patients,” according to Honzel, and has been overused and driven by provider preference or supply.
 
Research done by Dr. John Wennberg reported in the Dartmouth Atlas Project has found that certain healthcare services have very low value, Friedman said. “There are probably 15-20 procedures where the return on investment is low. On the other hand, where benefits are high such as diabetes care, we’ll offer free primary care visits and drugs.”
 
Finally, the standard deductibles and co-payments would remain the same for all other healthcare services.
 
The health leadership task force is also working on other ways to reduce healthcare costs.  An administrative simplification task force is focused on eligibility, claims and credentialing. The payment reform group is looking at the value of a medical home, bundled services and pay-for-performance, while physicians have teamed up to establish guidelines for evidence-based care such as high cost imaging, depression and low back pain – relying on work done by the Institute for Clinical Systems Improvement, which is sponsored by seven health plans in Minnesota and Wisconsin.
 
The project’s work began in September when several business groups approached Honzel – the Oregon Business Council, Associated Oregon Industries, the Oregon Business Association and the Oregon Coalition of Health Care Purchasers.
 
“Our goal has been to offer a product and drive the conversation about whether we need all these benefits,” Honzel said. “This approach is much more surgical. It’s the right conversation to have as we move forward.” 
 
Several health plans and hospitals are paying for the project’s work. These sponsors include Providence Health System, Legacy Health System, Oregon Health & Science University, Regence BlueCross BlueShield of Oregon, The ODS Companies, Kaiser Permanente and PacificSource Health Plan.
 

Who's involved in the health leadership task force?


PHYSICIANS

Dr. Mike Bonazzola, Oregon Health & Science University Medical Group
Dr. Craig Fausel, Oregon Clinic
Dr. Greg Fraser, Mid-Valley IPA
Dr. Bob Gluckman, Oregon Governor, American College of Physicians, Oregon Medical Association
Dr. Roger Muller, United Health Care
Dr. Doug Walta, Vice-Chair, Oregon Health Fund Board Service Delivery Committee
Dr. Al Weiland, Northwest Permanente

HOSPITALS AND HEALTH SYSTEMS

Dr. George Brown, Legacy Health System
Russ Danielson, Providence Health System
Jim Diegel, Cascade Healthcare Community
Larry Mulllins, Samaritan Health Services
Peter Rapp, Oregon Health & Science University
Roy Vinyard, Asante Health System

HEALTH PLANS

Majd El-Azma, LifeWise Health Plan
Chris Ellertson, Health Net of Oregon
Dave Ford, CareOregon
Jack Friedman, Providence Health Plans
Robert Gootee, The ODS Companies 
Dr. J. Bart McMullan, Jr., Regence BlueCross BlueShield of Oregon
Ken Provencher, PacificSource Health Plan

WORK GROUP LEADERS/STAFF

New Reimbursement/Payment Approaches: Chair: Stephanie Dreyfuss, Regence BlueCross BlueShield of Oregon, Staff: John Lee

Evidence-Based Best Practice: Chair: Dr. David Labby, CareOregon, Staff: Bill Kramer

Value-Based Benefits: Chair, Jack Friedman, Providence Health Plans, Staff: Denise Honzel

Administrative Simplification: Chairs: Dr. J. Bart McMullan, Jr., Regence BlueCross BlueShield of Oregon and Andy Davidson, Oregon Association of Hospitals and Health Systems, Staff: Diana Bianco and Paul Krissel
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