Health Plans Struggle with "Clinically Integrated" Doctor Networks
Will insurers be part of the problem or part of the solution in healthcare reform?
As some recent events show, insurance companies generally support moves by healthcare providers to deliver high-value care that balances cost and quality. But when providers' efforts to organize the system to support these goals threaten profits, the health plans shun them. The carriers will also fight any attempt by the federal or state governments to negotiate insurance rates on behalf of consumers and small businesses.
In today's post, the first of a three-part series, BNET looks at the response of health plans to the efforts of independent practice associations (IPAs) to become "clinically integrated" in order to deliver high-quality, cost-efficient care.
A few IPAs across the country moved in this direction after the Federal Trade Commission (FTC) sanctioned some physician networks that were trying to negotiate fee-for-service contracts with health plans. The FTC regarded that as an antitrust violation because the physician practices in these IPAs were independent businesses; by bargaining collectively, in the FTC's view, they were trying to fix the prices that insurance companies paid IPA members.
Initially, the only exception the FTC allowed was for IPAs that took financial risk: If the physicians in an IPA agreed to accept fixed monthly payments from HMOs, the FTC regarded them as part of a single business entity. But several years ago, the Brown & Toland IPA in San Francisco, which had been sued by the FTC, petitioned to be allowed to bargain with fee-for-service plans on the grounds that it was clinically integrated. What this meant was that its physicians shared a common information system and were following clinical guidelines that were designed to raise the quality and lower the cost of care. The FTC relented, and later, gave similar approval to two other clinically integrated IPAs: Advocate Physician Partners in Chicago and the Greater Rochester (NY) IPA, also known as GRIPA.
GRIPA has been around since the 1990s, and it has an impressive track record. Back when HMOs offered risk contracts, it provided 70 percent of the business of its members, who now number 650 physicians. But when the insurers stopped delegating risk to GRIPA a decade ago, the IPA switched its focus to disease management and pay for performance, becoming clinically integrated in the process. Now GRIPA has an information system that connects physician offices, labs, imaging centers and Rochester General Hospital. According to Eric Nielsen, chief medical officer of GRIPA, the network has "lowered the overall cost of health care for the population by 10-15 percent over several years."
One might think that the health plans would strongly support an organization that was working to achieve the same goals that they were. But in fact, only about 10 percent of GRIPA members' income now comes through the IPA, because the dominant plans in the area -- Excellus Blue Cross Blue Shield and MVP -- don't contract with the IPA. Instead, they cut individual contracts with its members.
An Excellus spokesman told Modern Healthcare recently that the plan was continuing to hold talks with GRIPA and that it was not refusing to contract with the IPA. But Nielsen told BNET that the local payers have been unwilling to bargain with GRIPA on rates. So the FTC approval has had no effect on the Rochester market.
The situation is just the opposite in Chicago, where Advocate Physician Partners has landed contracts with ten payers, including Blue Cross Blue Shield of Illinois. However, Advocate is part of an organization that includes 3,400 physicians and eight hospitals. It's hard to imagine how any payer could do without Advocate in the Chicago area. In addition, with so many health plans dividing the market, the IPA can manage without some of them. In Rochester, on the other hand, there are only two dominant plans.
Similarly, Brown & Toland is the leading physician organization in San Francisco, and there are many plans in the market. So it's not surprising that the IPA has managed to negotiate contracts with most of the insurers in the Bay area.
From the viewpoint of reform, the key question is how big insurers will view newer, less powerful IPAs and physician-hospital organizations (PHOs) that achieve clinical integration. Will they brush them off, so they don't have to pay higher rates, or will they accept them as a necessary accommodation to lower overall health costs?
Image supplied courtesy of Wikimedia Commons.
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