DOCTORS’ HEALTH PLANS: Physicians Launch HMO Alternatives
Hoping to capture support from small businesses eager for an alternative to "dominant insurers," physicians in New York, Massachusetts and Colorado are launching new products to compete with HMOs. The Rochester (NY) Community IPA plans to introduce its Doctors' Health Alliance PPO in April to a market saturated with HMOs with razor-thin profit margins. The 1,700-member IPA partnered with New York City-based Group Health Inc., a third party administrator, and 1,000 non- physician professionals to offer something patients and employers "can't already find." The PPO will allow members to choose from a statewide network of physicians and offers them direct access to specialists. The IPA already offers a separate plan for employers wishing to self-insure, but the new product is aimed "toward employers too small to self-insure" or who want to avoid directly bearing insurance risk. American Medical News reports that industry observers "question whether Doctor's Health Alliance will be able to succeed in a market where HMO penetration is about 66%," even though the dominant insurers, Blue Cross Blue Shield of Rochester and Preferred Care, only offer "a few health plans." But Dr. Joseph Messina, president-elect of the local medical society, calls the move a "good start," noting that it will "showcase what this IPA can do working in partnership with employers." Dr. Elisabeth Hager, chair of the IPA's board of directors, said, "We're very optimistic that there is a niche that is underserved for self-insured and small employers." She added that "other physician groups are watching us to see what happens" (Jacob, 2/22 issue).
Doctors in Massachusetts are also gearing up to regain control of medical decisions by offering a statewide health plan to be owned and managed by doctors and hospitals. Pinnacle Health of Massachusetts Inc. will target self-insured companies, a "market not dominated by the state's major health insurance companies," explained CEO Paul Brough. Representatives of the fledgling plan are garnering support among likely participants, hoping to raise $650,000 through a private stock offering before March. Brough explained that if "Pinnacle is able to deliver health care services for an employer at a lower cost than the previous year, health plan shareholders and the employer will split the difference." But Bruce Abernathy, associate director of the Massachusetts Healthcare Purchaser Group, warned that Massachusetts ranks high among regions in patient satisfaction with HMOs, and questioned whether enough employers would shed their plans in favor of Pinnacle. He said, "I just have a hard time seeing how it can work" (Griffith, Boston Business Journal, 2/22).
High in the Rockies
In hopes of gaining more control over medical decisions, a network of Colorado doctors has formed an IPA coalition that assumes most of the traditional responsibilities of insurers. Millenial LLC, an alliance of eight IPAs, has negotiated a contract for this year with PacifiCare, the state's second-largest insurer, under which Millenial will process claims and use data to conduct in-house medical management reviews. Millenial also hopes to cut costs by giving primary care doctors and specialists the same incentives to limit referrals to specialty care, rather than a traditional managed care arrangement in which primary care doctors are financially penalized for making referrals by which specialists benefit. Though other insurers declined contracts with Millenial on the grounds that processing medical claims is a core competency of insurers, not doctors, Millenial is optimistic that Pacific Health Dimensions, a medical management company that already handles claims for four of Millenial's eight IPAs, is up to the challenge (Hubler, Denver Post, 2/22).