PacifiCare Unveils New HMO that Limits Provider Options to Control Costs
In a "radical change," PacifiCare Health Systems today will unveil an HMO that will restrict patients to a relatively small network of providers, the Los Angeles Times reports. Called Value Network, the HMO will include about one-third of the hospitals and half the physicians of a typical HMO's network. The design of the plan is a departure from years past, when HMOs expanded provider networks at the request of employers and consumers. In response to increasing health care costs, however, employers and managed care organization are looking for ways to control expenses. In PacifiCare's new HMO, the network will include providers who have met a "cost threshold and scored high on several quality measures," which are based on preventive screenings, disease management and patient surveys. The plan will be available only in California. Dr. Sam Ho, PacifiCare's chief medical director, said the new plan would cut premium increases for employers by 6% to 16%. Helen Darling, president of the Washington Business Group on Health, said, "This is one of the models everyone is looking to. There will be some people who embrace it, some who don't. But I think that's the direction we're headed in."
While some of California's largest employers -- including Wells Fargo and Lockheed Martin -- have signed on to the new HMO, some doctors and hospitals are criticizing the managed care industry's practice of rating provider quality, calling it an effort to strengthen contract negotiating clout. Jan Emerson, a spokesperson for the California Healthcare Association, said, "Hospitals have absolutely no problem being held accountable for quality. But the issue is, we need to understand what the quality indicators are and what the methodology is in determining quality" (Lee, Los Angeles Times, 10/4).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.