Briefs: Fee-for-service contracts in health care+

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At least one insurance company gets it. As physicians struggle to provide quality care and still manage to come out ahead financially, they’ve had to seriously re-evaluate the contracts they sign with insurance carriers. Capitated contracts were the kiss of death for many providers, as the costs incurred to treat patients far surpassed payments. Recognizing this, PacifiCare of Colorado has struck a deal with Physicians Network of Colorado Springs that will allow individual physicians to be reimbursed under good, old-fashioned fee-for-service contracts.

“If a group like PNCS can’t be successful under (a capitated) agreement, there’s a risk for us as well,” said Laura Wegscheid, a spokeswoman for PacifiCare.

Under capitated contracts, providers assumed financial risk.

Physician’s Network, Wegscheid said, was “doing reasonably well” under the existing contract but had concerns about being able to operate successfully in the future.

Costs have become somewhat unpredictable, Wegscheid said. “There has been some nervousness and wariness on the part of physicians to operate under that kind of agreement.”

So, PacifiCare sat down with the 280-physician group to hammer out a contract that could permit quality, affordable health care, some financial return for PacifiCare and some financial success for providers.

“We’re trying to sit down with physician organizations and find out what that means to that individual group – what is the right methodology for reimbursement,” Wegscheid said. “What we really know is that there is no cookie-cutter solution.”

Wegscheid admitted that contracting with individual physicians was unusual in Colorado Springs because of the solid organization of provider groups here, but that it was not so unusual in Denver and elsewhere. She said that the contract arrangement won’t prevent PacifiCare from realizing cost efficiencies.

“We’ve got some pretty sophisticated, robust data systems in place,” she said, that allows the company to manage care and costs as a function of physician, condition and other parameters.

Wegscheid said she expects the majority if not all primary-care physicians in PNCS to sign the individual contracts, which would take effect July 1.

“We looked at each other across the negotiating table and we both said, ‘this is the right agreement.’”

Smooth sailing

Centura Health completed the sale of Sloans Lake Health Plans, its PPO and auto managed-care products. Denver-based PhyLink purchased the plans for an undisclosed amount. In December, Centura sold the Sloans Lake HMO to Anthem Blue Cross Blue Shield of Colorado.

The plans will continue to operate under the Sloans Lake name. Both Centura and PhyLink said they expect a transparent transition for the 430,000 Sloans Lake members affected by the sale.

With the completion of the sale, Centura is now fully divested of its non-hospital assets, a process it began when Joe Swedish took over as CEO, reports Colorado Managed Care, an industry newsletter.

Coloradans for choice

The Colorado Coalition for the Medically Underserved launched a series of town hall meetings in August 2000, seeking input on different options for health-care coverage. More than 500 people took the time to complete written surveys, in which they were asked to list the most important features of an approach to cover all Colorado residents. The top responses were that participants should have a choice of plans and providers (39 percent); that there should be low administrative overhead (23 percent); that coverage should be accessible, without exclusions due to pre-existing conditions, and with simple paperwork (19 percent); that a basic set of benefits should be provided for all people, with a possible option to “buy up” for additional coverage (16 percent); and that plans should be portable regardless of where a person is employed or lives within the state (16 percent).

Participants were also asked to rank the desirability of five coverage options after being educated about the benefits and limitations of each. Two-thirds (66.6 percent) said a single-payer system – but not necessarily single delivery – was their first or second choice. They expressed some concern, however, that it might be unfeasible from a political and financial standpoint. Fears of larger government bureaucracy dominated discussions, as did the current lack of providers to handle the increased demand.

Only 21.9 percent said they wanted to see an “employer pay or play” system, in which all employers would be required to contribute to the cost of coverage for their employees, either by offering coverage at the workplace, or paying a fee to the government. Most opposition to this plan focused on concern for small-business owners. There was also fear that employers would pass on costs to consumers, or that employees would receive lower wages.

The Coalition reports that it will develop and test options and organize interested parties in following through on survey results.