Increases in health insurance premiums have become an annual story and despite our awareness of what drives them (rising medical costs largely beyond the control of health plans), the intensity of the debate surrounding their cause continues to increase.
But is there a way to reduce some of the sting of rising premiums? Through a combination of very simple strategies with larger lessons for health care, Fallon Community Health Plan has been able to hold down and, in some cases, reduce 2009 premiums for our Medicare members — despite rising health care costs.
We offer coverage to Medicare beneficiaries through 12 different Medicare Advantage plans, each with slightly modified benefits to best fit individual health status and financial risk tolerances. For 2009, we reduced premiums for four of those plans, from 10 to 42 percent. The others are remaining level.
The real story here is how we were able to do it. Regular readers of Commonhealth know that I'm perhaps the state's biggest advocate for limited, high-performing networks. And they are the primary reason we’ve been able to reduce or hold premiums flat for our Medicare Advantage members.
What’s the secret of our success? Look no further than the original elements of not-for-profit managed care, which were based on the primary use of outstanding multi-specialty physician group practices and community hospitals to deliver care. It’s really a “back to basics” formula – something that FCHP has not lost sight of, particularly for our Medicare Advantage plans. Key ingredients to a “back to basics” formula include:
· Prepay physician groups using a formula based on the mix and health status of patients. In the old days, we called this “capitation.” When done right, a capitated payment structure is one of the most effective ways to manage health care costs.
· Partner with group practices that use electronic medical records and have incorporated patient information with chronic care management. We have established relationships with physician groups that have been doing this for well over a decade.
· Jointly establish clear inpatient and outpatient health care protocols that are coordinated, managed and measured by a joint operating committee comprised of both physicians and health plan staff.
· Establish goals that are clearly defined and keenly aligned - better health, higher patient/member satisfaction, lower cost and less administrative hassle.
· Use of “pay for performance” incentives that give both organizations – provider and health plan – a greater ability to advance improvements in more focused areas such as high cost diagnostics, access, wellness and prevention.
So what’s the catch? There really isn’t any. It’s more about having a choice:
· A smaller provider network with a more organized delivery system comprised of physicians that have the ability and interest to coordinate all health care and manage cost;
· Or, the alternative, which is what America has today, a fragmented system of outstanding clinicians and hospitals, supported by a payment system that’s misaligned with patient needs.
We are such big believers in coordinating health care delivery and prepaid health care financing that FCHP has become the only health plan in Massachusetts that is also a provider. Our Summit ElderCare program, a Program of All-inclusive Care for the Elderly, is a growing team of physicians, nurse practitioners, therapists, aids, and other staff that provide all-inclusive, coordinated care for elders. It uses the “medical home” model for frail elder care and is funded with a case mix adjusted prepayment from Medicare and Medicaid. The participant remains independent for as long as possible, the provider team manages all care, and the cost savings typically are 8 – 15% lower than the alternative.
Our experience at FCHP shows that keeping it simple – going back to basics – has a powerful impact on cost and quality. And seeking ways to link coordinated health care delivery with prepaid financing often produces positive gains for the patient, the provider and the payer, and provides lessons that can be applied to the entire insured population.
Eric H. Schultz is President and CEO of Fallon Community Health Plan.
This program aired on October 24, 2008. The audio for this program is not available.