Paul Wynn
MANAGED CARE January 1997. ©1997 Stezzi Communications

Life just got tougher for the 3,000 physician members of the Permanente Medical Group of Northern California. Starting this month, those physicians will be paid based on a 44-hour work week rather than a 40-hour week.hour week.

The group's doctors are paid salary plus overtime figured in four-hour increments. Under the new system, a doctor must work 56 hours to earn the same income 52 hours' work previously earned. Physicians won't be forced to work longer hours, says company spokesman Tom Debley, because most physicians already work more than 44 hours a week.

The decision, which affects both primary care physicians and specialists, was agreed upon by Kaiser Permanente and the Permanente Medical Group's physicians. It was one of a number of belt-tightening measures intended to conserve resources and make the company more competitive in northern California's health care market.

Savings from the system will be used to improve patient access to physicians by reducing waiting times and preapproval requirements, says Kaiser. Also, the company will try to match physicians better with patients' medical, behavioral and even cultural needs.

It's unclear, says Debley, whether Kaiser Permanente's other 11 regions of the country will make a similar change in the way they pay physicians.

Blue Cross and Blue Shield of Ohio will keep its valuable trademarks — at least for now. The Sixth Circuit Court of Appeals has granted the Cleveland-based company a stay, or waiting period, which allows the plan to continue as a Blue Cross and Blue Shield affiliate. The federal court will hear the company's appeal soon, possibly this month.

The appeal stems from a court battle between BCBS of Ohio and the national Blue Cross and Blue Shield Association, which is trying to strip its Cleveland affiliate of any Blues trademarks because the company's license expired in September and it agreed to sell most of its assets to the for-profit hospital giant Columbia/ HCA.

Originally, the association had hoped that BCBS of Ohio would stop using the famous marks and name by Dec. 5, with final resolution of the dispute around March. Now it looks as if the conflict will be drawn out till spring, maybe summer.

Under the court order, BCBS of Ohio must post a $32 million surety bond, which is typical in such cases. Earlier, a federal judge ordered the association to post a bond in the same amount. BCBS of Ohio may not consummate its agreement with Columbia/HCA until the appeal has concluded. The court also granted an expedited appeal process.

During a recent association board meeting, BCBS of Ohio sought reinstatement as a licensee, but the 62-member board voted down the request.

If BCBS of Ohio loses the appeal, the company could theoretically take the case to the U.S. Supreme Court.

Managed care administrators blame the high cost of medical care in part on overuse of hospital emergency departments by the poor and uninsured. But in fact, say two Harvard Medical School professors, emergency department use by the poor is a tiny piece of the medical care pie: just 0.47 percent of the nation's health care expenses in 1987, for example.

David U. Himmelstein, M.D., Steffie Woolhandler, M.D., M.P.H., and their colleagues also sound a warning. Managed care plans' reliance on cost-constraint mechanisms such as copayments, prior approval requirements, financial incentives for gatekeepers and retrospective denial of payment after ED visits is threatening the health of minorities and the poor, who rely more heavily than others on outpatient care in EDs because they don't have primary care doctors, the study concludes.

The authors analyzed recently released 1987 data on medical expenditures and discovered that ED spending as a percentage of national health expenditures was 1.86 percent — 1.62 percent for the insured and 0.23 percent for the uninsured. In '87, when fee-for-service was still the dominant system, payment for ED visits broke down this way: private insurance (42 percent), Medicaid (13 percent), Medicare (9 percent) and other third parties (15 percent). Nineteen percent was paid out of pocket by patients and uncompensated care accounted for 2 percent, or $146 million.

The study's findings contradict the widespread perception that hospitals provide huge amounts of free ED care to the uninsured. Rather than close EDs because they have high overhead costs associated with round-the-clock staffs, health plans and the government should provide better access to primary care doctors, say the authors.

The national Blue Cross and Blue Shield system is likely to break up during the next few years, say health care consultants Lynn Etheredge, Stanley B. Jones and Lawrence Lewin, writing in the winter issue of Health Affairs. The authors do not predict what the Blues system will become, saying, "The arrangements of the pieces and their partnerships and alliances are difficult to foresee."

Responding to the article's conclusion in the same issue, Blue Cross and Blue Shield Association's Harry Cain, executive vice president for business alliances, counters that the Blues system will become even stronger based on the trio's other predictions, which include:

  • Small indemnity insurers will leave the market and enhance the purchasing clout of larger health plans;
  • High costs will drive employers away from purchasing fee-for-service insurance, while the desire to satisfy employees will lead employers away from closed-panel HMOs, and
  • Rival traditional, staff-model HMOs will be at a disadvantage because they own hospitals and employ salaried physicians.

The same group of Americans that reports satisfaction with their health care coverage would like to see the U.S. health care system overhauled, says a study conducted by Wirthlin Worldwide, a polling company based in McLean, Va.

Of 1,012 people polled, 83 percent said their health insurance was satisfactory, but 62 percent of the same group said major changes in U.S. health care are needed.

"Although few Americans are unhappy with their own health care, many seem convinced there's an undercurrent of dissatisfaction sweeping the country — and they want it addressed," says Richard Kennedy, lead pollster.

Houston leads major cities in HMO penetration growth

In a recent study of HMO market penetration, 15 of America's big cities reported mixed results. Houston, New York and Boston registered the strongest percentage gains for HMOs, while HMO penetration in Chicago and Minneapolis remained stable. Average growth in market penetration in these cities was 21 percent.
HMO enrollment as percentage of population
City 1994 1995 Percentage increase '94 — '95
Houston 15% 28% 86.7%
New York 17 28 64.7
Boston 36 55 52.8
Dallas 18 27 50
Seattle 24 34 41.7
Atlanta 22 30 36.4
Washington, D.C. 36 44 22.2
Riverside, Calif. 37 45 21.6
Los Angeles 38 42 10.5
Philadelphia 40 43 7.5
San Diego 41 44 7.3
Detroit 24 25 4.2
San Francisco 55 56 1.8
Minneapolis 43 43 0


Paul Wynn

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.