‘Radical Changes’ Predicted for Managed Care

FORT LAUDERDALE, Fla—Major changes in health care contracting are coming as the managed care industry, spurred by losses, is raising premiums and seeking to shift risk to providers, Patricia J. Goldsmith said at the Fourth Annual Conference of the National Comprehensive Cancer Network (NCCN). Ms. Goldsmith is vice president for managed care and business development at the H. Lee Moffitt Cancer Center and Research Institute, Tampa.

“Managed care backlash is at an all time high,” Ms. Goldsmith said. “I would say that 12 months from now, we certainly will hear a lot of complaints about double-digit premium increases, and the payers will be blamed or maybe the ‘greedy providers’ will be blamed, but placing blame is not the solution. Payers and providers must work together to create positive change.”

Ms. Goldsmith said that there is already some disruption, expansion, and contraction occurring among managed care organizations, and she predicts such changes will continue over the next 3 to 4 years. “We will see a radically different market,” she said.

She gave an example in the Florida market. “One of the state’s largest Medicare HMO insurers and a huge commercial insurer have very quietly, over the past 12 to 18 months, offloaded risk in almost 90% of their total population by contracting as a percent of premium for all of their members.”

In this arrangement, the health plan negotiates with medical groups to provide certain functions (claims processing, utilization review, etc). Then, based on the cost of those functions, the plan retains a percent of the premium paid for each member in the plan and gives the rest to the providers, who are totally at risk for all medical care (with the exception of transplantation).

In terms of contracting for transplants, Ms. Goldsmith said that there is a significant move toward establishing networking centers of excellence. “Any of you who do business with United Resource Network and Humana have probably already felt the impact,” she said. “We are also starting to see small and medium-sized payers terminating their own transplant networks and subcontracting transplants to larger networks such as United.”

She said that over the next few years, managed care organizations will continue to consolidate. “I predict that we will probably see one to three large dominant networks emerge over the next 18 to 24 months.” Ms. Goldsmith also predicts that Medicare and Medicaid will, in some form or another, be subsumed under a managed care model.

Payer roles may be redefined, she said, with a shift in emphasis from provision of care to benefits management, with actual provision of care contracted out to others. “What that will mean for providers is assumption of more risk,” she said.

On the other hand, she also predicts increased legislative mandates for coverage of benefits that may preclude shifting of significant risk to providers.

A possible boon for providers of cancer care is the potential of a shortage of hematologists/oncologists as the population ages. “Generally, in a market where there is a shortage, you will see very different practices and styles of contracting than when there is a glut,” she said.

Ms. Goldsmith also foresees a renewed interest on the part of employers for direct contracting with providers. “I think that city and county governmental agencies and self-insured organizations are looking for a way to cut out the middle man (managed care) and potentially save some money.”

Managed care has historically refused to pay for clinical research. “The payers’ perspective is that it is not a significant issue because less than 5% of community oncology patients are enrolled in clinical trials. I think that we, as providers, have failed to educate payers about the value of clinical research,” she said.

A Day in the Life

Patricia Goldsmith emphasized throughout her talk the importance of educating payers as to the needs of cancer patients.

“I would like to create a forum for medical directors of health plans of a day in the life of a cancer patient,” she said, “to show them what cancer patients go through, for example, hoping that their lab results arrive on time so they can get their chemotherapy.

“The forum would show that a cancer patient may be too fatigued to drive 5 miles to get the lab work drawn, another 6 miles to get an x-ray. I don’t think health plans think about that when they do carve-outs that may lower cost but place an added burden on the patient.”

Ms. Goldsmith stressed that such education should extend not only to the plans’ medical directors but also to the case managers and nurses who authorize care and who “may not have a clue about the distinction between phase I, II, and III clinical trials. From their perspective, it’s all experimental and it’s not something that they cover.”

Ms. Goldsmith offered up one controversial suggestion. “At our organization, we sometimes use a ‘don’t ask, don’t tell’ strategy. We call to ask for authorization of the care, and if the payer doesn’t know it is a clinical trial, we don’t offer that information. I don’t suggest to you that this is a long-term solution, but it is occurring in the market.”

What is going to happen 12 to 18 months from now when employers are facing double-digit premium increases? Ms. Goldsmith fears that the health care market may move backwards “to tight, narrow networks focused on 1-800-Mother-May-I.” If that is the case, she said, “then we must be ready with some acceptable alternative.”