TWIN CITIES' FRIENDLY PLANS

By GEORGE J. CHURCH

Need to see a doctor? All too often, you can only pick one you know nothing about from a list supplied by your employer's managed-care plan. But if you happen to work for one of 24 large corporations in the Minneapolis-St. Paul area, you could visit a kiosk near your office, punch a button and see a computer screen light up with a sales pitch like this, from pediatrician Leonard Snellman III:

"Smiles from children are the gas that keeps me going. Thus I wear funny ties, watches and socks, hide finger puppets in my desk drawers and try to have other diversions in my rooms so patients won't be too anxious...I have special interests in asthma, infectious diseases, preventive medicine and high-risk newborns."

Not quite what you need? Punch the button again. Other physicians--about 7,000 in 23 practice groups--also want your business. Some groups offer 24-hour hot lines and evening clinics for two-worker families. Some also trumpet their expertise in treating particular illnesses. "No. 1 in cardiac care," brags HealthSystem Minnesota--plus "96% early detection of breast cancer...above-average five-year prostate cancer survival rates." Some groups ask for $10 a month, in addition to the $70 payment each patient gets from his or her employer; others demand $20, still others $40 (no deductibles though). You pays your money--along with funds kicked in by such employers as Pillsbury, General Mills, Honeywell or Scotch tape-maker 3M--and you takes your choice.

Choice Plus, as the plan is called, is a good example of both what employers can do if they want to and why they should want to. It may not be the wave of the future in U.S. medical care, but it is one of the more imaginative alternatives out there for health-maintenance organizations.

Oddly, Choice Plus was not created in reaction to any bitter consumer backlash. Minnesota law requires all managed-care plans to be nonprofit, so there was no suspicion that patients were being shortchanged for the benefit of Wall Street. And 87% of the state's citizens tell pollsters they are satisfied with their medical care. But workers did grumble about cumbersome approval procedures, the need to change physicians whenever companies changed medical plans, and limited choices.

Executives, meanwhile, feared they would lose control of health-care costs. In Minnesota as elsewhere, HMOs are merging at such a pace that some analysts think the three that currently have 78% of the business will soon have all of it. They "would own all the doctors and hospitals and could charge us whatever they wanted," says a company official. Well before things got to that pass, companies' premium bills were rising rapidly, and no one could quite explain why. "We were writing checks into a system where we didn't know what we were getting for services in return," says Fred Hamacher, vice president of compensation and benefits for the Dayton Hudson department-store chain--though he did suspect that "there was a lot of administrative gobbledygook that added no value to the system, just cost." Like Harry and Louise of the TV commercials, Minneapolis executives thought there must be a better way.

Officials of the city's biggest employers, organized as the Buyers Health Care Action Group (B.H.C.A.G.), met weekly in late 1991 and throughout 1992 and began talking directly to groups of doctors. The physicians were delighted to deal for once with the people who would actually be paying the bills, rather than with insurance middlemen. The HMOs, doctors reported, were not much interested in what kind of treatment they provided; they were interested only in price. To win contracts, said the physicians, they had to resort to "shadow-pricing" bids and try to make up for it later by padding services and procedures--"trolling for warts" in medical slang.

The HMOs, in turn, had been presenting employers with little more than a price quote and a list of doctors' names. Result: "We were working with a lot of patients who were surly and unhappy," says Dr. Jim Reinertsen, a rheumatologist and the chief executive officer of HealthSystem Minnesota. "They were in your waiting room only because their company made them come" by forcing them to choose blind names from a list. The doctors were happy to find the corporate executives eager to discuss services and choices as well as cost.

The Choice Plus system that finally evolved is based on the old principle of cutting out the middleman. B.H.C.A.G. these days has only one deal with an HMO: it pays HealthPartners a flat fee to handle all the paperwork for the plan. That arrangement alone, says Hamacher, has knocked 15% off the premium costs that companies incurred when each had a separate relationship with an HMO. Otherwise the companies contract directly with medical groups that agree to offer employees a full range of medical services for a set premium rate. If actual costs exceed the premiums, the companies pay the difference.

Under this setup, patients can generally go directly to a specialist without getting approval from a primary-care "gatekeeper." Doctors make such decisions as whether a patient needs expensive surgery and how long a person should stay in a hospital without having to argue with insurance officials.

Choice Plus also supposedly encourages doctors to accept--even seek--the expensive-to-treat patients whom many managed-care plans shun. Medical groups enter bids for B.H.C.A.G. contracts based on what they think it will cost to treat their average patient--say, $100 per patient per month. But the lowest bid does not necessarily win. The bids are weighted according to a complex set of guidelines developed by Johns Hopkins that measure what it costs to treat different types of patients and diseases. Thus a clinic that expects to attract a lot of diabetics, who need long and expensive treatment, can enter a higher bid than a clinic that treats few or no diabetics and still win. In fact, its doctors will earn higher fees.

The final innovation is more information for consumers--both about their health and about their doctors. B.H.C.A.G. had medical groups draw up guidelines for people suffering from various complaints--lower-back pain, arthritis, the common cold. These detail when a patient needs to see a doctor and what to do at home.

Last fall B.H.C.A.G. distributed results of a survey conducted by HealthPartners rating all local medical services on various criteria--waiting time for appointments, the number of physicians on 24-hour call, the amount of time doctors spend with members and their children. While B.H.C.A.G. contracts with groups, employees choose which groups to join and which doctors within a group to consult. Supposedly they can now do so the same way they pick a barber shop or beauty parlor: weighing price against location, hours, type of facilities, number of doctors available, specialties in treating diseases. Plus, of course, those computerized pitches from doctors.

Could the Minneapolis plan be the model for a kinder, gentler managed care? Its success is by no means assured. Some executives say privately that the plan would have to grow to twice its present size--112,000 enrollees--in order to spread costs over a wide enough base to stay viable. That means attracting more companies, and even in Minnesota the idea is too radical to prompt more than a kind of nervous interest. Then too, Minneapolis-St. Paul is somewhat unique because of its close-knit business community and well-educated work force. So far, the only feeler from out of state about establishing a similar plan has come from Des Moines, Iowa.

But the most important question to be answered about Choice Plus is whether it can really keep costs affordable, sustain the plan against political opposition and improve levels of medical care and service. The omens are good: 1997 bids from medical groups came in at an average cost per patient per month that was 8.5% lower than B.H.C.A.G. had anticipated. But these estimates are basically guesses. If they are wrong, the companies as self-insurers will pay the difference between actual costs and premium revenues out of their own pockets. That will not bankrupt Pillsbury or Honeywell, but it might sour them on the idea.

The plan does contain incentives to hold down costs. If a medical group treats patients for a lower average monthly cost than it had anticipated in its bid, its doctors get a bonus. If its costs are higher, it gets some sharp questioning as to why, and a warning that next time its fees might be reduced.

But couldn't these incentives tempt doctors to give patients the cheapest rather than the best treatment--just as conventional HMOs are savagely criticized for doing? Maybe. Minnesota executives are convinced that the only long-term way to keep costs down without limiting services is to educate patients to take responsibility for their own care by following healthy habits as well as choosing and cooperating with the right doctors. Choice Plus is designed above all to give patients the information they need to do that.

--Reported by William A. McWhirter/Detroit and Marc Hequet/St. Paul

With reporting by WILLIAM A. MCWHIRTER/DETROIT AND MARC HEQUET/ST. PAUL