Moving Our Eggs Out Of One Basket

According to Gary Capistrant, ATA’s resident expert on all things related to health policy, at least 73 million Americans, almost one quarter of the population, are now covered under some form of managed care. Such plans eschew the fee-for-service approach in favor of a fixed sum to provide health services with flexibility in what and how such services are provided. Importantly, federal restrictions on the use of telemedicine don’t apply to such managed care plans.

Managed care comes in many flavors. Medicare Advantage is offered mostly as a private managed care insurance plan and covers about 25 percent of all Medicare patients. About two thirds of state-run Medicaid patients are now enrolled in Medicaid managed care programs. Health reform, leading to 32 million more Medicaid enrollees will skyrocket that number in the next five years. On the private side, employer and private plans are all shifting away from traditional fee for service models and embracing various forms of bundling payments, incentives for cost reduction and coordination of care.

How important is this? Cigna, a traditional fee-for-service insurer is spending $3.8 billion to buy HealthSpring, which has 340,000 customers in its Medicare Advantage program in 11 states. Private insurers around the nation are rushing to turn their portfolio of covered lived from fee-for-service to managed care and, to further control costs, are becoming owners and managers of their own medical facilities and health services. It will be interesting to see if this leads to such dilemmas as United Health doctors pressing for privileges at a hospital owned by Aetna.

The rush toward alternative payment models is already shifting decision-making on services from the payer to the provider. To prepare, we need to shift traditional lobbying for a new CPT code or national payment policy toward efforts to convince health systems and even local providers on the benefits of using telemedicine.