Tahoe Forest Hospital officials envision community health plan
Tahoe Forest Hospital District’s community health plan is stirring controversy and raising questions about the future of local health care.
Hospital officials and doctors within the Independent Practice Association are supporting the move from insurance companies providing indemnity insurance to a system of seamless care, hospital administrator Larry Long said.
Some physicians are worried about being excluded from the plan and some nurses are worried about layoffs caused by decreasing revenues to the hospital. Hospital officials say there will be changes, but they will not be drastic.
“The hospital has been working on putting this plan together for many years and we are finally a big step closer to our goal to provide seamless care to the community,” Long said.
Because Tahoe Forest is a district hospital, implementing a managed care plan for the community affects everyone.
There are two different types of managed care and the hospital has chosen to provide the more flexible of the two, said Long, who pointed out the distinction between health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
HMOs pay their physicians on a capitated system, where doctors are paid once monthly on a percentage basis. PPOs offer discounted rates for physicians under contract with their organization. PPOs tend to be more flexible for insureds and attractive to physicians, Long said.
“Our intent is to provide insureds with a wide array of providers and information to help insureds make intelligent decisions about their health care unlike the HMOs,” he said.
Before 1970, there were only five types of organizations that provided insurance:
— Blue Cross/Blue Shield;
— commercial insurance companies, such as Prudential and Aetna;
— Medicare, a federal program for everyone over the age of 65;
— Medicaid, a program administered jointly by state and federal governments for low-income individuals; and
— the military medical system and CHAMPUS, programs financed by the government for military personnel.
As the medical insurance industry became more and more competitive, premiums and doctor fees rose sky-high. It was the excesses caused by the fee-for-service indemnity system that prompted hospitals and insurance companies and insureds to examine the services they were providing and getting in return, Dr. Rick Newman, Tahoe Forest’s managed care coordinator said.
In the indemnity program doctors get paid for services rendered. The more services given, the more money the doctors receive. Expensive testing is done by outside specialists, longer hospital stays were required and patients got sicker.
On the other hand, indemnity insurance allows patients to choose their own care providers.
Managed health care is unlike indemnity insurance where the insured has the freedom to choose a physician and hospital, medical providers are paid on a fee-per-service basis and insureds pay deductibles and required coinsurance-a certain percentage of all medical costs.
Managed care lowers co-insurance payments, provides a list of health-care providers who have agreed to the discounted fee schedules and provides wellness education and preventative medicine.
Managed care places financial risks on the physicians rather than the insurance companies. Using a capitated system, managed care physicians and hospitals are either paid once a month depending on how many people are insured in their area or are contracted to supply medical services on a discounted-fee basis.
Joseph Ferrera, Tahoe Forest’s public relations representative, said this is a good way for costs to be managed. Others say this could be the downfall of the system.
“If doctors are only going to get a certain amount of compensation per month, they are going to want to have healthy patients,” he said. “Whether the docs see their patients or not, they get paid the same.”
In the fee-for-service system, doctors can request many tests and follow-up visits for their patients all at the patients’ expense. Not so in the managed care system, said Ferrera.
“That is where the logic behind managed care lies,” he said.
Dr. Chris Richards, president of the North Lake Tahoe Medical Group Inc., agreed.
“We want to keep our patients healthy from the start,” Richards said. “By educating our patients on keeping themselves healthy, we need to see our patients less.”
For physicians not agreeing with the reduced-fee plan, Ferrera raised a question.
“Would doctors prefer to get reduced fees by providing health care to a large segment of our population, or would they rather see that money go to Sacramento or Reno to doctors outside of the community?”
Sacramento is just one example of managed care gone wrong, he said.
“So many companies offer their employees a managed care insurance package that was designed by some huge company outside of their area,” Richards said. “Our plan is different in that we have public input from the start of our planning.”
“Without community input the health plan will be useless,” said Chris Spencer, Tahoe Forest’s director of outpatient services.
Newman said the shared goal of the hospital and physicians is to have 80 percent of the Tahoe-Truckee area insured under the hospital’s community health plan.
“This is the only way to make the plan profitable for the docs and district, which includes Truckee residents,” he said.
The intent of the hospital and participating physicians is to look at as many plans as possible to design a plan specific to the area’s residents.
“We have such a diverse community,” Newman said. “There are the self-insured, the seasonal employees, the government employees and the unemployed. We need to design a one-size-fits-all plan.”
Long said the goals of the hospital are clear.
“We need to ensure that everyone in the community has access to local health care,” he said. “We need to make sure that everyone is in the loop.”
Employees sent elsewhere
Long pointed out that more and more employers are offering managed care programs that send their employees to physicians outside of Truckee.
“Our plan is better for our entire community because it keeps the medical dollars in the community,” he said. “(The economic benefit) is cyclical.”
Physicians are still concerned about the possible reduction in revenue with the monthly cap on payments. Long said there will be more money put back into the community by providing more local service.
“Right now the majority of local care is on an emergency basis,” Ferrera said. “The PPO programs are sending insureds to docs in Sacramento or Reno and this hurts the district.”
Long said the plan must be consumer friendly. He said consumers want good access to the local medical community, affordability and services that are not now available like specialty surgery.
In an attempt to spread the financial risk across a larger section of the population, Long said Tahoe Forest has entered into a partnership with other district hospitals in California and hopes to also partner with South Shore’s Barton Memorial Hospital.
Newman said, “This is a win-win situation for everyone in the community.”
Ferrera agreed, adding, “Many people within the medical community have concerns and that’s good, but they’re mainly concerned about changes.”
“Change is good,” he said. “Change happens over time, and in time, everyone will (have to) adjust.”
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