Correspondence
Changing Health Insurance Trends
N Engl J Med 2003; 348:365-367January 23, 2003
- Article
To the Editor:
The strategies presented by Galvin and Milstein (Sept. 19 issue)1 are relevant to the current national dialogue; however, the authors neglected to consider models in which providers are paid on the basis of performance. Contrary to what the authors suggest, many insurers are effectively improving the quality of heath care, while also achieving economic efficiencies, by gradually introducing innovative models for the reimbursement of providers on the basis of the quality of their output. This approach is so promising that a leading foundation issued a call for proposals for performance-based compensation models.2
After stating that “to date, a minority of consumers have used health care performance ratings as a basis for choosing providers,” the authors continue to believe that the provision to consumers of less complex and more timely information alone will suffice. In the past, public reports ranking physicians and medical groups according to their performance as determined by a nationwide analysis3,4 resulted in no substantial change in the behavior of consumers or providers.
The authors fail to note the wide variation among providers in the adoption of evidence-based guidelines for the care of patients, and in general, in the current environment, there is no financial incentive to adopt such guidelines. The authors suggest that employers want to use the same approach in purchasing health care as they do in their core business in order to improve overall health care, but their other vendors are paid, or retained, on the basis of the quality of their output. If the quality of a vendor's product is poor, this will be reflected in their payment. The pay-for-performance models deserve the attention of mainstream think tanks and policymakers, who can encourage the use of reimbursement models that reward providers for high-quality medical care.
4 ReferencesAntonio Legorreta, M.D., M.P.H.
Health Benchmarks, Los Angeles, CA 91367
alegorreta@healthbenchmarks.com 1
Galvin R ,Milstein A . Large employers' new strategies in health care. N Engl J Med 2002;347:939-942
Full Text | Web of Science | Medline2
Call for proposals: rewarding results: aligning incentives with high-quality health care. Princeton, N.J.: Robert Wood Johnson Foundation.
3
Legorreta AP ,Christian-Herman J ,O'Connor RD ,Hasan MM ,Evans R ,Leung KM . Compliance with national asthma management guidelines and specialty care: a health maintenance organization experience. Arch Intern Med 1998;158:457-464
CrossRef | Web of Science | Medline4
Legorreta AP ,Liu X ,Zaher CA ,Jatulis DE . Variation in managing asthma: experience at the medical group level in California. Am J Manag Care 2000;6:445-453
Web of Science | Medline
To the Editor:
I believe that in Iglehart's otherwise accurate summary of the current health insurance crisis (Sept. 19 issue),1 he overinterprets Galvin and Milstein's remarks about large employers and the tilt toward defined-contribution insurance. As Martin and Gauthier state in a recent monograph, “Depending on the model implemented, defined contribution health benefits may lead to increased risk segmentation. An employer's risk pool is almost certain to disperse if employees go into the individual market, where premiums for healthier and/or younger people are markedly lower than those for sicker and/or older people, who, in some cases, are unable to get coverage at all.”2 But Iglehart is clearly correct in highlighting the importance of motivating consumers through appropriate mechanisms for copayment and coinsurance and empowering them through the provision of information on performance. As Robinson has pointed out, “Americans' first-best health care preference is cost-unconscious choice, with some distant, unknown party footing the bill. When faced with the second-best trade-off between cost-conscious choice and no choice at all, however, Americans may grumble but select the former.”3
3 ReferencesDaniel C. Lyons, M.D., M.P.H.
5 Narothyn Rd., Sellersville, PA 189601
Iglehart JK . Changing health insurance trends. N Engl J Med 2002;347:956-962
Full Text | Web of Science | Medline2
Martin KE, Gauthier AK. Shifting responsibilities: models of defined contribution. In: Changes in health care financing & organization. Washington, D.C.: Academy for Health Services Research and Health Policy, February 2002:4-5. (Also available at http://www.hcfo.net/pdf/definedcontribution.pdf.)
3
Robinson JC. Renewed emphasis on consumer cost sharing in health insurance benefit design. Bethesda, Md.: Health Affairs Web Exclusive, March 20, 2002. (Accessed January 3, 2003, at http://www.healthaffairs.org/WebExclusives/2103Robinson.pdf.)
Author/Editor Response
Paying differentially on the basis of performance is an emerging strategy of large employers and is one of the three purchasing principles of the Leapfrog Group.1 It was omitted from our Sounding Board article only because of space constraints.
The National Health Care Purchasing Institute recently summarized approaches that purchasers and payers may take to reward providers for quality.2 Although Dr. Legorreta is correct that there have been examples of health plans rewarding providers for quality, this has not been the case with Medicare or most insurers, and there is little evidence that the phenomenon is growing. Leapfrog employers will be insisting that the health insurers with whom they do business have pay-for-performance systems. Several new employer initiatives are under way that build on previous efforts but attempt to get clinicians more involved in designing the programs and defining the rewards.3 Disseminating performance measures, engaging consumers, and rewarding clinicians for quality and efficiency are synergistic tactics in employers' overall market strategy for encouraging providers to cross the quality chasm.
3 ReferencesRobert S. Galvin, M.D.
General Electric, Fairfield, CT 06431
robert.galvin@corporate. ge. com Arnold M. Milstein, M.D., M.P.H.
Pacific Business Group on Health, San Francisco, CA 941111
Milstein A ,Galvin RS ,Delbanco SF ,Salber P ,Buck CR Jr . Improving the safety of health care: the Leapfrog Initiative. Eff Clin Pract 2001;3:313-316[Erratum, Eff Clin Pract 2001;4:94.]2
The growing case for using physician incentives to improve health care quality. Washington, D.C.: National Health Care Purchasing Institute, December 2001. (Accessed January 3, 2003, at http://www.nhcpi.net/pdf/incentives.pdf.)
3
Kowalcyzk L. For doctors, bonuses for quality care. Boston Globe. November 7, 2002: A1.
Author/Editor Response
My description of the defined-contribution model (also known as “consumer-driven” health insurance) was carefully couched to reflect its current status as a benefit option. I reported that these products are considered the first wave of more profound changes sought by employers who are searching for new ways to cap the expenses they incur in purchasing health insurance for their employees. I noted that, to date, “only a handful” of employers are offering this type of health benefit. I identified many of the few large firms that have added this option for coverage, raised a concern expressed by employers who are self-insured that this approach may be more, rather than less, expensive, and reported the misgivings of some analysts that these products could further fragment insurance risk pools. Dr. Lyons is entitled to his opinion, but I would not describe my account as an overinterpretation, but rather as a reality check.
More important, though, one should recognize that benefit offerings change rapidly as the (often conflicting) interests of employers and workers shift.1,2 A recent report by Gabel and colleagues, based on interviews conducted in early 2002 with industry leaders and other stakeholders, estimated that 1.5 million Americans (less than 1 percent of the employer-coverage market) are being offered defined-contribution products.3 But the authors added: “Many health plans and benefit consultants, however, see consumer-driven plans accounting for 20 percent of the market by 2005 and as much as 50 percent by 2007.”
3 ReferencesJohn K. Iglehart
1
Fronstin P. Consumer-driven health benefits: a continuing evolution? Washington, D.C.: Employee Benefit Research Institute, 2002.
2
Christianson JB ,Parente ST ,Taylor R . Defined-contribution health insurance products: development and prospects. Health Aff (Millwood) 2002;21:49-64
CrossRef | Web of Science | Medline3
Gabel JR, Lo Sasso AT, Rice T. Consumer-driven health plans: are they more than talk now? Bethesda, Md.: Health Affairs Web Exclusive, November 20, 2002. (Accessed January 3, 2003, at http://www.healthaffairs.org/WebExclusives/2201Gabel.pdf.)
