Agenda - Council - 11/26/1979 - Laserfiche WebLink

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chment for Request for .iF.' 5 ~Lober ll, 1979 ,rd Action 4. FLEXIBILITY It may be that the principals upon which an HMO must operate and flexibility in plan design and administration of claims are contradictory. PHP is an Individual Practice Association (IPA) and as such must apply strict cost control because of its less structured atmosphere when compared to a clinic based HMO. This, coupled with its early financial problems, have led to a hard line in regard to claims administration. Perhaps PHP perceives this as necessary to compete and survive. The County's concern is that this not lead to communication problems with employees or denial of necessary (in the subjective medical sense) out-of-plan medical services. The post bid meeting did little to lead the County to believe further flexibility would be forthcoming. The problem of the lack of freedom of choice in medical care as it relates to out-of-plan services is a characteristic of all HMOs. We do not want to unfairly single out PHP as being inflexible in regard to out-of-plan service approval. Our recognition of a larger number of such problems may relate to the larger enrollment in PHP by County employees and to the structure of an IPA's claim administration which may create more visible situations. During the next few weeks, the County's consultant, Risk Manager and Benefits Administrator will develop a set of requirements for improvement in data available, renewal rating procedures, communications, and the acknowledgement of the need for flexibility. PHP will be expected to improve its performance in order for its contract with the County to be reviewed on January l, 1981. MCHP The problems with MCHP relate to the "governmental load" it places on the County's capitation rates, an apparent lack of enthusiasm to service the County's administrative needs, and its unwillingness to provide separate rates for Medicare Supplement benefits. 1. RATE JUSTIFICATION MCHP was questioned during 1978 as to why its rates for County employees were so much higher than those offered to private employees. The response came from MCHP's consulting actuary through Stephen K. Goldstone, Executive Director of MCHP. The actuary's memo states: "While I have found no direct health cost comparisons, there do exist studies giving other morbidity characteristics by industry." A single study was cited which related to disability days that shows an average total of acute conditions per 1000 covered persons to be 168.9 persons on the average, but 202.1 for Public Administration. Our concern is that the study referred to is too general with no appropriate relationship to the Gounty's demographics and referred to disability frequencies and acute care days and not directly 'to health care costs. The disability data was questionably translated into health care costs and although valuable to the insurance industry~ it does not necessarily nor logically follow that this should be the basis for establishing HMO capitation rates. To avoid this use of generalized data for justification, the specifications for this year's bids required data on higher utilization of government workers with similar demographics to the County's. The "similar demographics" is meaningful because County enrollees in Med Center are significantly younger, on the average, than County employees enrolled in PHP or the BCBS indemnity plan. MCHP enrolls a large percentage of single females with a relatively low average age. The bid response referenced the previous general data. When asked for specific data, the County was advised its employees utilized the clinic's facilities at an above