How Twin Cities employers are reshaping health care; by forming an integrated system of care, Minnesota employers are testing their solution to health reform without state regulation - Business Health Care Action Group's Choice Plus plan - Cover Story

Business & Health, Feb, 1994 by Marion Torchia

Last January, nine members of the Business Health Care Action Group, a coalition of employers in the Minneapolis-St. Paul metropolitan area, began offering their workers a new health plan. The coalition adopted a plan that operated as an integrated system of care because its members believed such a system had the greatest potential to deliver high-quality, cost-effective care.

This year, BHCAG's rounding companies have just completed their first re-enrollment and are happy with the results. The per-employee costs are about 10% below the average cost of the HMO options offered previously, and costs have increased 4% to 5% in the past year, compared with average increases of 7% to 8% in the greater Minneapolis market, reports BHCAG's Executive Director Steve Wetzell. On average, employers are paying $2,900 per family and $1,200 per individual.

The plan, called Choice Plus, is a typical point-of-service plan, allowing enrollees to choose care from a network of participating providers and go outside the network for coverage at a lower reimbursement rate. But it is also unusual in many ways. The network is large and can therefore offer its enrollees a considerable degree of choice among providers. It is highly standardized--all participating companies have agreed to use a standard benefit design.

Technically, an ISC coordinates care provided by groups of doctors and hospitals and accepts financial risk for the population. Choice Plus borrows features of an ISC by using a primary gatekeeper physician as the coordinator for all care, financial incentives to improve the delivery of care and contain costs, and a range of continuous quality improvement techniques.

Choice Plus is a first step in the coalition's effort to reform health care by demonstrating that improved quality, increased provider competition, increased consumer responsibility, and enhanced efficiency of health care delivery are compatible goals. These goals can best be accomplished within an ISC, BHCAG members believe.

When Choice Plus was created, a statewide health care reform movement was under way, and the coalition members wanted to influence its outcome by creating their own health care financing and delivery system. "This is not just a purchasing activity. It's an effort to change the basic structure of health care through an ongoing dialogue among payers, providers, and consumers," says Larry Schwanke, vice president for human resources of The Bemis Co. Inc., a packaging manufacturer.

Adds Dee Kemnitz, vice president of the Minneapolisbased Carlson Cos. Inc., "When the coalition's effort to get cost containment features incorporated into the state's health reform legislation was not successful, the companies decided to demonstrate that they could contain costs themselves." Carlson Cos., a hospitality services company that includes Radisson Hotels and TGI Friday's restaurants, has 5,300 covered lives in the Twin Cities area.

ASSESSING CHOICE PLUS

Benefits managers of participating companies say their employees are happy with the new plan. Paula Roe, vice president for compensation and benefits for Norwest, a nationwide financial services company headquartered in Minneapolis, says 70% of the bank's employees chose Choice Plus over the other alternatives the company offered, and this year's enrollment has increased to 87%. The company has 14,300 covered lives participating in Choice Plus.

Such numbers and the coalition's growth mean BHCAG now possesses sufficient purchasing power to exert a significant influence on the area's health care market. Now numbering 22 members, the coalition includes most of the major employers in the Twin Cities.

Collectively, the companies are responsible for some 250,000 covered lives, about 10% of the population of greater Minneapolis, Wetzell estimates. Enrollment in Choice Plus in 1994 is expected to be about 100,000, and it will continue to grow as member companies adopt to the plan.

In developing the network of providers, "The coalition's founders wanted to find a group of providers who were committed to conservative, cost effective medical practice and who were willing to engage in an ongoing dialogue with employers about health care delivery issues," says Schwanke. "They were convinced that efficient delivery of health care was achievable. They wanted to bring a greater degree of vertical integration to the health care system."

So the coalition considered the multispecialty group practices in the area because "these large groups have the administrative sophistication to support the development of integrated systems of care," says James L. Reinertsen, M.D., a rheumatologist with Healthsystem Minnesota, the parent organization of Park Nicollet Medical Center and Methodist Hospital. "They also have a capacity for collective action impossible among many small independent practices."

Early in 1992, BHCAG invited bidders to develop a health plan meeting their specifications. The winning bid came from a consortium that consisted of HealthPartners, an entity formed from two HMOs (Group Health and MedCenters) that had counted many of BHCAG's employees among their members; the Park Nicollet Medical Center; and the Mayo Clinic.