Sn 106-03 Managed Care Product Evolution & Hosp.scorecarding Strategy

Front 1

MANAGED CARE PRODUCT EVOLUTION (page 3)

Back 1

1. Traditional indemnity plans
2. HMO Plans
 Lower costs
 limited provider access
 utilization control

3. PPO Plans
 Lower costs than indemnity plans
 but full provider access

4. The POS Plan
 Like an HMO but with full access.

5. (Coming Soon) “Tiered Network” products.

Front 2

REASONS WHY A NEW TYPE OF PRODUCT IS NEEDED

Back 2

 1990’s initiatives (negotiation and UM) only caused one-time drops in trend
 Health trend exceeds GDP (proxy for corporate revenue)
 Hospital trends are highest of all.
 HMO trends are as high as Indemnity now.
 directing ees into an HMO doesn’t save costs.
 MCO’s ability to negotiate discounts has decreased, b/c:
 Networks grew
 Can no longer promise providers increased volume (since patients freer)
 Incentives based on cost have led to legal problems

Front 3

THE NEW PRODUCT: TIERED NETWORKS WITH DIFFERENTIAL COST SHARING

Back 3

 hospitals rated by cost, quality, and efficiency (value)
 grouped into most-preferred, preferred, unpreferred, and out-of-network.
 Patients have free choice
 But pay less for more preferred hospitals.

Front 4

THE HOSPITAL SCORECARDING SYSTEM

Back 4

 Cost Measures
 Charges per Day; per Admission

 Quality Measures
 Mortality, complications, infections

 Efficiency Measures
 Unnecessary bed days

 Adjusted for case mix and severity mix.

Front 5

ADVANTAGES OF THE PROPOSED HOSPITAL SCORECARD AND TIERED NETWORK STRATEGY:

Back 5

 Patients “financially vested” in the costs of care
 Patients understand the reason for copays.
 Hospitals can’t deny their results
 Negotiation easier.
 Reduced administration costs
 Quality and Efficiency rewarded.
 fewer legal and public relations problems
 hospitals motivated to reduce complication rates.


Done.