Business coalition sets maximum allowable medical charges; caps for large employers will kick in Jan. 1
A coalition of major southeastern Wisconsin employers plans to place a cap on how much their self-insured health plans will pay health care providers for many outpatient procedures.
The limit of 150% above Medicare reimbursement levels will kick in Jan. 1 for many members of the Business Health Care Group of Southeast Wisconsin (BHCGSW), according to a coalition spokesperson.
The coalition of businesses and associations formed to address the fact that some estimates put health care costs in the region 55% higher than those in the rest of the Midwest.
Members of the group include Rockwell Automation Inc., Harley-Davidson Inc., DaimlerChrysler AG, Inc., Manpower Inc., Midwest Airlines Inc., Miller Brewing Co. and Journal Communications Inc.
According to Matt Gonring, Rockwell Automation’s vice president of communications and marketing and chair of BHCGSW’s communication committee, the coalition has been holding meetings for plan administrators and negotiating with the major healthcare providers.
"We had asked plan administrators to look at and review what it would take to implement a maximum allowable charge," Gonring said. "We are targeting around 150% of Medicare (reimbursement levels). This would be implemented in steps, geared first toward outpatient care. We would look at hospitalization at a later date. Many of our member companies are prepared to implement this by Jan. 1 of 2004."
Gonring said the change would force employees of the companies implementing the cap to become more informed consumers. Employees would choose between health care providers that will provide services within the cap or those that would require the patient to pay an additional out-of-pocket amount.
"We will publish a list of providers that will charge at the MAC (maximum allowable cost) level and our workforce will then make choices about working with those providers or working with providers outside and then paying the difference or negotiating."
While initially, the MAC strategy would apply only to self-insured plans, smaller companies may get in the game soon.
"The coalition or group formed here also has a business association of Kenosha that is comprised of smaller employers," said Terry Frett, president of Frett/ Barrington Limited, an independent insurance brokerage based in Waukesha. "They are taking this concept to the Blue Crosses to create a concept."
Representatives of the Kenosha Area Business Alliance, the group Frett referred to, declined comment regarding the MAC.
"I am rather amazed with how rapidly they are moving with it," said Frett, who participated in BHCGSW plan administrator meetings. "Essentially, these larger employers are the same ones that created the health care network 15 years ago for the purpose of negotiating discounts. This time around, they are trying to force the engagement of consumers and providers coming forward with their real cost of care – and forcing that discussion up front, because my insurance plan is only going to cover this maximum allowable amount."
Frett said insurers likely will introduce new products reflecting the MAC concept, bolstered by the fact that other large groups have moved in lockstep in that direction.
However, according to Larry Rambo, chief executive officer of Humana Inc.’s Wisconsin and Michigan markets, insurers are already ahead of the trend.
"I think the key component that is very positive is that they are looking at getting the consumer much more engaged in working with the providers – to reward using providers who are lower cost – and for consumers to have to pay more for providers that are higher cost," said Rambo, who also attended the BHCGSW’s plan administrator meetings. "That is very consistent with the consumer-based solutions Humana has been developing."
According to Rambo, insurers will be able to do a better job with an MAC concept than self-insured health plans.
"I think the private marketplace will probably respond with more complete products than what the coalition is ultimately able to do," Rambo said. "The coalition can come up with concepts, and they have to implement them within. Union negotiations and other factors will make it difficult to implement any one single solution all at one time."
Aug, 8, 2003 Small Business Times, Milwaukee
