AIDS TREATMENT NEWS Issue #278, September 5, 1997
John S. James

The central problem in managed care today is how to provide quality care to persons with expensive medical conditions. Managed care controls cost by paying doctors a flat rate per patient, regardless of how much treatment they need -- a payment system called "capitation." Under capitation, additional treatment costs come from the bottom line of the HMO, the IPA, or the physician (whichever accepts the insurance risk, which is determined by contracts between them). This system can create incentives to skimp on care, or to exclude experts in HIV, cancer, etc., who are likely to attract expensive patients to the plan. Dr. Becker discusses one way of improving HIV care in this environment.

This interview focuses on HMOs, not PPOs (preferred provider organizations), a different form of managed care which often allows greater choice of physicians and treatments.

Background: Managed Care, and Role of IPAs

AIDS TREATMENT NEWS: What is happening today in managed care for HIV?

Dr. Becker: The two major trends in where HIV patients receive their treatment are Medicaid, and managed care. That is where the overwhelming majority of HIV patients are treated now. So it is important to understand those systems, and where the logical pressure points will be. If we can be nearly as successful in pressuring the insurance companies, as in pressuring the pharmaceutical industry or the Federal government, we can achieve quality care. The same level of advocacy and involvement will be necessary to bring about the needed changes. The community can learn how to do it successfully; it is just a different group of people to deal with.

ATN: As background for understanding your work on HIV treatment standards at Brown & Toland, can you explain what that organization is, and how it relates to HMOs?

Dr. Becker: Brown & Toland is the name of the recently merged California Pacific Medical Group and the University of California San Francisco Medical Group. Brown & Toland is not an HMO, although some people think that it is. Brown & Toland is an IPA, an Independent Physician Association, that contracts with numerous health plans providing HMO insurance. The major HMOs in the state -- for example, PacifiCare, HealthNet, Aetna, Cigna, Prudential -- have contracts with Brown & Toland, which provides healthcare services to persons covered by the HMOs.

If you are offered health insurance at work, and you signed up with an HMO, you would then select a doctor. The HMO then sends the monthly capitation money to the IPA that the doctor belongs to. If you signed up for me, the money would go to Brown & Toland; with some physicians it would go to a different IPA, for example, Catholic Healthcare West. When a patient selects an HMO they then select a doctor; they thereby select a medical group, and all of their medical services must be provided by that IPA.

ATN: Are some physicians not in IPAs?

Dr. Becker: Today you almost cannot avoid being in an IPA. You could not take care of HMO patients; the administration is too difficult, both for the patient and for the individual doctor. Almost all physicians in San Francisco who accept HMO coverage are in one of several large IPAs.

ATN: How does an IPA start?

Dr. Becker: Usually it has been a group of doctors, with colleagues from hospital administration, who get together and form this organization. The goal is to aggregate doctors in order to contract with the major insurance companies, to bring those patients to the doctors and secondarily to the hospitals.

Standards for HIV Treatment

ATN: And that contract would include standards for HIV care?

Dr. Becker: We are just getting those in place.

As HMOs grew, an organization called the National Committee for Quality Assurance (NCQA) created standard measurements for judging the quality of HMOs. This standard is called HEDIS (Health Plan Employer Data & Information Set). HEDIS defines a list of health-care related criteria, for example for childhood immunization, or Pap smears, or mammograms, that are standards of what must be done. If you do not do well with HEDIS criteria, you will not be successful either as an insurance company or as an IPA. The insurance companies will not contract with you as an IPA; and the government will not look favorably on insuring Medicare or Medicaid patients, if the HEDIS performance of the insurance company is not good.

At Brown & Toland, for the last couple years we have been working to develop HIV-specific HEDIS-like criteria. Examples include, as a minimum standard of care, TB skin test, hepatitis B serology or immunization; we have extended it at Brown & Toland to include viral load monitoring, T-cell monitoring, the frequency of ophthalmologic examinations, and a variety of other more detailed requirements.

ATN: Are these standards publicly available?

Dr. Becker: Yes, both the HEDIS standards and the Brown & Toland HIV guidelines are available.

ATN: What would be involved in getting additional guidelines into HEDIS?

Dr. Becker: Getting new criteria into HEDIS is a very long process. About two years ago NCQA considered adding PCP prophylaxis as a criterion, but they dropped it from consideration. The mechanism needs to be loosened, so that new standards can be put on the list more readily.

Meanwhile, there is no reason that a series of HEDIS-like criteria for HIV disease could not be imposed upon either an IPA or upon an insurance company, if done from a position of strength -- either the patient advocacy community, or physicians, or a combination of the two groups, saying, "We must be assured that your doctors will be doing these minimal things" - including availability of expert physicians.

In San Francisco, the Mayor's AIDS Summit will take place Dec 2, the day after World AIDS Day. The insurance subcommittee for the Summit will be working with the Pacific Business Group on Health, a consortium of the major employers. PBGH has aggregated these big employers and said, we want the following standards; if you (an HMO) want to sell your product to us, all of you must meet the following requirements. Through the AIDS Summit, we hope to develop an equivalent list for HIV which we can get the PBGH to acknowledge and put into force. So besides requiring standards for such criteria as the number of pediatricians, and the mammogram rate, we will say there must AIDS expertise among the panel of physicians, that AIDS experts cannot be excluded simply because their patients will be more expensive. You must have certain standards of care. We will take the U.S. Public Health Service/IDSA 1997 guidelines on opportunistic infection prophylaxis, and the guidelines we have developed on immunization, and say that these are standards, that we want you to put these forward to the insurance companies, and make them do this, in the same way you have made them responsible for women's health or for childhood immunization. At a minimum we will educate this group on things they do not know; and we may be able to raise the minimal standard of quality in HMOs for HIV-infected individuals.

ATN: This would apply only in San Francisco?

Dr. Becker: Yes. But the experience here can be a model for other communities.

In California the pendulum has swung back a little from cost cutting, cost cutting, cost cutting, regardless of quality. Now some of the HMOs know that they have to deliver quality care in order to stay in business. HealthNet is a good example; it is one of the largest HMOs in the state, and had a decidedly anti-HIV posture for many years, until just a couple of years ago. It has had a change in medical directors, brought on an HIV-oriented chief pharmacist, set up an HIV Advisory Committee -- I'm on that, as are Paul Volberding, M.D., John Stansell, M.D., and some of the HIV physicians from Southern California. They are interested in doing it right. We said there will be dual protease treatment -- you have to let us do this, there are people who will need it. Since 3TC, every AIDS drug that has come to market has been on the HealthNet formulary on the day the FDA granted approval. The HMO did the work ahead of time, they read the literature and discussed with us what is the proper use of this drug.

So some of these HMOs have taken to heart the issue of quality. They know it makes more sense to treat people early on, that in the long run they save money.

ATN: This illustrates the importance of doctors getting together; otherwise there could be a race to the bottom.

Dr. Becker: Exactly.

Reimbursement and Incentives

Dr. Becker: Another issue is how reimbursement works. It is important to understand how these dollars flow from the health plan to the medical group and from there to the doctors.

There are basically three payment systems. One, "full risk," is payment at the straight commercial capitation rate. (HMOs divide their coverage into "commercial" and "senior" product; age 65, or Medicare eligibility, is the distinguishing point.) As a general rule, the medical group may get about $50 to $90 per member per month. That must include everything -- primary care, specialty care, laboratory, X-ray, hospitalization, rehabilitation, surgery; the primary care physician will get about $10 per member per month of that.

These amounts are adjusted by age and by sex, but not by severity of illness. This is fine for a healthy person who will seldom come to the doctor, who may come once a year. But if the person has HIV disease, clearly that payment will not be nearly adequate.

If you have HIV disease, clearly those figures are not enough -- unless you have so many enrolled lives, and a sufficiently large healthy population, that those payments can float the cost of care of HIV disease. In some cases that has worked -- there have been enough healthy people that the losses from care for HIV have been offset by the profits from the healthier people.

In the HMO world, the situation I have just described is called a full risk product. Brown & Toland's arrangement with HealthNet, for example, is full risk; it means we are at risk for everything. Starting September 1, we will also be at risk for pharmacy, the cost of drugs -- which previously were just passed through to the payer [the HMO].

ATN: Isn't that an improvement for patient care [since it lets Brown & Toland physicians make prescription decisions, without need for approval of the HMO]?

Dr. Becker: In some ways, yes. But what HealthNet and others have done is passed on the risk. Total drug costs increase about 15% per year. Health plans have not been able to pass on that 15% to the employers. So they make the doctors take more risk -- they give doctors a payment per patient, and we have to manage within that.

ATN: Is that 15% just for HIV drugs?

Dr. Becker: That is the increase for all drugs. It is a lot, each year. Drug cost is the fastest growing segment of healthcare costs.

ATN: The pharmaceutical industry has said that only around 7% of total healthcare costs go for drugs.

Dr. Becker: In our HIV Intervention Program at Brown & Toland, our drug costs are more than 50% of the total costs of care. That is just oral drugs. If you add injections and infusions to oral drugs, about 68% or 69% of the total cost of care for HIV is drug, infusion, or injection costs.

Since the commercial capitation rate will not cover the cost of care for HIV or other major illnesses, HMOs sometimes pay for treatment of these patients through a disease-specific carve-out -- either capitated or not. Very few places have developed an HIV-specific capitation rate. We are trying to develop a fair rate.

Meanwhile, many of the HMO health plans will pay a discounted fee for service for HIV care. For example, you might get $25 or $35 for a routine office visit.

[Part 2 of this interview will look at using an HIV carve- out, and at the economics of treatment by HIV-experienced physicians.]

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