Houston physicians form own insurance company
No gatekeeper, no preauthorization for care
Frustrated with managed care organizations and the loss of control over their patients’ care, more than 1,400 Houston-area physicians formed Physicians Inc., a physician-owned integrated health care delivery system with its own insurance company.
"Our primary purpose was to give the community a solid alternative to the cookie-cutter approach to medical care and insurance plans," says Paul Handel, MD, outgoing president of the Harris County Medical Association and a founder and stockholder in Physicians Inc., the umbrella company for the insurance firm and its network of physicians, hospitals, and ancillary providers.
When insured patients need health care, all the decisions for their care are made by the physician and the patient. There is no gatekeeper, no requirement for referral authorization or preauthorization of care, and no retroactive denial of coverage.
The physician-owned insurance company doesn’t have a medical director. Instead, more than 150 volunteer physicians serve on the medical management team, reviewing admissions, diagnostic studies, and treatment plans to make sure each patient gets the best possible treatment.
Physicians Inc. includes Medical Community Insurance Co. (MCIC), which offers Physicians Health Plan (a fully insured group health plan) to businesses, and Gulf Coast Independent Practice Association, a network of more than 4,500 physicians, most of whom are in independent practice or small groups. (For details on how the company was formed, see story on p. 29.) MCIC started insuring people on Jan. 1, 1998.
With a year of experience under its belt, the company is growing steadily, with more 3,000 insured lives, a network of 4,500 physicians, more than 70 hospitals, and more than 375 pharmacy locations, as well as other ancillary services.
The company’s long-term goal is to cover 15% to 20% of the Houston market.
"With a new company, it takes time to establish credibility. We spent a good deal of time in the first year getting ourselves known," says Michael Manley, president and chief executive officer.
Houston physicians have been eager to sign up with MCIC because of the company’s philosophy of putting decisions for care back into the hands of the doctor, Manley says.
"MCIC is set up so that we do not second-guess the doctor. We feel the patient and the doctor together can make appropriate decisions as far as care is concerned," Handel adds.
The staff and shareholders of the company feel it is in the best interest of patients, physicians, and the company’s bottom line to pay for the care the physicians feel the patients need, he says.
"Medical literature is replete with studies that show the appropriate intervention at an appropriate time is the least expensive method of treatment. You can’t make money by withholding treatment," Handel says.
Physicians’ reimbursement is based on Medicare’s Resource-Based Relative Value Scale. The reimbursement schedule puts Houston physicians towards the low end of reimbursement for PPOs, but HMOs in the area typically reimburse physicians at lower rates, Manley says.
"We believe our reimbursement schedule is equitable. I don’t think physicians are going to get wealthy, but they will be able to maintain their practices, and that is critical," Handel says.
Handel points out that physicians may suffer heavy losses if they accept managed care contracts that pay them less than it costs to treat patients.
"We are trying to tell our doctors they have to examine their contracts and study the reimbursement rates. If rates aren’t adequate, they should reject the contract. You can’t make up for low reimbursement with a high volume of patients. You’re just losing money on more patients," Handel says.
Since January, the plan has had around 30 admissions, with an average length of stay of 2.5 days.
A volunteer medical management team of physicians who practice at each hospital review all admissions. If the panel finds that a physician hasn’t delivered the appropriate treatment, the doctor and hospital still are paid, but the physician is counseled on how more appropriate treatment could be rendered, Handel says.
The second time it happens, the doctor is warned in writing. If it happens a third time, the records of the three incidents are sent to an independent review organization. If it finds the treatment was inappropriate, the physician is out of the network, Handel says.
The physicians on the medical management team have developed best-practice treatments for some common chronic conditions, such as hypertension, asthma, and diabetes. The guidelines, which are distributed to members of the network and available on the firm’s Web site, are a summary of the latest in medical breakthroughs.
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