Four models public, private purchasers can use to work together
4 Models / Public / Private
June 30, 1997
One of the reasons for the heightened interest in collaboration between private and public purchasers is that "state Medicaid agencies are increasingly performing functions that also are being performed by private purchasers," says Mark Merlis, a senior fellow at the Institute for Health Policy Solutions.
In a recent paper prepared for the Kaiser Family Foundation’s Innovations in State Health Reform Program, Mr. Merlis notes that "both the Medicaid agency and private purchasers are selecting health plans, negotiating contracts, providing information on available choices to beneficiaries or consumers, and processing enrollments and payments." They both also are "engaged in ongoing monitoring of the plans with which they contract, collecting quality and consumer satisfaction data and assessing performance," Mr. Merlis says.
In addition to reducing duplication of effort and sending a unified message to health plans, he cites several other potential advantages, including "improving continuity of coverage for individuals or families who might shift between Medicaid and private coverage because of changing circumstances" and encouraging the "inclusion of Medicaid beneficiaries in mainstream health plans."
He sketches out "four broad models" for collaboration between Medicaid, cooperative healthplan purchasing organizations (CHPOs) and health plans. They include:
• Cooperation—The state and the CHPO could, without any formal contractual relationship, agree to coordinate certain activities, such as quality standards or reporting requirements, but would deal with health plans independently.
• Administrative services—The state could purchase from the CHPO, as from other suppliers, services it needed to oversee health plan quality or operate other facets of its contracting program.
• Joint purchasing —Medicaid and the CHPO would contract with a limited number of health plans that agreed to serve both the Medicaid and employed populations. The state might delegate to the CHPO much of the process of selecting and negotiating with health plans, but the state and the CHPO would contract with health plans independently.
• CHPO as purchasing agent for
Medicaid—The CHPO could contract with health plans to provide services both to members of its participating employer groups and to Medicaid beneficiaries. The state would make its premium payments to the CHPO rather than to the plans. Under one variation of this approach, the CHPO might be at risk, receiving a fixed per capita amount from the state.
Mr. Merlis also cites four categories of activities that could be delegated to a CHPO by a Medicaid agency:
• Quality Assurance—Collection, validation and analysis of HEDIS data or other performance information and conducting and analyzing consumer satisfaction surveys;
• Consumer Information—Development of criteria for comparing health plans and production of consumer information materials based on these comparisons;
• Contracting functions—Development of contracting criteria and request for proposals and negotiation with contractors; and
• Operations—Informing beneficiaries of available plans, processing enrollment and payments and handling grievances and appeals.
One of the best-known collaborations is the Massachusetts Healthcare Purchaser Group (MHPG), a statewide coalition of more than 40 private and public purchasers that was spearheaded by Massachusetts Medicaid.
"The coalition has repeatedly published quantified, comparative HMO quality data for purchasers and the public and has challenged health plans to reduce their premiums," writes Michael Bailit, a Needham, MA consultant in a paper prepared for the Center for Health Care Strategies, Princeton, NJ. Mr. Bailit was formerly the assistant commissioner for benefit plans with Massachusetts Medicaid. The group issued a "report card" on plans in 1996, for use by both employees and Medicaid recipients.
Since 1993, the group has put out a Cost Challenge and a Quality challenge to plans in the state. The 1997 cost challenge to the market is to reduce premiums by 2%.
As the pressure builds on HMO profit margins in Massachusetts, Mr. Bailit says, public and private purchasers may have more reasons to work toward joint purchasing.
Contact Mr. Merlis at 202-857-0810 or Mr. Bailit at 617-444-8559.
Four models public, private purchasers can use to work together
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