Two virtual HMOs’ prepare for launch
Pros and cons still being debated
Two Minneapolis start-up companies based on the defined-contribution, virtual HMO philosophy already are planning to sell health services on-line to employer-based groups. Vivius (www.vivius.com) plans to pilot-test its concept in Kansas City, MO, starting this fall. HealtheCare (www.healthecare.com) is aiming for a pilot launch by year’s end.
Vivius divides providers into 20 categories, including primary care physicians, doctors in 14 specialties, hospitals, labs, and pharmacies, according to an analysis by the American Medical Association (AMA). Each specialty sets its own fees, which are translated into a flat monthly rate paid by consumers, much like capitated per member per month fees. "Under this system, doctors in a new practice might charge less to draw patients while those in established practices with a solid reputation might charge more," notes the AMA. Vivius also permits physicians to raise or lower their rates for new customers and, after one year, alter rates for existing customers.
HealtheCare, on the other hand, plans to create an instant network by offering the services of independent practice associations to its customer base. However, individual doctors also can join the system, says Tom Valdivia, MD, HealthCare’s chief medical officer.
Under both approaches, employees pay out of their own pockets if the benefits they select, and the providers, cost more than defined contribution set-asides by their employers. However, workers choosing lower-charging providers can use any leftover funds to buy other health-related services.
Both of those dot.coms make their money by charging providers an administrative fee or a fee for any the business they generate.
On the downside, some experts worry that without a traditional carrier to cover the related insurance risk associated with unexpected costs of care for some patients, providers will end up having to pay monthly risk payments to the dot.com to cover that contingency.
Vivius counters that it is less risky than traditional capitation because physicians can raise charges whenever they like for new patients. The company also says it is spreading the risk by charging higher rates to certain demographic groups that generally have higher medical bills, such as women in their childbearing years and men ages 55 and older.
While the approach is financially sound, some benefit experts wonder if companies would be willing to segment employees that way because of the morale problems it could create.
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