Could Staff Model HMOs rise from the dead?

Last updated on: April 4, 2017 at 8:07 am by Jane the Actuary

Could Staff Model HMOs rise from the dead? 2017-04-04T08:07:10-06:00 Jane the Actuary

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

I’ve thought, off and on, about the Staff Model HMO concept — that is, the early HMO structure which was based on “prepaid healthcare” with doctors employed by the HMO itself as staff. The idea was that, as employees, they would not be looking to increase the number of services they provide to patients, but instead have an incentive to manage their patients’ health to reduce the overall costs of their healthcare. The overall structure of such as system was, in theory, structured so that the patients’ care was coordinated among primary care and specialist providers, and the hospital, too, was focused on providing its care economically rather than seeking to maximize fees and reimbursements.

(This is different than a, well, non-Staff Model HMO, such as the HMO Illinois offered by Blue Cross Blue Shield which we had as our health plan for a number of years. In the latter, you could still only choose from a limited number of doctors, but the structure was based on the Independent Practice Association, a group of doctors which received a capitated, or fixed per-head payment from the HMO; this seemed to have produced doctors whose business model became minimizing the amount of time spent with a patient in favor of referrals to specialists. In practice, it seemed like pretty much every doctor was a part of an IPA, and so a part of the HMO, at first at least, but over the years in which we had this as our health plan, the reimbursements must have gotten tighter as several of our doctors dropped it.)

Stephen Brill writes about his ideas for such a system in Bitter Pill, which I summarized here, and somewhere along the way I tried to find out more about the Staff Model HMO, and why it didn’t work after all. As near as I was able to piece together, there were lawsuits around the Staff-Model concept, in which doctors outside the staff complained that they should be able to “participate” — that is, see patients and receive reimbursements from the HMO. Besides this, there weren’t enough patients willing to accept the very limited restrictions, and perhaps there weren’t enough doctors willing to accept the business model of being an employee, given our idealized notion of a doctor being independent. I was never able to fully figure this out, though. And Kaiser Permanente in California does continue to operate based on the Staff Model, but it’s not as if everyone’s rushing to that health plan. (Though I did come across an article the other day that there are complaints that Kaiser’s cash reserves are massive, well in excess of what regulators require; they defend this as the result of their system consisting not just of a health insurance company but hospitals and other assets, but perhaps there’s also a degree to which their business model to be to charge what the market will bear even if their healthcare delivery system would allow them to charge less, and use the excess to expand.) Whether they still maintain the “health maintenance” component — that is, the ideal of coordinated care — or whether this is lost with their massive size, is also not clear to me.

But it seems to me that we could be seeing a set of circumstances that could make the Staff Model viable.

On the provider side, doctors are increasingly becoming a part of large practices, in many cases affiliated with or owned by a specific hospital. Around us, Northwest Community Hospital has the NCH Medical Group, Amita has the Alexian Brothers Medical Group and Adventist Health Partners, and the same is true for multiple other providers. How big a step would it be to partner with an insurance company for reinsurance for particularly high claims, patients who need specialists outside their network or who need treatment when travelling, and for their administration expertise?

And on the consumer side, Obamacare customers are becoming conditioned to narrow networks, and those with high-deductible plans are far more aware of costs than before.

But the biggest missing ingredient is this: Staff Model plans don’t fit well with employer-sponsored health insurance. Employers don’t want to fuss with plans with a small geographic coverage area because it would be administratively complicated to offer plan choices that only a small number of participants would choose. And a Staff Model plan really relies on the consumer understanding how the system works, that over time it will save them money, that there’s value in the doctor coordinating their care — all of which isn’t possible when you’re just looking a a list of plans and premiums at annual enrollment time. It also requires that consumers stay with their chosen health plan over time, rather than moving in and out as employers change their offerings or they change their employers.

For Staff Model HMOs to become viable there needs to be a large base of consumers choosing their health plan on their own; it requires that we move away from employer-provided insurance to individually-purchased insurance. In other words, Janecare.

(By the way, I’ve probably written about this before, but I can’t seem to find anything in past posts. So apologies in advance if you think I’m a broken record.)

Image: https://commons.wikimedia.org/wiki/File%3ADoctor_examines_patient_(1).jpg; By Unknown photographer [Public domain], via Wikimedia Commons

Uncategorized

health insurance

HMOs

Previous Post

April 3, 2017

My latest family history (non-)discoveries

Next Post

April 5, 2017 Puparazzo, part 2

Browse Our Archives

Select a Category Actuarial/Retirement Issues Politics Uncategorized

Select a Month September 2026 August 2026 July 2026 June 2026 April 2026 March 2026 February 2026 January 2026 December 2025 November 2025 October 2025 July 2025 June 2025 May 2025 April 2025 March 2025 February 2025 January 2025 December 2024 November 2024 October 2024 September 2024 August 2024 July 2024 June 2024 May 2024 April 2024 March 2024 February 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 December 2022 September 2022 August 2022 July 2022 June 2022 May 2022 February 2022 January 2022 December 2021 August 2021 June 2021 April 2021 February 2021 January 2021 December 2020 November 2020 October 2020 September 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013

TAKE THE

Religious Wisdom Quiz

What animals attacked and killed Job's servants, according to the messengers?

Select your answer to see how you score.

Syrians and Egyptians Ammonites and Edomites Philistines and Moabites Sabeans and Chaldeans