On Health Plans and Narrowing The Physician Network

I keep six honest serving men

(They taught me all I knew);

Their names are What and Why and When,

And How and Where and Who,

Rudyard Kipling (1865-1936), The Elephant’s Child

Let’s say you’re a health plan executive.  Your stakeholders want a return on investment. This return depends on your company growing and making a profit.   ObamaCare threatens this investment and the profit by putting a lid on marketing on management , forcing you to drop plans that don’t meet minimal  government  standards,   raising the cost of doing business because of onerous regulations,  and  cutting your return by 7% or so on Medicare Advantage Plans.

What to do?  You drop physicians decreasing your profit from the physician network by cancelling their contracts.

It isn’t rocket science.

What – You look at what doctors are costing you money, and you determine it is physicians who order the most tests,  perform and most tests and schedule the most visits..

Why -  You consider the reasons why is that these physicians regularly  spend more on average of  patients’ premium dollar than other physicians.

When – You drop these physicians out of your network, i.e., the physicians with whom you do business  before January 2014,  when ObamaCare kicks in in earnest in January 2014.

How –  You simply review your claims data and cut out 10% to 15% of doctors who are ordering the most Medicare Advantage services.

Where  -  You do it  in those physician markets where Medical Advantage costs are high and physicians  and their associations are more tractable, then you do it nationally.

Who -   You pick the physician who are high rollers, and you do it in the names of efficiency and quality – without mentioning the unmentionable – profit.

It is all done on the basis of sound business principles.  That’s why United Healthcare and other health plans is dropping 10% to 15% of its doctors from Medical Advantage Plans, and why it will force man seniors to find new doctors or change plans.  According to Todd Baker, director of professional relations with the Ohio State Medical Association, “This is one of the most significant (provider) network narrowing’s we've ever seen in the Medicare Advantage world,”

As nearly as I can tell from multiple sources, about 25% of 50 million Medicare recipients are on Medicare Advantage plans.  This amounts to 12.5 million people.   If United and other health plans drop 10% to 15% of those in Medicare Advantage plans that would mean 1.25 million to 1.87 million seniors would have to switch doctors.  

A small number, to be sure, when you consider 50 million Americans are on Medicare.  But losing your doctor is irritating   if you are a Medicare recipient whose doctor is being dropped,   And it may anger you  if you believed President Obama in 2009 when he promised, “ If you like your doctor,  you will be able to keep him. Period.” In the case of Medicare Advantage plans,  a period has become a question mark.

Tweet:   Insurers may drop 10 to 15% of doctors involved in Medicare Advantage plans, meaning 1 to 2 million seniors may have to switch doctors.  

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