Weiss Ratings (yes, I’m a big fan) released an analysis of recent changes to employees’ health plans, and there is a notable lack of innovation.
According to Weiss, “Higher prescription drug co-pays were cited by 34.3 percent of consumers polled, while 23.8 percent indicated higher co-pays for physician visits.” In addition, in perhaps the most drastic move to control health insuranc costs, 11.3% lost their health insurance altogether.
This last statistic may be inflated due to the nature of the study, so I wouldn’t generalize the result to a larger population. However, it is important to note the large percentage of respondents who saw an increase in costs shifted to them from the health plan. Call it “consumerism”, “accountability”, “burden sharing” or what you will, it is clear that employers are fast running out of ideas.

Weiss Ratings reported very strong earnings from HMOs in the first half of 2004. Weiss, perhaps the most insightful of the rating agencies, noted that over half of the HMOs studied were financially strong, and the industry generated $5.8 billion in profits during the first six months of 2004.
The strong results were felt even among the less-well-off HMOs, as the number of plans considered “weak” financially dropped from 40% in 1998 to 17%.
Weiss did not provide any insights into the reason for the financial improvement, but strong premium growth generated by higher rates, better risk selection and exiting of unprofitable markets, and industry consolidation were likely contributing factors.
Interestingly, the financial improvement occured at a time when health care costs were continuing to increase at rates well above those for overall inflation. Some may note the contradiction here – the companies tasked with managing health care costs were generating big profits while failing to accomplish their appointed task.

Coventry’s management has added an old colleague, Skip Creasy, to the executive team. Creasy worked with many of the present Coventry team in a prior life at Travelers’ Health Company; Shawn Guertin, Harv DeMovick, Tom McDonough, CEO Dale Wolf, and others were all affiliated with either Travelers, successor MetraHealth, or UnitedHealthCare after UHG acquired MetraHealth.
According to the press release, Skip “Creasy will be responsible for the development of Coventry health plans in new markets, including those markets to be added in the pending acquisition of First Health.”
Perhaps Eliot Gerson is next?

Managed Healthcare Executive magazine published their annual survey of HMO enrollment in December.
The numbers show that most states actually experienced a decline in HMO enrollment, and nationally there was a decline of some 3 million members. Part of this may well be definitional issues, as HMOs have morphed into “open-access” HMOs, “closed network” PPOs, and the like. Regardless, this is an interesting development; early (albeit anecdotal) indications are that enrollment in more tightly managed plans may actually be increasing, as employers battle significant trend rates.

Bill McGuire, MD, chairman and CEO of UnitedHealthGroup, was interviewed by the journal “Health Affairs” recently, including, amongst other topics, UHG’s work in the area of physician practice pattern variation, .
UHG’s approach seems to be to identify centers of excellence for (primarily inpatient) high dollar claims, such as transplants, cancer, orthopedics, etc, and to encourage employers to preferentialy utilize these centers. UHG’s philosophy is to present the information to the employer, and give the employer the option of encouraging the utilization of the preferred centers. The tools available to the employer include benefit design, network customization, and cost sharing.
Not noted in the conversation is any attempt by UHG to provide feedback to non-center of excellence physicians on their practice patterns, the outcomes thereof, and associated costs. Instead, UHG is identifying those providers, down to the surgical team level, that have the best outcomes, and promoting those providers.
Interestingly, McGuire does not promote the use of narrow networks of a few highly-credentialed physicians with best-in-class outcomes.
To quote McGuire;
“I’m not sure that narrow networks get significant savings. Primary care gatekeepers did not lower costs. If people want narrower networks for some reason, we are in a position to facilitate that. But, philosophically, our desire is to bring the overall level of care, by a broad population of care providers, to a higher standard

The pending acquisition of First Health by Coventry is due to close within the month. First Health’s shareholders are scheduled to vote on the deal Jan 28th (evidently there is no need for a Coventry shareholder vote).
The announcement signals that all regulatory approvals have been obtained.
The deal had received a response from the analysts and financial markets that can only be described as lukewarm to downright cold, as Coventry’s stock value plummeted after the announcement on October 14. However, the price has recently recovered, and is now essentially unchanged from the pre-announcement level.
While it is impossible to precisely identify the reason for the increase, one can only assume it is due to confidence in Coventry’s management and their ability to turn around an under-performing asset. To quote S&P;
“Standard & Poor’s believes Coventry maintains a good financial and market profile, partly because of its sustained pricing discipline and strong focus on the fundamentals of its business. Standard & Poor’s also believes Coventry is capable of integrating First Health in a methodical way that limits operational disruption to the consolidated enterprise. ”