Hopkins is expanding plan for self-insured companies Hospital contracts directly with firms

April 25, 1996|By M. William Salganik | M. William Salganik,SUN STAFF

After a successful shakedown cruise, the Johns Hopkins Health System is seeking higher visibility for a plan in which it offers managed-care services directly to self-insured employers -- skipping over insurance companies and health maintenance organizations.

The program, called Employee Health Plans (EHP), makes Hopkins the only hospital in Maryland contracting directly with employers, although other hospitals and doctors' groups have assembled care networks to contract with managed-care insurers.

For hospitals elsewhere, direct contracting is an increasingly popular option. Nationally, 13 percent of hospitals have arrangements with employers, according to a 1995 American Hospital Association survey.

Maryland hospitals were seeking regulatory changes to make direct contracting easier here, but a hospital-backed bill failed to clear the legislature this year. In addition to regulatory considerations, Hopkins is precluded from offering HMO services before 2001 by an agreement under which it sold its HMO to Prudential in 1989.

Hopkins, however, has put together a structure that gives it many of the benefits of direct marketing to employers, without the regulatory requirements that come with functioning as an HMO or insurance company.

It has done that by aiming at employers that are self-insured for health benefits. That's about 60 percent of all employers, according to the Self-Insurance Institute of America.

"In essence, this is a program that assists employers in managing their own plans," said Dr. James A. Block, president and chief executive of the Johns Hopkins Health System. Hopkins, he says, has the expertise and the infrastructure "to effectively evaluate the value and quality of the care being received."

EHP began in January with about 14,000 members and half a dozen employers, including Baltimore Gas & Electric Co., Mercantile-Safe Deposit and Trust Co., the Johns Hopkins University, Johns Hopkins Bayview Medical Center, Johns Hopkins Medical Services Corp. and Johns Hopkins Hospital, enrolled. The plan is expected to double in size as more employers join in July, and Hopkins is marketing it to more employers for 1997, according to Jerome Gotthainer, president and chief executive of EHP.

Varied menus

Hopkins has assembled a network of nearly 4,000 participating doctors and 10 hospitals to provide care. Under the basic EHP plan, members would make small co-payments to receive services from plan doctors and hospitals. They would select a plan doctor as primary care provider, functioning as a managed-care gatekeeper to refer the patient to services as needed.

Members could go to other doctors and hospitals as well, but would incur larger co-payments and deductibles. Details of the plan -- such as the size of the co-payments and deductibles -- could vary with individual employers, as could the menu of benefits.

By managing the care through gatekeeper physicians, and by negotiating fees with network doctors and hospitals, Hopkins believes it can offer employers a plan that will be significantly less costly than plans that simply pay claims for whatever services a patient receives.

Also, Mr. Gotthainer said, Hopkins, seeking to run the service on a break-even basis, could "eliminate third-party profiteering," making for further savings.

Unique role

By offering members the chance to go out of the network by paying extra -- increasingly common in managed-care plans -- Dr. Block said EHP provides "maximum freedom and, on the other hand, significant opportunity for improving value."

Hopkins is functioning as a benefits administrator -- a role it believes is unique for an American hospital -- but not as an insurer. Normally, self-insured employers get such services from insurance companies -- including Blue Cross and commercial insurers -- or from specialized firms called third-party administrators, or TPAs.

Eventually, Mr. Gotthainer said, Hopkins hopes to expand the program throughout the mid-Atlantic region. Currently, participating hospitals, besides Hopkins and Hopkins Bayview, are Carroll County General, Harford Memorial, Fallston General, St. Joseph, Sinai, Howard County General, Anne Arundel and North Arundel.

Pub Date: 4/25/96

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