(“Risks & Benefits” is a weekly column covering risk management, employee benefits, compensation, and other workplace issues of interest to senior financial executives. Comments are most welcome. E-mail David Katz at: [email protected])
Any employee who’s been a member of a health- benefits plan that installs a “gatekeeper” system knows the drill.
When the new health plan takes hold, you frantically pick a “primary care physician” (PCP) from among a list, several pages long, of doctors you’ve never heard of to serve as your guide to all other health care issues.
You show up at the new doctor’s office and get a physical—a good thing, to be sure. But problems arise when you want to go to that specialist who’s been treating you effectively for many years.
It turns out you have to get the PCP- gatekeeper’s okay in writing for your chosen specialists—if, in fact, they’re in the new insurer’s provider network at all. Then you have to get the gatekeeper on the phone.
Once you do, you must convince the gatekeeper that your chosen specialist is the right person—even though you may know more about your ailment than he or she does. Then you’re issued the piece of paper that helps you get the treatment you were entitled to to begin with.
Edward Kaplan, vice president in the national health practice of The Segal Co., a New York City-based benefit consulting firm, says that gatekeepers represent a “nuisance factor” to workers. “Many employees know their illnesses,” he adds. “Now they have to go to a PCP for a referral” to a specialist they would have chosen themselves.
Asthma sufferers, for instance, often amass an impressive amount of knowledge about the ailment that a PCP might not be aware of, Kaplan says. There’s “some belief that gatekeepers are not up on the issues related to their diseases,” he adds.
More broadly, disapproving employees have lumped gatekeeper programs with managed care plans in general as a target for condemnation. Citing an overall “managed-care backlash,” Joshua R. Raskin, a research analyst specializing in managed care with Lehman Brothers in New York, says, “People don’t like having managed care dictating services.”
But while such feelings have recently gathered steam, they’ve been simmering since managed care began to take a firm hold in many benefit plans in the early 1990s. And in a job market that favored employers, workers had to accept tightening benefit conditions.
In that climate, employers embraced the gatekeeper model as a way to rein in costs of group health coverage. Kaplan says an employer using a plan with gatekeepers typically pays 5 to 10 percent less in premiums than it would pay for a plan without them.
With workers competing for jobs, financial officers and benefit managers were free to make curbing the effects of medical inflation a priority.
Then came the revolution.
With the huge, late-1990s economic expansion, corporations were suddenly vying for talented workers almost as much as they were competing for market share. The balance of power swung strikingly from employers to employees. In the broader context of the boom, benefit costs have loomed less large than the need to retain talent.
As a result of the turnaround, many employees are bidding a blissful farewell to gatekeepers and heading straight for their specialists. The age of the paper-pushing PCP is over, benefits mavens are saying.
Responding to the changed labor market, many employers have heard the outcry against gatekeepers and now seem willing to pay an extra premium for greater employee choice. Sensing a turn in the group-health market, managed-care outfits are also pushing these kinds of “open-access” products.
A Lehman Brothers Managed Care Update issued last month notes for instance that Aetna U.S. Healthcare, observing a successful strategy, is “copy-catting” Cigna and other health insurers by offering a new non-gatekeeper product.
Presented this year to Lehman Brothers’s employees as a plan option, Aetna Open Choice is a preferred provider organization in which, as Aetna said in a brochure, “members do not identify a primary care physician to manage their care and can self-refer to providers either in or out-of-network.” (Members generally pay less for care if they choose a doctor from the list of providers chosen by Aetna.)
Lehman Brothers thinks the trend to shed access restrictions is taking hold nationally, with employees benefiting from an increased flexibility in plan design.
In short, the gatekeeper is dead. Good riddance to bad rubbish, I say.
Sadly, for employees, the dance on the gatekeeper’s grave may not last long and may not involve that many dancers. Managed care, while ripe for change, isn’t going away so soon. Tight as the labor market may be, employers don’t plan to return to pre-1990s Cadillac indemnity benefit plans. The costs are just too high.
More ominously, the stock markets have plunged in comparison to last year. Up until the Fed’s interest rate cut and Wednesday’s subsequent stock rally, fears of a recession had been gaining momentum. If a recession does arrive, the longer and deeper it is, the more the need to control medical costs grows. And if unemployment starts to rise, in what kind of bargaining position will employees be in their quest for freer access to specialists?
Referring to employers, Raskin says that “if unemployment comes up…, you don’t have to offer better benefits than the guy next door.”
Thus, if there’s a sustained slowdown, CFOs, along with their benefit managers, will need to calculate exactly when health-care cost cutting becomes more important than satisfying employees. At that point, however, they would do well to find better tools than the gatekeeper system.
Effective as it may have been in keeping costs down, the approach added a layer of paperwork and delay that infuriated employees. It may also have lessened the quality of care, and it has certainly made the quality of service poorer.
Those are good reasons to leave it in the grave.
There are better ways to cut costs in a slowing economy.