Trying to Cure The Managed-Care Blues

By ADAM COHEN

Valerie Thompson has been unable to stop crying since she realized that managed care is tearing her away from her newborn daughter Morganne. The baby has jaundice and needs to stay under white fluorescent lights for another day. But Valerie's managed-care plan, like most, wants her out after two days, vastly complicating her plans to breast-feed her baby. Thompson went to the nurses' station and begged for one more day. The nurses told her she could call her insurer, but they didn't hold out much hope. "They said, 'No way. That's not going to happen,'" Thompson recalls.

But it did happen. Her doctor called Peter Jacobi, medical director of PrimaHealth, and Jacobi authorized an additional day. Thompson's saga sounds like one of those sepia-toned HMO commercials: dub in the triumphant music, fade out with mother embracing child. But this is no ad, nor is PrimaHealth an HMO. It's a rarer species in the managed-care jungle, called an independent-practice association. IPAs are groups of doctors who band together to act like HMOs. Some medical observers believe that if IPAs like PrimaHealth spread, they could make managed care a lot more patient-friendly.

What makes an IPA different from a regular managed-care company is that the doctors who are giving the care are also calling the financial shots. PrimaHealth is owned and operated by doctors from Duke and the surrounding area. It has contracts with insurance companies to provide the doctors' services under those plans. Once it has the contract, PrimaHealth doctors, not the insurance company, make the decisions about how patients will be cared for.

But IPAs aren't entirely labors of love. A major reason for starting PrimaHealth was that doctors felt themselves being squeezed by managed care. Insurers could keep pushing down reimbursement rates, and there was little doctors could do about it. With an IPA, doctors get together and, in some ways acting like a union, negotiate how much money they will charge to provide care. An IPA also gives doctors more control over how they do their jobs, something managed care has been taking away. "The doctors want to be listened to," says Dr. Dennis Clements, a Duke pediatrician and PrimaHealth member physician. "Why did we go to all that school if someone with an M.B.A. is going to make all the decisions?"

Traditional managed-care companies don't agree that IPAs will provide better care. They note that IPAs like PrimaHealth contract to cover patients on a "capitated" basis. That means they are paid a set amount per patient per year, and keep any money that is not spent. This gives them an incentive to be careful about how much treatment they provide--much like traditional insurers, who point out that they too have doctors on staff to make medical decisions. In the end, they argue, a well-managed IPA will probably make roughly the same decisions as a traditional insurer. "Everyone thinks they can do a better job of doing what we do," says North Carolina Blue Cross Blue Shield chief operating officer Robert Greczyn, "until they try to do it themselves."

--By Adam Cohen