Cigna’s recent history has been marked by a (very) difficult, painful, and not entirely successful IT conversion/improvement initiative, known within the company as “transformation” – sometimes with several expletives preceding that term. A less well-known initiative, perhaps because bad news travels on wings, good on foot, is the company’s efforts to implement so-called “high performance networks“.
Rolled out last year in nine markets, and expanding over the next 12-18 months to a couple dozen more, the high-performance network is a revised and updated expression of the Exclusive Provider Organization, or EPO. The concept is simple; utilize health care claims data, corrected and augmented by various case-mix adjusters, episode of care groupers, and other black arts to figure out which physicians within what key specialties deliver the “best” care. Then, set up employee benefit plans with financial incentives for members to use those providers. Ideally, you would want to pay the high performers more, hassle them less, and thus build loyalty and perhaps even the foundation of a relationship based on something other than “if you don’t agree to my deal I won’t work with you”.
Cigna’s program concentrates their efforts on the nineteen specialties that consume 95% of the dollars spent on specialists. The company is using a number of markers of quality of care, including the efficiency of the hospitals where the provider has admitting privileges. Cigna is also starting to work with the National Council on Quality Assurance (NCQA) to incorporate quality of care indicators into their assessment.
Cigna is in a tough spot – hampered by systems conversions issues; and struggling to compete with larger foes with more resources, broader geographic coverage, more buying power, and lower costs of capital. It’s efforts to develop new and innovative provider relationships are laudable, but it all comes down to execution.
What does this mean for you?
Beware systems conversions, as they ALWAYS take much more time, deliver only part of their promises, cost bundles more, and can result in high levels of career mortality and morbidity for those managers unfortunate enough to be identified as responsible for the idea or implementation. As a rule of thumb, reserve 50% more than the cost of the initial project to cover unanticipated costs flowing from the project’s unknowable negative impacts.
Watch Cigna’s progress with high-performance networks. If this does not work, the company’s future will be in serious jeopardy. Regardless, there will be a wealth of lessons learned as a result of their efforts.

Rapidly rising health care costs have led more than one employer to search for better ways to provide health care coverage for their employees. Perhaps the most innovative approaches I’ve encountered is that of Manatee County, FL.
I had the good fortune to sit next to Bob Goodman, director of the program, at lunch during a conference in Arizona on prescription drug management. It was one of the more interesting discussions regarding employee benefits I have had in years.
Here’s what Manatee County is doing. They are self-insured, self-administered, and self-managed. Goodman and his staff, numbering a handful of FTEs plus about a dozen contract workers providing case management and related services, handle claims, managed care, network contracting and relations, wellness, and program administration. Seems pretty standard.
The unique features are several.
First, employees are financially encouraged to develop healthy behaviors through different cost-sharing arrangements. Second, the County has implemented a full-service wellness center, focused on encouraging employees with health issues to take charge of their health before it becomes an expensive, unpleasant, and potentially fatal issue. Third, Goodman is hiring his own full-time internist to work in the wellness center, thereby ensuring quick access to medical care for county employees, who otherwise might have to take time off from work to obtain care for themselves or their dependents. Fourth, despite a rich plan design, Manatee County has enjoyed trend rates below 10% for several years. Fifth, Goodman is planning on opening a “captive” pharmacy, to better manage the only major expense category that his program did not directly address.
The program was initiated after the local government, frustrated by the usual non-solutions offered by their existing health insurer and broker after several years of rapidly rising health care costs, asked Goodman to come in and take a look. With his extensive background in TPA operations and management, and complete lack of any agenda, Goodman recommended the County blow it up and do it themselves. To his great surprise, they agreed, and hired him to lead the effort.
What does this mean for you?
If you are a health insurer or broker, a wake-up call; if you don’t provide solutions, real solutions, you will find some of your customers decide to take matters into their own hands. For those brokers willing (or more aptly capable) of true innovation, think about this as a separate business line. Of course, you’d better have someone like Bob Goodman on staff before printing up the marketing materials.
If you are an employer, you do have alternatives. Let me know if you want more information on Manatee County’s program. I’m planning on visiting their operation, and will report on the visit here.

The backlash against managed care did not reduce HMO enrollment in the late nineties. Although there was a lot of “talk about backlash

For consumers, managed care is a choice between limited access to providers and premium costs; the greater the access, the higher the premium; the more limited the choice of providers, the lower the premium. In the late nineties, the so-called “managed care backlash” occurred when cost increases moderated, and consumers demanded access to any provider.
This spawned the “open access” HMO model, tiered benefit plans, and the explosion of PPOs. Now, with costs once more on a double-digit inflation path, there appears to be more willingness on the part of consumers to trade access for lower cost.
The Center for the Study of Health System Change released a national report entitled “More Americans Willing to Limit Physician-Hospital Choice for Lower Medical Costs“.
The Center reported that “Between 2001 and 2003, the proportion of working-age Americans with employer health coverage willing to trade broad choice of providers for lower out-of-pocket costs increased from 55 percent to 59 percent

A new report indicates what many have perceived for some years; the world of health care insurance is increasingly dominated by larger payers. Conning & Co.’s report indicates that larger insurers/managed care firms are buying up smaller ones in an effort to grow market share.
This is consistent with HSA’s own experience; as the larger plans seek to keep their stock prices moving up, revenue growth becomes increasingly important. Their growth choices are pretty limited –
1. grow organically by taking market share from a competitor by cutting price (a really bad long term plan) or
2. buy up other plans.
The acquisitions of FirstHealth, Oxford, Connecticare, et al are all indicative of this trend. Good news if you own a smaller managed care firm; bad news if you are a provider or employer operating in an oligopoly environment.
The health care market is rapidly maturing, and will come to be dominated by a selection of large players – Aetna, UHG, Anthem, and a few others.

A new study indicates HMO enrollment in New England has declined over the past year. HealthLeaders-Interstudy (here’s hoping the new company gets a new name shortly)’s just-released New England Health Plan Analysis indicates that all states save New Hampshire experienced a drop in HMO participation.
There is continuing migration to PPOs,” said Paula DeWitt, HealthLeaders- InterStudy analyst. “Massachusetts has strong regional plans and will likely continue to be an HMO stronghold, but even it isn’t immune to the migration into more open-access products. In addition, while all New England states reported net profits through the third quarter of 2004, profits were down in Massachusetts, New Hampshire, and Rhode Island compared to the same period in 2003.”
Insurance Journal noted “The firm also reported on other factors at play in the managed care fiel. Tufts Health Plan has formed an alliance with national player CIGNA HealthCare to offer an open-access PPO-type product to large- and medium-size businesses. Medicare HMOs in New England are adding options and some are enhancing benefits for 2005. For example, Fallon Community Health Plan is offering a new option called Fallon Senior Plan Saver with no premium.”