Integrated Delivery Systems In Managed Care

Managed Care Plan Contracts

Ms. Clark described the changing health care environment in Rochester, New York, and the merger of six hospital systems into three integrated delivery systems (IDSs) from 1994 to 1996. There has been a managed care presence in Rochester since 1973 with a current 53.5 percent penetration. The Finger Lakes Blue Cross and Blue Shield (FLBCBS) organization developed three options to contract with the emerging IDSs. Ms. Clark described the advantages and disadvantages of each.

In Option One, the IDS could be capitated for services under Blue Choice (an existing FLBCBS managed care product). This option would limit potential losses and be easier to implement and monitor (i.e., it would use existing policies and protocols). However, the IDS would have a limited ability to change existing policies.

Option Two would develop a new product tailored to the delivery system. Though this option would be able to create, within the health maintenance organization's (HMO) parameters, its own policies and protocols, it carries greater financial risk.

In Option Three, the IDS and FLBCBS would create a new HMO with 50/50 ownership and governance, where the IDS and HMO would jointly develop policies and protocols, have system identification, and be able to demonstrate improvement of health status of the enrolled population.

Any option would need to have a sustainable competitive advantage in the market for the product to be successful.

Ms. Clark reviewed the contract model they developed, highlighting capitation issues, premiums, and strategies employed to monitor IDS compliance with contract terms.

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