Blue crossroads: Insurance in the 21st century

The medical director of the national Blues organization sees opportunities ahead as well as challenges.

By — Posted Sept. 20, 2004

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The Blue Cross Blue Shield family of 41 health plans is facing a future of difficult choices.

These include how to color the Blues system uniquely when competitive necessities are erasing many of the old, familiar differences between Blues and their rivals. Moreover, Blues face the challenge of building or restoring goodwill with doctors, some of whom have grown dismayed with the continuing market clout of many Blues plans.

Coordinating outreach to doctors nationally since 1999, Allan M. Korn, MD, serves as the Chicago-based BlueCross BlueShield Assn.'s medical director. Dr. Korn, 60, an internist in Evansville, Ind., until the mid-1980s, went on to various positions including health care consultant and medical director of BlueCross BlueShield of Illinois. He has spoken out frequently on promoting evidence-based medicine, reducing medical errors and adapting new technology to improve outcomes.

An AMA member since his years in practice, Dr. Korn says he misses contact with patients but adds that being the top doctor for the Blues system provides him with "a rush all of its own."

American Medical News interviewed Dr. Korn at his Chicago office.

Question: Seventy-five years ago, the Blues system was just beginning as a prepaid plan in which doctors had a lot of input into the organization and, to some extent, control over it. To what extent today do you think doctors outside the system have influence over the Blue Cross system?

Answer: If you look at what we're doing today over the last several years, we truly have committed to asking the real experts in patient care what the right thing to do is. Now that's hard. Before we're able to re-establish a meaningful level of trust and an honest dialogue about quality and safety and outcomes, the discussion was always about money. [But recently] we've had an extensive dialogue, primarily at the specialty society level, because the dynamics are so different for [doctors such as] pediatricians and obstetricians.

That dialogue just led to, No. 1, a deeper appreciation by us of what really happens out there ... but more important, an understanding on the part of provider communities of how complex health insurance is. It's not a matter of opening an envelope and writing a check. There are layers of complexity, legal issues, all sorts of things that really are transparent to most doctors. And we've established this sort of bilateral understanding.

Q: How do you believe doctors' perceptions of Blues plans are shaped by the local market presence of the plan -- their dominance?

A: That's a really good question. I haven't seen that the belief of all this leverage has really played out the way most people hear. Blues premiums are competitive -- we're generally not the most expensive and probably not the cheapest. In general Blues [reimbursements] are fair and in many cases higher than Medicare. And if you think about it, we don't print money in the basement. You get what you get, and at the end of the day you don't want to run out [of funds] on Dec. 9.

I think the Blues plans deal respectfully with provider organizations in most states, and in states where I'm aware there is a very high market penetration, I'm also aware that not only the [medical director] but also the CEO make an extraordinary effort to reach out to the provider communities to make certain there isn't this perception of "take it or leave it."

Another thing we recognize, in terms of quality and administrative complexity, we at the Blues now recognize that simple is better. In virtually every state now ... our medical policies are on the Web. Why are they there? Ten years ago when this was suggested, everyone was sure -- except the medical directors at the plans -- that ... we couldn't let our competition see our medical policies. We now understand that, particularly if you're dominant in the marketplace, if you're out there with the medical policy and smaller plans happen to say, "Yeah, it's pretty good," who's the big winner? No. 1, the physician. Because now there's consistency, if doctors know it's got to be done the same way every time and what the outcome's going to be.

It doesn't matter what our market position is. We care about [doctors].

Q: How do you think about conflicting expectations that are sometimes placed on Blues plans in today's market -- on one hand, there appears to be an expectation to be as flexible and modern and innovative as the commercial insurers they compete with, yet on the other hand to remain true to their traditional public-service orientation and provide a public benefit for the good of patients. Can both expectations be met?

A: For sure. [But] you cannot cover as many people as you'd like to unless the model changes. Every year the number of uninsured goes up. More and more people cannot afford health insurance. It's not too complicated. Why they can't afford health insurance is obviously the struggle. ... Blues plans have to be innovative if they're going to be viable and they're going to help get as many people under the umbrella as possible. And by the way, as a result of that, we have before Congress now a set of proposals which are quite innovative in terms of making health care more affordable. We have to be innovative.

The other thing we find interesting is how the role of the health insurer has evolved in the mind of the purchaser. [About 20 years ago] as costs began to go up, the benefit consulting community, representing employers primarily, said, "This is a bad thing; it's getting expensive. All the doctors out there are the problem. You insurance companies are the solution. You contract with them and you [make the rules]."

Those of us in the insurance industry recognized this was not a very good model.

Based on various discussions we had with organizations in the medical community, we [realized] we're all part of the problem and all part of the solution. That's something we should have decided 25 years ago and didn't.

Q: You're the chief adviser to the Blues association's Technology Evaluation Center, which issues reports on the effectiveness and safety of medical treatments. To what extent can the national association guide the individual plans about what to cover and what not to cover, since each Blues plan is essentially autonomous in this respect?

A: There's new stuff coming down the pike all the time. Some of it I can't even pronounce. ... Some of it's pretty straightforward. If there are no data, if it's somebody's great idea and they're out there pushing it -- I mean, that's fine, that's not too complex. If it is complex and politicized ... we have to answer five questions for every new thing that comes down the pike. Is it approved by the necessary government agencies? You can't run around the United States with radioactivity unless the [Nuclear Regulatory Commission] says you can. It's got to be legal. Does it have an impact on human health? If so, is it positive? If it's positive, is it at least as good as -- not necessarily better than -- an existing treatment? And then finally, can you get it outside the experimental setting?

We have a staff of full-time scientists here that study each issue thoroughly, wrap it all up and then present it to the medical advisory panel. And it's the medical advisory panel that really decides whether these five criteria are met. And [for] the members of that panel, we invite [doctors from various medical societies]. It's an extraordinarily rigorous process. Cost isn't an issue. "Do they work?" is the question.

Once we know that, once we come up with a decision, we use that to formulate a template for medical policy. .... We don't write medical policies. But we do the research once, and we send it out to our health plans. And there's a remarkable degree of consistency across the United States. Ninety percent of our plans use 90% of our policies exactly the way they would appear on the template probably 90% of the time.

Yet lots of exceptions are made based on specific patient needs, which is why in the appeals process -- and it happens often, when claims are [turned down] -- way more than half of the time the claim ultimately is paid as originally billed. It may not [be covered there], but on the other hand there's ample reason to make an exception.

Obviously customer contracts [vary]. It doesn't matter that it meets criteria. This customer says it's not covered. That's something else that I think is important for most practicing physicians to understand. If I were to say medical policy, coverage policy and payment policy, in the mind of most practicing physicians, they'd say "same thing." Boy, are they different.

Let me tell you how important that distinction is. A medical policy is what I've just described. It's the science. ... Then there's coverage policy. Every customer determines their own. ... Chicago has 17,000 different plan designs, because everybody wants their own [version]. So it may meet criteria, but if this particular purchaser says they're not paying for it, even if it meets criteria, according to that policy, it wouldn't be covered. Because they simply don't want to pay for it.

Q: Does that make sense to you, as a doctor, that it should be that way?

A: Listen, we as Americans demand choice. Why would [Blue Cross] want to support 17,000 different plan designs ? Because our customers demand it. What, can I say, "You can't have it, go to Humana and get it"? It's the world. So we have medical policy, which we think is sensible. We have coverage policy, which often mimics medical policy.

Q: As consolidation among Blues plans continues, and more plans fall under the ownership of large corporations such as Anthem, what's the future role of the Blue Cross and Blue Shield Assn.? What power does the association have if it consists of just a handful of plans that are, by themselves, extremely powerful?

A: There has been consolidation, and there will be some consolidation. But if there were only two [Blues plans remaining], [laughs] you want there to be the same consistent, meaningful, evidence-based, ethical relationship in every state with every medical community. It doesn't matter how few computers we can ultimately pay the claims on -- and that's where the savings is, these are huge systems, they're so expensive -- each state has its own rules, its own laws, its own mandates, its own everything. There will be a Blues plan in every state even though it's consolidated with a single owner.

There will be a role for the association, for what we do, forever. We have to be consistent because our customers expect it. And incidentally, it's not just our big, huge national employers that expect it. All of the people who go on vacation every winter in Florida for two weeks, when they walk into a doctor's office, they expect the same service that they get here in Illinois. We pride ourselves on that, damn it, and we're going to keep doing it.

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Blues memories at 75

1929: In a forerunner of the Blues, 1,500 teachers in Dallas get prepaid hospital insurance through Baylor University Hospital for $6 annually. Many more single-hospital plans begin to spring up.

1934: The AMA, concerned about undue interference in health care by private insurers, asserts that "there should be no restrictions of treatment not formulated and enforced by the organized medical profession" and that "no third party" should intercede between a doctor and a patient. The Association supports only direct cash payments to patients.

1937: The American Hospital Assn. starts to spearhead a group hospitalization movement. Blue Cross executives assemble for the first time, in Chicago.

1939: The California Physicians Service, or Blue Shield of California, starts offering prepaid care by doctors. By 1946, 44 physician plans are operational.

1946: The Blue Cross Commission, the early governing body of Blues plans, is formed. The AMA creates the Associated Medical Care Plan, a subsidiary to aid and advise Blue Shield plans.

1955: Almost seven out of 10 Americans have health insurance, up from fewer than one in 10 in 1940.

1965: Medicare is rolled out in close cooperation with Blues plans, which help provide administration for a fee.

1973: The Health Maintenance Organization Act is passed, giving seed money to HMOs nationwide. Several years before, the Blue Cross Assn. had approved trials of HMOs for member plans.

1982: Blue Cross and Blue Shield associations merge into BlueCross BlueShield Assn.

1994: The association eliminates longstanding rule that member plans must be nonprofit.

1996: The Blues' managed care enrollment surpasses its traditional indemnity membership. Blue Cross of California merges with WellPoint Health Networks, the first for-profit conversion.

2003:WellPoint and Anthem, the nation's largest conglomerates of for-profit Blues, announce their wish to merge. In 2004, the deal reaches an impasse because of opposition by California regulators.

Source: BlueCross BlueShield Assn.; The Social Transformation of American Medicine by Paul Starr; The Blues: A History of the Blue Cross and Blue Shield System edited by Robert Cunningham III and Robert M. Cunningham Jr.

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