From next April, employers will have to pay National Insurance contributions on their premiums for group PMI schemes. This presents a worrying scenario for providers. They would like to increase premiums for large group schemes, which are running at a loss, but resistance can be expected from the employers, whose pockets are not infinitely elastic.
Providers will therefore have to redouble efforts to control costs. BUPA has already grasped the nettle with a three year cost reduction programme, involving a number of job losses. But internal efficiency gains offer only a partial solution. The bigger challenge is to put a cap on the charges levied by hospitals and consultants.
BUPA led the way with its incentive scheme for consultants who abide by its fee schedule for surgical procedures. Fergal Kee, BUPA’s managing director of UK membership, says: “Our consultant partnership scheme was introduced to ensure that fees are paid in full. It has 6,000 consultants enrolled now, and it’s working well.”
Norwich Union Healthcare has also published a fee schedule, and negotiates with consultants to make sure they stick to it.
Hotel charges form the other main ingredient of hospital bills. BUPA and PPP are trying to save money by channelling patients through hospital networks, particularly the ones they own themselves. The subject has provoked huge controversy. But where large schemes are concerned, it is not uncommon to have restricted hospital lists, with everyone in the scheme getting the same choice. And if company directors want a more upmarket service for themselves than for their employees, they can select a higher hospital band. This does not necessarily mean that charges go through the roof. The directors will probably be treated by the same consultant. They will just get a nicer room overlooking the garden rather than the car park, and a wider range of non-medical services.
Differences in costs and services have, however, caused problems. Western Provident Association (WPA) has had to deal with a situation in which private hospitals were charging WPA-insured customers far more than clients who pay cash. So if its subscribers self pay, WPA now gives them a cash benefit of half the difference between the two rates. While this applies primarily to individual customers, WPA’s director of communications, David Ashdown, says there is no reason why companies should not self pay for staff in the same way. Savings would be reflected in the cost of the group scheme.
After ceilings on consultants and hospitals, the next opportunity to save money is through managed care – an expression meaning different things to different people. In the UK, it does not take the extreme form met with in the US, where patients have little choice and insurers are known to haggle over procedures and drugs.
Tim Baker, marketing director at Norwich Union Healthcare, argues: “Managed care is about getting access to highest quality treatment at best cost effectiveness. Most of the work is done behind the scenes. We do quite a lot of that kind of activity. But we wouldn’t be challenging the recommending consultant’s treatment.”
On the other hand, Norwich Union proactively suggests alternative places of treatment. The London Hernia Centre is an example, where the operation can be done in a morning and the patient sent home, instead of occupying a hospital bed for a week. Healthcare at Home is also supported. This is an organisation providing chemotherapy in patients’ homes.
Wherever it is a safe option, after-care in the home will become the norm. Recuperation will be started in hospital, and, if the patient requires, say, a further 14 days’ treatment, it will be completed at home, through a service paid for by the insurer. A win-win situation. The patient is happier at home and the insurer saves a packet on accommodation.
Insurers automatically audit all large bills. At Norwich Union, the company’s managed care team gets involved in all cases where the hospital stay is estimated at more than nine days. It then tries to negotiate a reduction on the total cost.
Providers keep a close watch on new or experimental treatments. They may well let a claim go through under supervision. On the other hand, they may say no, it’s not proven and we won’t pay for it. They will certainly discuss second opinions with patients who reveal uncertainty about their proposed treatment. The National Institute for Clinical Excellence (NICE) will have an increasing role to play here in deciding what is appropriate and effective, on a national basis.
Overtreatment still occurs in both public and private sectors. Some doctors believe more grommets are inserted than necessary; too many hysterectomies performed; and too many adenoids and tonsils whipped out. Group scheme providers can do little about procedures performed on the partners and children of members. They can however exert more influence over employers and the members themselves.
Research has shown that where there are plenty of orthopaedic surgeons, a high number of spinal operations are undertaken. With less surgeons, the number goes down. Only five per cent of bad backs really need surgery if they have not resolved in three months of primary care, according to Victor Last, marketing director of Spring Medical Active Rehabilitation at the Stamford Hospital. The rest do better with functional restoration.
Yet many workers go off sick for months on end without the problem being sorted. Even when they are covered by a group PMI scheme. Last remarks: “If the PMI doesn’t do its job, it becomes an income replacement issue, an employers’ liability issue, or a pensions issue.” Somehow, the employer and the PMI provider should be actively intervening.
Insurers have come to realise that PMI attacks only part of the problem faced by employers. What they need is a holistic absence management programme. While progressive companies like Mars and United Biscuits have already put such programmes in place, there are lots of organisations which have not – including some insurance companies. Not to mention large parts of the NHS.
Companies still allow employees to remain off work for months on doctors’ sick notes, without contacting them to talk about their return. After four to eight weeks, a change takes place in the employee’s thinking. Instead of feeling part of the work team, they take on the sick role. Life no longer revolves around workplace, social and family activities, but around being an invalid. This applies not just to the workshy but those (the vast majority) who genuinely want to get back to normal.
Physically going back through the door of the workplace becomes a huge psychological barrier. After six months off, the chances of ever returning to work have diminished to 50 per cent. By this time, the employee’s mindset has become focused on dependency.
To help employers address the issue, PPP healthcare has published Positive Attendance Management, written by occupational physician, Dr Bill McCulloch, who has a wealth of experience in industries such as electronics, computing and mining.
McCulloch stresses the importance of telephone contact with the employee on the first day of absence, and again when the first certificate is received after seven days.
After a month, face-to-face contact is essential. Where the employee is in hospital or confined to bed, the fine manager should visit. If not, employees should be encouraged to come to visit the workplace. These are commonsense measures, but to complete the process of managing people back into work, firms frequently need the assistance of healthcare organisations.
Providers of group PMI have therefore become increasingly involved in the whole subject of health at work. PPP offers firms health screening, health audits, occupational health and a variety of other services, as does BUPA. Confidential stress counselling has become a must. Employees rarely want to discuss stress with their boss, as it damages their promotion chances, their performance bonus and their self-respect.
Insurers are also becoming aware that to reduce claims incidence, they need to get in at the primary stage, not when the condition has become chronic. Under the NHS, the average GP has 1,500 patients. A consultation lasts seven minutes. How much better if the consultation can be thorough and unhurried, say half an hour. Spending more time in primary care undoubtedly affects the amount of time patients spend in secondary care.
Control of primary care could prove the ultimate weapon in controlling large group claims. Prevention, rather than cure, would provide the biggest benefit of all to both workforce and employer – not to mention insurers with an eye on the bottom line.