April 1996

Michigan HMOs under the Microscope

by Martin Ackley, Consultant for Health Policy

Health maintenance organizations (HMOs) in Michigan must be doing something right if so many people are paying so much attention to them.

Authorized by state law back in 1978, HMOs in Michigan annually have filed financial and benefit information reports the size of bed sheets. No one other than the state Insurance Bureau seemed to pay much attention. Now, however, it seems you can’t swing a stethoscope without hitting a new survey, report card, or evaluation of the HMOs in Michigan.

Most of this new-found attention evolves from the success HMOs have had in the past five years (the Insurance Bureau reports that the HMO share of the Michigan health-care market has expanded from about 16 to 28 percent) and the emergence of managed care as the market’s preference for health care reform.

Because the growth of these managed-care plans, health care in Michigan (and across the United States) has become less provider-driven and more purchaser-driven. Doctors and hospitals have less say than before in which procedures are performed, how many tests may be done, and how many office visits or hospital days a patient may have. If they are participating providers with one or more HMOs, which is the case with more and more doctors and nearly all hospitals, the HMOs steer the health-delivery decisions. Clearly, power has shifted, and the providers are looking for ways to bring the scales back into balance.

Four Reports

Armed with the assurance that knowledge is power, the Michigan State Medical Society (MSMS) and the Michigan Health & Hospital Association (MHA) separately have studied and published evaluations of and trend data about HMOs in Michigan. With this knowledge, providers hope to empower themselves and their patients when dealing with HMOs.

After evaluating the needs of its members, the MSMS concluded that there was little health-care information broadly available to physicians and patients. The purpose of the MSMS report, in part, is to help its members decide which plans to participate with. "A lot of times physicians sign up because they fear they’ll lose all their patients if they don’t," said Mary Anne Ford, manager of the Department of Medical Economics and Health Care Delivery at MSMS. "Like any other decision, [physicians] need to go through some sort of due diligence to make those decisions. The report was also done, in part, as a tool for helping [physicians’] patients through the [HMO] system."

The MHA plans to follow its report with a detailed data book on HMO medical use rates and benchmarks that can be used by its members and HMOs as well. "This will not be a consumer report card," said Peter Schonfeld, vice president of the Health Care Futures Division at MHA. "This will be a document to allow people in the business to improve their performance and have another tool to measure with."

Schonfeld said the MHA’s decision to study HMO data resulted from the association’s transformation from the Michigan Hospital Association to the Michigan Health & Hospital Association. "We recognized that our members are not just hospitals anymore, they’re integrating into networks with other health providers, and some are owners and partners with HMOs," he said. "We see the influence of managed care in the coordination of care and its significance to where care is provided and how."

In addition to the provider-generated reports, there are two other resources that appraise various aspects of HMOs and managed-care plans. One is a consumer survey about managed care, conducted by the Institute for Public Policy & Social Research at Michigan State University. The other is the Consumers’ Guide to Health Plans, published by the Washington, D.C.–based Center for the Study of Services, which offers a state-by-state report card on HMOs as well as advice on choosing a health plan, finding a good doctor, and getting good care in any plan.

"I think everybody has the right to all the information that’s there," said Gene Farnum, executive director of the Association of HMOs in Michigan. ". . . I hope they base some of their decisions on information; there certainly has been enough misinformation about how we operate out there."

Survey Says!

The MSU survey (of 1,000+ Michigan residents) found that managed-care (not strictly HMO) enrollees are slightly less satisfied with their ability to get health care than are people in traditional fee-for-service plans. Of managed care enrollees, only 53 percent reported being "very satisfied" with their health plan, compared to 63 percent of those in traditional plans. The survey report states that among the dissatisfied, people in managed-care plans complain most often about waiting for appointments and restricted provider choice, while those in traditional plans complain most often about the cost of care.

The Consumers’ Guide to Health Plans studied 12 of the 16 HMOs in Michigan during 1994. The four that chose not to have their members surveyed are listed in an appendix that tells consumers that the decision of these HMOs not to cooperate "should raise concerns for you." The survey of 3,835 Michigan HMO enrollees, equally representative of the 12 plans, gathered opinions on many personal health-care issues including plan coverage, availability of doctors, quality of care, waiting time in doctor’s office, access to specialty care, and whether doctors listen and spend time with their patients and offer prevention advice.

All 12 surveyed HMOs score better than 80 percent on the overall-satisfaction rating scale, with five plans faring better than 90 percent: Care Choices of Ann Arbor (95 percent); Care Choices of Grand Rapids/Muskegon (94 percent); Physicians Health Plan (94 percent); Medical Value Plan of Lenawee and Monroe counties (94 percent); and MCare (93 percent).

The MSMS and MHA reports are more quantitative in nature, studying the numbers gleaned from private and government sources, including the Insurance Bureau. The MHA report does give some analysis of the data collected and makes comparisons with national HMO trends. It reveals tremendous HMO expansion into outstate Michigan—in 1993 HMOs were in 40 of the 83 counties; by 1995 they were in 71 counties—and growth in the number of individual practice association (IPA) model HMOs in the rural and nonurban markets. The MHA predicts that HMO enrollment will continue to grow, accompanied by premium-growth decreases.

The Association of HMOs in Michigan is rather pleased with the outcome of all this provider scrutiny. Farnum said that the MHA report is honest and straightforward and that the MSMS evaluation shows that many of the problems HMOs are perceived to have elsewhere in the country are not occurring in Michigan.