How would a big HMO like Kaiser handle a pandemic?
April 29, 2009 10:39 PM Subscribe
I'm sure Kaiser Permanente and other major HMOs have plans related to a potential pandemic, and how they would try to protect their customers' health and/or minimize financial losses. Have the plans themselves been published or leaked? Has anything summarizing those plans been published anywhere?
Two things. The first is called "reinsurance". The pdf linked above is just Cigna's plan for its own employees, which differs little from other employers' plans. Most responsible employers have contingencies for things like this, i.e. how to survive as a business when huge numbers of people aren't coming to work. But in terms of the public health side of things, there isn't a whole lot they can do besides signing reinsurance treaties to protect themselves from the risk of a catastrophic loss.
Insurance, including health insurance, is one of the most highly regulated industries in the entire economy, and insurance carriers are generally required to obtain reinsurance for things like this. For example, P&C companies carry it for things like Katrina, which is why companies like State Farm don't go out of business every time there's a hurricane/earthquake/wildfire/etc.*
The second is that most insurance policies exclude particularly catastrophic events from coverage, e.g. acts of war and civil disturbance (you think insurance companies paid out when looters torched huge chunks of Detroit?), flood (it's pretty much always a total loss, and there's no way to underwrite that kind of risk), acts of the government (the potential for corruption and fraud is just too high), and intentional acts (if you did it on purpose, you're on your own). I don't think "pandemic" would be one of those kinds of things, but you can bet your ass that if things get really bad that the health insurance carriers will try to make it fit. They'll fail, but even delaying payouts can be worth huge amounts of money.
*It's also because many P&C companies just won't write policies in the Gulf states, as they're pretty regularly trashed. Homeowners insurance in Florida and Texas is really, really expensive, and really, really hard to get.
posted by valkyryn at 5:35 AM on April 30, 2009
Insurance, including health insurance, is one of the most highly regulated industries in the entire economy, and insurance carriers are generally required to obtain reinsurance for things like this. For example, P&C companies carry it for things like Katrina, which is why companies like State Farm don't go out of business every time there's a hurricane/earthquake/wildfire/etc.*
The second is that most insurance policies exclude particularly catastrophic events from coverage, e.g. acts of war and civil disturbance (you think insurance companies paid out when looters torched huge chunks of Detroit?), flood (it's pretty much always a total loss, and there's no way to underwrite that kind of risk), acts of the government (the potential for corruption and fraud is just too high), and intentional acts (if you did it on purpose, you're on your own). I don't think "pandemic" would be one of those kinds of things, but you can bet your ass that if things get really bad that the health insurance carriers will try to make it fit. They'll fail, but even delaying payouts can be worth huge amounts of money.
*It's also because many P&C companies just won't write policies in the Gulf states, as they're pretty regularly trashed. Homeowners insurance in Florida and Texas is really, really expensive, and really, really hard to get.
posted by valkyryn at 5:35 AM on April 30, 2009
A "light" flu-type pandemic wouldn't cost an HMO much at all, since they don't pay anything for individual patient visits to your primary care physician. The PCPs would absorb much of the costs, since the number of visits would be much higher than expected and a $20 copay doesn't go far. I bet they are already feeling the pain for that on the current swine flu outbreak.
posted by smackfu at 7:04 AM on April 30, 2009
posted by smackfu at 7:04 AM on April 30, 2009
One thing that might be relevant is that HMOs can really be set up in two different ways: as a staff model (which is what Kaiser is) or as a network model. A staff model is an integrated system where the doctors who treat you are functionally salaried employees of the health insurance plan. A network plan is where the health insurance piece is a stand-alone business that merely contracts with doctors and hospitals and gets those independent providers to agree to see any member of the HMO for a set price. Depending on which way the plan was set up, you'd see a big difference in who bore the ultimate higher costs (as smackfu alludes to above, doctors can end up taking on different amounts of the risk themselves, although not every HMO shares risk with providers) as well as in how much power the insurance company has to compel doctors to treat customers.
I would imagine that in terms of "protecting customer's health," any HMO that runs on a staff model is probably more likely to have actual contingency plans if a significant portion of their doctors start to get sick. I'm just totally guessing here, but I imagine it's something like prophylactic antivirals for any doctor working with pandemic patients plus the ability to pull in doctors from other specialties (a plastic surgeon or urologist is still a doctor that could probably be re-assigned to do primary care during a pandemic period) if too many of their primary care docs get sick.
I would be less sure that an HMO that ran on a network model would have extensive contingency plans in place, in part because they have a lot less flexibility with respect to what they can ask participating physicians and hospitals to do. Unless there was something written into their contracts with their providers, I'm not sure they'd have any recourse if a bunch of their doctors either got sick or overwhelmed with other patients and stopped seeing the HMO customers. I imagine you'd end up seeing a lot of people just finding care wherever they could (hospitals, public health sites)--if you have a good personal relationship with your doctor, they'd probably squeeze you in, but otherwise good luck. Notably, this is really the same situation that most people who are in a PPO might be in, except that a PPO may pay higher reimbursement rates to the providers, making it more likely that those people wouldn't be pushed to the end of the line if there were more people seeking care than there were doctors to provide it.
In terms of the financial piece, valkyryn is right about reinsurance, although for a staff model this is less critical, since a lot of costs for paying physicians are locked in. In either case, insurance companies would probably be facing big expenditures on prescription drugs, particularly Tamiflu and the like (which I think runs about $100 per dose). However, my only somewhat-informed impression was that reinsurance in the health insurance industry is usually linked to a single case going over a specified dollar threshold (that is, the plan is only on the hook for the first million, then reinsurance takes over for all additional costs), which makes sense--high medical costs in any one year for a health insurance company are much more likely to arise from a handful of extremely high cost individuals as opposed to a pandemic. I'd hope that health insurance companies are covered for something like a pandemic, where the high costs come from a large part of the risk pool getting sick at once, but I'm not sure that reinsurance contracts are currently written like that.
posted by iminurmefi at 7:23 AM on April 30, 2009
I would imagine that in terms of "protecting customer's health," any HMO that runs on a staff model is probably more likely to have actual contingency plans if a significant portion of their doctors start to get sick. I'm just totally guessing here, but I imagine it's something like prophylactic antivirals for any doctor working with pandemic patients plus the ability to pull in doctors from other specialties (a plastic surgeon or urologist is still a doctor that could probably be re-assigned to do primary care during a pandemic period) if too many of their primary care docs get sick.
I would be less sure that an HMO that ran on a network model would have extensive contingency plans in place, in part because they have a lot less flexibility with respect to what they can ask participating physicians and hospitals to do. Unless there was something written into their contracts with their providers, I'm not sure they'd have any recourse if a bunch of their doctors either got sick or overwhelmed with other patients and stopped seeing the HMO customers. I imagine you'd end up seeing a lot of people just finding care wherever they could (hospitals, public health sites)--if you have a good personal relationship with your doctor, they'd probably squeeze you in, but otherwise good luck. Notably, this is really the same situation that most people who are in a PPO might be in, except that a PPO may pay higher reimbursement rates to the providers, making it more likely that those people wouldn't be pushed to the end of the line if there were more people seeking care than there were doctors to provide it.
In terms of the financial piece, valkyryn is right about reinsurance, although for a staff model this is less critical, since a lot of costs for paying physicians are locked in. In either case, insurance companies would probably be facing big expenditures on prescription drugs, particularly Tamiflu and the like (which I think runs about $100 per dose). However, my only somewhat-informed impression was that reinsurance in the health insurance industry is usually linked to a single case going over a specified dollar threshold (that is, the plan is only on the hook for the first million, then reinsurance takes over for all additional costs), which makes sense--high medical costs in any one year for a health insurance company are much more likely to arise from a handful of extremely high cost individuals as opposed to a pandemic. I'd hope that health insurance companies are covered for something like a pandemic, where the high costs come from a large part of the risk pool getting sick at once, but I'm not sure that reinsurance contracts are currently written like that.
posted by iminurmefi at 7:23 AM on April 30, 2009
Response by poster: This information is great. The aspects I'm most interested in are those that would affect patient care (or rationing and lack thereof) and public health decisions (is Kaiser involved in US government decisions about whether or not to close the border? would they issue health advisories to their clientele: "the flu has been detected in your school district"?).
posted by salvia at 9:22 AM on April 30, 2009
posted by salvia at 9:22 AM on April 30, 2009
I believe each state's written pandemic influenza plan would control most of these decisions, or designate the appropriate local authority. Of course border closings are not a state decision. I think school closings would be up to each school district, although the state could order them closed if the district failed to act.
posted by lakeroon at 9:44 AM on April 30, 2009
posted by lakeroon at 9:44 AM on April 30, 2009
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posted by crataegus at 12:09 AM on April 30, 2009