PPOs, bad billing and other problems with the health care system

Preferred provider organization (PPO) plans beat off the attack of the health maintenance organization plans.

PPO plans also assimilated the consumer-driven health plan companies, and the Affordable Care Act public exchange plans.

Ray West, the chief growth officer at  Maestro Health, says the kinds of plans Maestro Health is setting up will stop the PPOs’ winning streak.

Related: Doctors, fed up with health insurance, drop coverage

West has been involved with  health savings accounts (HSAs) and private exchange programs before most people had heard of them. He moved from a company he founded in 1997, Workable Solutions Inc., to Alegeus Technologies in 2013.

Maestro Health — a Chicago-based private exchange, benefits administration and health plan management company — acquired the Alegeus division he worked for in 2014.

AXA acquired Maestro Health in March. AXA has said that Maestro Health systems will be a key part of AXA efforts to transform the company through its “Ambition 2020″ initiative.

Maestro recently introduced a campaign to appeal to employers with 250 to 10,000 employees by offering them a program based mainly on a “name your own price for health care services” reference-based pricing strategy, along with rigorous auditing of facility claims.

The company promoted the program by sending potential influencers a mini tablet carrying a video explaining the program. The cover of the tablet holder urged recipients to, “Break The Rules, Change The Game.”

“The health care game is rigged,” Maestro Health told recipients on the inside of the cover. “That’s why we don’t play by their rules — and neither should you.”

Here are three things West said in an interview about the new program, and the U.S. health care system.

1. Provider networks no longer work.

Employer-sponsored group health plans still cover a majority of the U.S. residents under 65 who have health coverage.

Most employer plans, including HMO plans and plans that incorporate health savings accounts or health reimbursement arrangements, try to manage costs by using provider networks, or groups of doctors that have agreed to abide by the network manager’s pricing rules, quality rules and other rules.

Years ago, organizers of the first personal health account programs argued that accounts similar to HSAs would free employers from the need to use provider networks, by giving enrollees the power to use their own account money to bargain for their own health care services.

Most of the health account pioneers soon became subsidiaries of big health insurers. The big health insurers  quickly added provider networks to the health account programs, partly because successful efforts by consumers to bargain with health care providers were rare.

The main problem with the early efforts to escape from the provider networks is lack of transparency, West said.

“We’ve not been able to give consumers the information they need to make good choices,” he said. “It’s not in the interest of the industry to provide that information.”

The shift to provider networks may have freed patients from the need to try to shop for care without actually knowing what care will really cost, but the employers that are paying for the provider-network-based coverage now face a similar lack of information about the operations of the provider networks, West said.

The networks are designed to give the network managers a profit, not to push the cost of care to the lowest possible level, he said.

“The answer is never going to be to go back to PPO networks,” he said.

Instead, he said, “Put the employers in direct contact with the providers in their area.”

The reference-based pricing approach may even be able to help employees pay for care from the many providers who have gotten fed up with managed care and have stopped participating in provider networks, West said.

2. Bad billing is still a real problem.

Simply auditing facility claims can still reduce a plan’s spending by 7% to 8%, West said.

Maestro Health auditors continue to see “strange ways of listing services.”

In one case, he said, a hospital billed a plan $800 for a “sleep aid” for a child who was in the hospital.

The $800 sleep aid was a teddy bear.

3. The Affordable Care Act ban on annual and lifetime limits on benefits for the services in the core “essential health benefits” package is starting to hurt.

Claims for more than $10 million for a single patient are still rare, but big facility claims are more common these days, West said.

“In some cases, it’s almost like there’s a blank check,” he said. “The facilities know these claims will get paid.”