Oxford Health Plans CEO Stephen F. Wiggins

By Paul Kengor, Ph.D.

Published May 1997

• Oxford Health Plans web site

• React to this article in the Discussion Forum.

Oxford Health Plans, Inc. has launched two experiments that could have a dramatic impact on the health care landscape in southeastern Pennsylvania, as well as major significance for primary care physicians. The Norwalk, Connecticut company is switching the management of many types of patient care from primary care physician-based to specialty team-based and is piloting a program that turns over many conventional duties of primary care physicians to nurse practitioners. Long the hot commodity in managed care, primary care physicians ultimately may be squeezed at both ends of the care intensity spectrum if Oxford’s experiments work out and are adopted by other insurers and health systems in the region.

Oxford Health Plans, Inc. has 1.7 million members—including 50,000 in the five-county Philadelphia area. The company has offices in Pennsylvania, New Jersey, New York, Connecticut, and New Hampshire, and a total of 37,000 physicians in its network. The company has provided coverage in alternative medicine as well as Oxford-affiliated nurse midwifery for OB/GYN primary care, maternity care, acute and follow-up care. The company’s latest innovations include the substitution of physician gatekeeper with specialty teams and nurse practitioners.

Oxford members will have the option of selecting from "care teams" made up of specialists and other health professionals as their primary caregivers for 20 ailments in eleven specialty areas, such as behavioral health, urology, cardiology, gastroenterology, neonatology, obstetrics and oncology. Oxford plans to use teams of specialty physicians to manage the diseases and market the teams by partnering with third-party administrators and other HMOs outside Oxford’s service areas, according to industry reports. By the end of the year, Oxford hopes to have 700 of the specialty care teams in place in its markets.

These specialty units are a variation on the "disease management" trend being pursued in certain segments of the health care industry. The concept suggests that some diseases so define the health of an individual that such patients are better served by a specialist as their primary care provider. Oxford will begin implementing the approach, to be made available to all Oxford members, in its Pennsylvania market, according to Oxford spokeswoman Amy Gustafson.

Physician payments will be distributed according to a fixed rate for each case that has been negotiated between the specialty teams and Oxford. The case-rate system falls between a capitation arrangement and a traditional fee-for-service reimbursement. Oxford plans to pay capitation to specialists, while primary care physicians will be paid as specialists were.

A much more controversial and daring move by the company is its current experimentation with nurse practitioners as gatekeepers. The company has embarked on a pilot project with Columbia Presbyterian Medical Center in New York to offer members a choice between a primary care physician or a nurse practitioner for certain types of care. Nurse practitioners at the center have the ability to admit patients and write prescriptions. What is especially unique about the project is that Oxford is paying the nurses at rates equal to those of primary care doctors for equivalent services.

The rationale for insurers like Oxford to use these two alternatives to the traditional gatekeeper model stems from their desire to reduce costs, to redress the perceived shortcomings of the gatekeeper model and to sell themselves as responsive to the choices of the consumer.

"We’ve come to the realization that the gatekeeper strategy isn’t working," says Oxford CEO Stephen F. Wiggins. "It has its place, but can’t be relied on for expensive medical events." He said that 75 percent of the company’s $2.2 billion in medical spending last year went to specialists. "We’re asking primary care to control all of this. It’s getting too complicated, and its something primary care doctors weren’t trained to do."

"The issue here is new research and a recognition of the reality that specialists can do a better job. You’ll see research over the next couple of months that shows that in procedural things specialists do a better job," notes one analyst. Indeed, recent studies have found that patients with certain chronic problems, such as heart disease and asthma, fare better when treated by specialists than when cared for by primary care practitioners.

This view is supported by David Shulkin, M.D., chief medical officer at the University of Pennsylvania Medical Center: "End-stage renal disease is an example. When you get certain patients to a nephrologist earlier, you can better prevent end-stage renal failure. Also with AIDS patients. You’re probably better getting those patients to a specialist to manage their care."

Cost savings are also the impetus for the use of nurse practitioners. While the Oxford-Columbia nurses will get paid equivalent rates for equivalent services, their base salary is much lower than primary care physicians. Other dynamics are fueling the nurse practitioner experiment there, however. Says Robert Lewy, M.D., Ph.D., director of medical affairs at Columbia Presbyterian Medical Center, that the marked lack of primary care physicians at his center means that they need all the help they can get. "We have a desperate, crying need for PCPs. In that sense, maybe we’re unusual here."

Oxford’s specialty team approach seems likely to be a hit with patients. The primary care physician will help the patient choose a specialty team and turn over care, coordination and management of the patient to that team. Oxford views this as better for the patient, not merely because the patient is empowered with enhanced autonomy—including selecting a specialty team from a perusal of performance profiles made available to them—but also because the patient gains a variety of medical input from the teams. Wiggins believes the policy will expand a patient’s choice of specialist care and compel doctors to come up with coordinated strategies to best treat patients.

Oxford also maintains that consumer responsiveness is driving its push to use nurse practitioners as gatekeepers. The company contends that studies have shown that under certain circumstances a nurse practitioner in the role of primary care provider can generate "quality health outcomes." For instance, it notes that nurse practitioners perform effectively in health education and preventive care.

It would appear that the market status presently enjoyed by primary care physicians would be jeopardized if Oxford’s gatekeeper alternatives reduce costs while not diminishing quality of care, and if other insurers adopt them.

David Olson of QualMed Plans does not concede that Oxford’s approaches could marginalize the primary care physician. "I think that’s an overstatement," states Olson, saying that primary care physicians will continue to have a "very, very important role going forward." Olson does not dismiss the specialty care team concept: "I think it’s wise. It makes sense to have someone with cardiac problems go to a cardiologist as a primary care physician. The primary care physician gatekeeper model isn’t going to work everywhere. Where are they ever trained to be gatekeepers? They’ve been given that role without maybe having proper training."

Oxford officials note that it is still the primary care physician who makes the initial referral and decides with the patient which specialty team is most appropriate. Moreover, the specialty team may include primary care physicians. In any case, specialists seem to be winners under the arrangement. Wiggins argues that the new system benefits them because they will no longer need approval from a primary care physician or HMO medical director in order to perform a procedure or order a test.

Not everyone is convinced that specialists will out-perform primary care physicians. Ronald Buckley, M.D., president-elect of the Pennsylvania Academy of Family Physicians, believes that while primary care physicians are not trained as "gatekeepers," their training better suits them for such a role than specialists. He says many specialists simply are not trained to identify problems outside of their specialty. A patient with cardiac problems may use a cardiologist for primary care, but if that person has a certain type of rash, the cardiologist might not be trained to diagnose it properly. Likewise for an OB/GYN as gatekeeper. That specialist may not be able to adequately recognize some cardiac problems. On the contrary, says Buckley, "The family-practice physician is trained to recognize those problems. Well-trained family practitioners are still the best primary care doctors around."

Prudential Health Care spokesman Kevin Heine says his group currently does not have an Oxford-like plan in the works. As for the chances of Oxford implementing this approach at Penn, Shulkin has not closed the door, stating, "It’s really too early to say. Philosophically, we’re interested. But first we want to see their contract." First, Oxford must submit bid requirements, and then Penn would decide whether to submit a bid. "We’re just beginning to consider this," says Shulkin.

Nurses have long engaged in a turf war with physicians. Columbia’s Lewy concedes that there may be contention and competition between nurse practitioners and primary care physicians at centers with a PCP surplus: "It almost stands to reason that there would be some of that. But we don’t have that luxury here," referring to Columbia’s shortage of primary care doctors.

The nurse practitioner experiment seems to be a volatile one, as many institutions simply refused comment without explanation. Buckley agrees that supervised use of advanced practice nurses can demonstrate positive outcomes and cost savings. Buckley points to his own office, where they opted for a nurse practitioner (who is supervised) rather than adding another physician. That move, he notes, led to cost savings while not jeopardizing outcomes.

Some reports stated that Prudential was interested in doing the pilot project with Columbia. These reports are denied by spokesman Kevin Heine: "We have no plans to do that anytime in the near future. We don’t see the need to do it. We believe that’s the role the PCP should play. We’ve had no demand from employers and customers for that."

Many physicians question whether the knowledge level of the nurses will be adequate, depending on the extent they are used. Acknowledging the proven capability of the nurse practitioner in his office, Buckley cautions: "They are extremely helpful in a busy family-practice setting, but only under the supervision of a physician." He maintains that a good nurse practitioner can handle 60 percent of the problems that come through a family-practice office in a given day, but "it’s the other 40 percent that concerns me."

Penn’s Shulkin seems to agree: "We have many nurse practitioners in our system and they’re a key part of the team. I have a nurse practitioner who is very good and the patients are very comfortable with her. But this sounds like an entirely new level with much more autonomy. It’s probably worth studying as a pilot model. I admit I have my biases, but I’m concerned about the difference in the depth of knowledge between nurse practitioners and physicians."

Donna Torrisi, R.N., director of the Abbotsford Community Health Center in urban Philadelphia says that her center has been using nurse practitioners as gatekeepers for nearly five years and recently won an award for its efforts called "Models That Work", given by the Heath Resources and Service Administration of the federal Department of Health and Human Services. Because of state regulations, her nurses do not have the same level of authority as those at Columbia. "We prescribe our own medicines but our names are not on the bottle," states Torrisi. If patients that Abbotsford nurses send to the hospital gets admitted, they are followed by the hospital staff and are not managed by the referring nurses, Torrisi explains.

Torrisi cites study data which states that the center’s patients are hospitalized less and use the emergency room less than comparable family practices. "The proof is there," she contends. "Not trained enough? I think it’s arrogant to say that." Besides, she says, Abbotsford has physicians available by phone for any necessary consultation.

There are, however, state licensing obstacles to implementing a primary care nurse strategy in Pennsylvania. According to the Pennsylvania Nurses Association, nurse practitioners in New York have much more authority in admitting privileges and prescribing drugs than their Pennsylvania counterparts. One group that is lobbying hard to change that is Pennsylvania’s Alliance of Advanced Practice Nurses (AAPN). In Pennsylvania, nurse practitioners get an R.N. license and practice under 1977 regulations jointly promulgated by the Board of Medicine and Board of Nursing. Both of the groups currently interpret language within those provisions differently, and have attorneys on each side to bolster their case. Nurses believe that the language provides them with the authority necessary to write prescriptions. Physicians disagree. No change in the language or on interpretation can be made unless there is joint agreement by both sides.

According to AAPN member, Melinda Jenkins, Ph.D., CRNP, assistant professor at the University of Pennsylvania School of Nursing, nurses in Pennsylvania are among a handful of states (nine in total) that are governed by joint regulations. (New York is not, and neither is New Jersey.) She says Pennsylvania nurses have two options for changing the situation. One is to continue haggling over changes in the language, as they’ve done for 20 years. The other choice is to have legislators make changes to the state Nurse Practice Act that would allow nurses self regulation.