By Christopher Guadagnino, Ph.D.

Published October 2001

• React to this article in the Discussion Forum.

David Straight is executive director of the Employer’s Medical Access Partnership (E.MAP) and president of Benefits Network, a health care consulting firm located in Pittsburgh.

DS: E.MAP is a coalition of employers in Cambria, Somerset and Bedford counties that have banded together to be able to use significant buying power to try to combat the rising cost of health care and secure some stability in their health insurance plans. There are currently 154 business members who have paid dues to participate in the coalition and take advantage of a special pricing arrangement that we’ve negotiated with UPMC Health Plan. Considering that we just had our one-year anniversary of having our insurance program in place, that’s a significant number of companies, given the size of the region. Most of them are smaller businesses—averaging about 38 employees—reflecting the profile of the market in those three counties. We’ve been averaging about 10 to 12 new companies every month. We’re also close to finalizing arrangements to be able to offer other insurance programs such as dental, vision, group life and disability, to expand the services which will broaden the appeal of the coalition to more businesses. We just brought Bedford County into the fold about a month ago. I think there’s a good possibility that the geography could expand further as we go forward.

 PND: Is there a critical mass you need to reach in order to effectively contract with insurance companies?

DS: One would think that would be a requirement, but we were able to achieve our objectives without it. Six or eight months prior to when our insurance program kicked off last August, we began to have meetings with employers to talk about the concept of E.MAP and to seek their interest. We then went through a formal request for proposal process where we invited all the health insurance carriers to submit proposals. We were able to secure an excellent three-year contract from UPMC Health Plan without having a single member at that point. I also serve as the executive director for another coalition called REHA, the Regional Employers Health Alliance, which serves about 230 companies in Washington, Greene, Fayette and Westmoreland counties. The major provider there is Health America. That program has been in place since 1991 and has been very successful in helping a lot of businesses. I think that, because that coalition had a track record and we were using that as our prototype, the carriers took us seriously. It may take critical mass which we’ve built fairly quickly to keep that relationship going beyond the initial contract and we think we’ll be in the position of strength to renegotiate at that time.

We originally projected 2,500 employees and dependents in the first full year of operation that would be enrolled in the E.MAP program, We’re probably closer to 6,000, so we’ve greatly surpassed that. In fact, we’ve already surpassed our original forecast for the first three years and I’m working on a revised projection to present to the board of directors at our next meeting. In a market like Johnstown, where you have two hospitals—Conemaugh and UPMC Lee—it doesn’t take a whole lot of membership to have an impact on the dynamic of the market. I’m sure we’re getting the attention of both hospital systems out there.

 PND: What are E.MAP’s goals?

DS: One of the goals of E.MAP is to inject meaningful competition into geographic areas where, historically there has not been a lot of competition among health insurance plans, to force them to keep their prices at reasonable levels for employers. Another objective is to have stability in pricing over a period of time, which is particularly important for some of the smaller employers who don’t have any negotiating clout on their own to be able to know with some confidence what their health insurance rates are going to look like two or three years out, so they can budget properly and manage their businesses accordingly. With the rising cost of health insurance, by most national estimates at the rate of 16 to 18 percent, we were able to secure single digits for those businesses for a two-year period of time. The third objective is to be able to have some influence over issues of quality of care and service from the providers that serve our membership. We haven’t done a lot at this stage to use that voice, but, with competition comes improved service. Our board is keeping a watchful eye on the marketplace to try to have some type of sentinel effect if they think it’s necessary.

 PND: How is the coalition organized?

DS: The coalition is led by a volunteer board of 11 directors comprised of representatives from business and industry, from organized labor and from the medical community. We have a physician member on the board and an administrator of an ancillary services provider in the area. The coalition’s activities to this point have been centered on putting together competitive insurance programs, most specifically the health insurance program to help the membership to budget their health care costs and save some dollars.

 PND: What criteria did you use to select a health insurance contractor?

DS: We invited every single carrier to the table that serves our area: Highmark Blue Cross Blue Shield, UPMC Health Plan, Health America, Aetna U.S. Healthcare, Penn Highland Health Plan. We had certain criteria that were important in our selection process. We were looking for a multi-year partnership. We were looking for some caps on how much rates could go up to our member companies. We were looking for the carriers to provide an administrative override to the coalition that could be used to help with marketing. Also, that brokers who work with employers in health care buying decisions would not be penalized for putting business through the coalition. Those were the main criteria that had to be in place. We also looked closely at quality of care. We were interested in health plans’ status with the National Committee for Quality Assurance and with HEDIS report card scores to make sure that the partner we selected was doing things that were consistent with the high level of quality, care and service to their own customers. We were looking at how they work with providers in managing costs, and the extent of their network of physicians and hospitals.

 PND: Why did you select UPMC Health Plan?

DS: They agreed to all of those basic criteria. They put a deal on the table for our members that guaranteed them three percent savings off their standard rates and two years of rate caps—that’s six and one-half percent. That was something we felt that the business community could greatly benefit from. The rate caps are unprecedented in our region, especially at a time when double digit increases are the norm. It provided a great deal of security over a three-year period for the business community, and still does. Highmark declined to submit a proposal, as did Health America. Aetna U.S. Healthcare submitted a proposal, but then, because of some changes at the top of their organization, they withdrew their proposal. The only other carrier that submitted a firm proposal was Penn Highland’s Health Plan, but they failed to meet a number of criteria. We extended all of those carriers this year an opportunity to bid and be considered. Penn Highland showed some interest, but ultimately decided they weren’t going to be able meet our criteria once again.

 PND: Is the UPMC Health Plan an exclusive contract?

DS: We made it exclusive for the first year and that exclusivity expired August of 2001. They were the only ones who stepped up to the plate in a major way, so the board decided to reward them the first year by making it exclusive. It would have been exclusive anyway because the other proposals weren’t acceptable.

 PND: You mentioned earlier that Conemaugh and UPMC Lee are the only two hospitals in the Johnstown region. Is there no access through this contract to Conemaugh?

DS: If a company purchases a product that allows members to access care out-of-network, like a point of service plan or PPO, then you can access Conemaugh Hospital and have coverage, although at a lower level than if you stayed in the network and go to UPMC. So, certainly there’s steerage toward the UPMC Lee Health System over Conemaugh.

 PND: Did a restriction on provider choice produce concern or backlash by members?

DS: That’s the reason why the original projections we had for E.MAP’s growth were much lower than what actually happened. In a market where there was almost a 50-50 split on consumer loyalty toward one hospital versus another, we thought it was going to be a tough sell. But the economics apparently have been weighing in so heavily that employers have bit the bullet.

 PND: What were you able to gain in your initial contract with UPMC Health Plan that individual members were not able to get on their own?

DS: The rate guarantees were the big thing. No carrier is offering rate guarantees to companies, even large companies. It’s extremely rare in this day and age. Four to six years ago they were more commonplace, but with the way some of the carriers got into a price war in the mid 90’s, many of the carriers have shied away from that. To be able to lock in and know with predictability what your rate increases are going to be for a period of time, that was a significant achievement on the part of E.MAP to be able to negotiate.

 PND: Are E.MAP’s member companies able to offer their employees alternatives to the UPMC plan?

DS: Yes. Actually, UPMC Health Plan has always been willing to co-exist with any other insurance carrier. In fact, maybe 10 percent of our companies offer UPMC along with, say, Aetna U.S. Healthcare, which may have a slightly different network which gives more choice to employees. Some of the carriers that compete with UPMC Health Plan aren’t willing to co-exist. For example, Highmark generally doesn’t co-exist with other carriers and Health America is usually reluctant to do so unless circumstances are right. So, even though UPMC Health Plan is willing to co-exist with another carrier through the E.MAP arrangement, it’s often difficult for a company to do that. I’m not aware of any E.MAP businesses that have Highmark as an alternative to UPMC Health Plan. That’s contrary to the way Highmark is generally willing to do business.