A New Cure For Rising Health Care Costs?

With health care costs gobbling up greater shares of municipal budgets, the East End Supervisors and Mayors Association is touting a new possible remedy: merging local towns and villages under one cooperative health plan.

Dubbed the East End Health Cooperative Health Plan Initiative, the plan would be an alternative to the New York State Health Insurance Program. Its main goals, according to advocates, include stabilizing long-term costs and granting local control, while also improving patient care. Additionally, the initiative seeks to be self-insured, build scales of economy and share administrative costs among municipalities.

The health plan initiative seeks to do this via two principal ideas. One is to create a “clinically integrated” network of physicians, hospitals, labs, pharmacies and imaging facilities that could access complete patient information electronically, thereby reducing unnecessary or duplicate tests. The other would change the way a doctor’s office works, in part by turning reimbursement models on their heads so that doctors would get paid for taking personal responsibility and accountability for the care of their patients. Such an approach has been termed a “patient-centered medical home.”

Pilot programs nationwide have reported a significant reduction in hospital readmission rates, emergency room visits and total medical costs for chronic conditions, according to J. Scott Bradley, senior vice president of Cook, Hall & Hyde Inc., an insurance provider with an office in East Hampton.

Chronic diseases like diabetes, hypertension and cardiovascular disease “really drive the lion’s share of all of our expenses,” Mr. Bradley said. And recent federal health care reform addresses access, not cost, he said, although it is making these models available by allocating grant money for physicians to transition their paper records to electronic records.

Revamping the reimbursement model would pay doctors for doing what they are trained to do, though they are not currently collecting fees under the current model, according to Mr. Bradley.

“This is true health care reform,” Southampton Village Mayor Mark Epley said of the plan. “This is as good as it gets right here.”

Southampton Village became the first municipality to commit to the plan last Tuesday, November 23, following a presentation by Mr. Bradley, who is a leading development partner for the plan. He, along with Mr. Epley, are planning a series of presentations to other East End towns and villages in the coming weeks.

Mr. Epley, liaison to the initiative and representative of the East End Supervisors and Mayors Association, abstained from voting on the plan because of his involvement. Also, the mayor stressed that he is not receiving any financial gain from the plan, as Mr. Bradley also manages medical benefits at Seafield Center, an alcohol and substance abuse treatment center in Westhampton Beach where Mr. Epley is the executive director and a partner in the company. The mayor introduced Mr. Bradley as a good friend.

Under Article 47 of New York State Insurance Law, a minimum of three public entities and 2,000 employees, including retirees, are needed to form such a cooperative health benefit plan. In addition to towns and villages, school districts, libraries and other public entities can also participate.

The local initiative took root last winter when the East End Supervisors and Mayors Association agreed to study how to most effectively offer health insurance benefits on the East End, while delivering taxpayer sustainability. The other members of the association include the towns of Southampton, East Hampton, Shelter Island, Southold and Riverhead, and the villages of East Hampton, North Haven, Sag Harbor, Quogue, Westhampton Beach, West Hampton Dunes, Dering Harbor on Shelter Island, and Greenport. If all the eligible towns and villages join the initiative feasibility study, expected fees would be about $8,750 for each town and $4,375 per village.

Grant money is also available and Jennifer Mesiano, of Mesiano Consulting in Hampton Bays, is the grants director. Mr. Bradley said he would like the towns and villages to sign on within the next 60 days. If that happens, the results of the study should be available by April 2011, he said, and a projected effective date for the plan would be January 1, 2013.

“The foundation of health care moving forward will be on a technological platform where physicians, doctors, hospitals, imaging facilities will be able to communicate to each other,” Mr. Bradley told Southampton Village officials. “Today that’s not available. A person with chronic disease sees an average of four or five doctors a year. Those doctors don’t speak to each other. They don’t know what the other doctor’s doing and/or how they’re treating their patients.”

He continued: “The model of delivery that we have today is broken and inefficient.”

Patients with chronic conditions do not receive the follow-up care they should because physicians “aren’t really getting paid to do that,” Mr. Bradley added. But he said by reimbursing doctors to coordinate such care and talk to the necessary specialists, it will measurably improve service. “Doctors will get paid to talk to you on the phone,” he said. There would also be no disruption to access for students away at college, for example.

The East End Health Alliance, which is composed of Southampton Hospital, Peconic Bay Medical Center in Riverhead and Eastern Long Island Hospital in Greenport, is one of the development partners of the plan, and is making a significant investment toward developing an integrated network and technological platform, Mr. Bradley said.

“There’s two things that are driving our taxes in this country and it all has to do with health benefits and retirement,” Mr. Epley said. “This will improve coverage for employees and control cost.”

In Southampton Village, between $2 million and $3 million was budgeted for health care this year—more than 10 percent of the village’s total annual spending plan. The mayor said if nothing else changes, those costs could double within five years through the existing state carriers. Similar large hikes are expected elsewhere.

Other development partners in the plan include the Patient-Centered Primary Care Collaborative in Washington, D.C., East End primary care providers and Crag A. Lehmann, Ph.D., of Stony Brook University, as a potential academic partner. Third-party administrators would oversee the claims.