Britain's largest PMI provider launches controversial shake-up
All Bupa's Corporate Select customers will have to choose from a list of consultants selected by Bupa, from January 2012, the insurer has announced, in a move that represents a huge shake-up of the private medical insurance (PMI) market.
The Open Referrals process means that, instead of referring these patients directly to a consultant, GPs will have to provide them with an open referral (a referral for a procedure with no named consultant).
The member will then call Bupa to pre-authorise the diagnostic procedure or treatment they need and, provided this is covered by the policy, they will be provided with a choice of consultants at nearby hospitals. The member can then book their consultant appointment.
The change was announced in an email to intermediaries last Friday morning. The communication, from Linda Wallace, head of intermediary sales, says that the process has been developed in response to feedback from customers "expressing a desire for Bupa Health and Wellbeing to continue to develop innovative solutions to improve the overall quality of care our members can access, while at the same time leading the market by seeking opportunities to combat the rising cost of medical inflation and deliver sustainable costs."
Communication with intermediaries
Some intermediaries expressed shock at the announcement. Karen Gamble of Gallagher Employee Benefits said that no information about the change had reached her firm.
"Apart from what I think about the system and its good points and bad points, the main thing is the way they are treating intermediaries," she said.
Colin Boxall of ADVO Group also said that the firm had not received any information about Open Referral. On contacting Bupa's sales team he found "no information available and little awareness" while Member Services were "a little forthcoming in that this was something they are trialling."
"Good quality PMI should be about having choice and control in difficult circumstances," he said. "Obviously this has to be balanced with practicality and cost. Anything that improves the customer experience and eliminates shortfalls should be welcomed but I would expect advance notice and consultation to ensure this 'treats customers fairly' before changes are imposed."
Although Wallace describes Open Referral in her email as an "exciting development", it is likely to be opposed by doctors who will view it as another attempt to interfere in the referral process and reduce choice. Bupa has previously created networks of providers and reviewed referrals before approving them, arguing that its role is to secure value for money on behalf of its members by tackling unexplained variation in pricing by providers. The process, which will apply to both outpatient and inpatient care, is likely to result in fewer patients receiving treatment in central London hospitals, which Bupa claims costs around a third more than outside London.
A presentation accompanying Friday's email says that Open Referral has been developed to tackle "high variation in clinical practice between many specialists", the fact that "most GP referrals are made without using any data on quality or value of specialist", "unsustainable cost inflation for employers" and requests from patients for "some sort of guidance around who they should see".
The Office of Fair Trading recently raised concerns that patients were suffering in the current private healthcare market because of a lack of information about the quality and cost of care in different hospitals with different consultants. It claimed that GPs were relying on "informal information" about quality in making referral decisions and that consultants enjoyed most of the power in the market, failing to compete on price or quality.
Bupa argues that it has "an unparalleled level of information to assess hospitals and specialists" and says that members will benefit from Open Referral by getting access to "specialists and hospitals that give a better level of care" and more choice of specialists, possibly resulting in faster access to care. It also argues that the process will mean members do not suffer shortfalls.
Paula Aitken, commercial manager at intermediary Private Health Partnership, had a positive reaction to these arguments.
"Any change within the industry which ensures the end user of private healthcare has access to quality care and at the same time is guaranteed no ‘shortfalls’ can only be a good thing," she said. "The customer still has a choice as he or she will be provided with this choice at the point of authorisation rather than the GP making this choice for customers."
Previous moves by Bupa to manage the patient pathway have been opposed by doctors and raised suspicions in the intermediary community that the insurer may be moving towards managed care pathways.
Alex Bennett of intermediary Bluefin described Open Referral as "a bold move".
"My concern for Bupa would be to what degree they have considered or understood that their members see freedom of choice within their peer group," he said. "If you think about the people that enjoy PMI they are high net worth individuals, who are well-connected and talk to each other about consultants and places to go for treatment. It is not too dissimilar for employees and I just wonder whether people are quite ready yet to be directed."
He warned that the process, based partly on clinical concerns, was "mixed up with economic reasons and commercial reasons" and that Bupa could generate the same "confusion and debate" as the National Institute for Health and Clinical Excellence, which uses both clinical and cost considerations to assess what the NHS should fund.
"The recent Bupa stance on cancer cover was playing to the strength of their brand and this runs slightly contrary to that," he said. Earlier this year Bupa decided to remove the option for corporates to place maximum annual limits on cancer cover.
Bennett said, however, that intermediaries would have "just about enough time" to educate clients about the change and, if necessary, switch insurers, before the January renewals season.
A trend in corporate healthcare
Open referral is not a new concept in the PMI market, although it has proved controversial. AXA PPP healthcare's Corporate Patient Pathways is a policy which gives corporate clients a discount of up to 15% in return for giving the insurer responsibility for choosing a provider to deliver the treatment recommended by the member’s GP (who must supply an open referral). However, unlike Bupa's Open Referral, this is not mandatory but one of several options corporate customers can choose from.
Bluefin's Bennett said that a client who selected Corporate Patients Pathways has seen a reduction in claims costs "after 12 months of quite a lot of emotive response and resistance".
Bupa said today that Open Referral differs from Corporate Patient Pathways because it is not based on agreements with particular hospital groups but offers members a "a choice of consultants where possible, based on the patient's exact needs and our extensive knowledge of the consultant's record of treating Bupa patients".
Bupa's approach in part reflects the philosophy of Alliance Surgical, a network of doctors which believes that the key to tackling rising PMI costs is to tackle unexplained variation in clinical practice and costs. Bupa told Health Insurance in March this year that it was "in discussions" with Alliance Surgical, but said today that the network was not involved in Open Referral.
The Open Referral process has been trialled during the last 12 months with both large corporate clients and individual customers and Bupa says it has already "successfully guided" tens of thousands of patient, including its own employees. It says that expressions of dissatisfaction within the group are around one third of normal rates.