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LOCAL CARRIER BEGINS HEALTH CARE REFORM: KING COUNTY MEDICAL MANAGED CARE PACKAGE CUTS COSTS, INCREASES HEALTH CARE VALUE

 SEATTLE, Jan. 14 /PRNewswire/ -- In an unprecedented industry move, King County Medical Blue Shield (KCM) today unveiled a comprehensive package of managed care initiatives designed to reduce health care costs and give subscribers more value for their health care dollars.
 The package has six main components:
 -- Managed Care/Physician Selection ("Selections")
 -- Physician Payment Reform
 -- Hospital Reimbursement
 -- Managed Care Prescription Drug Program
 -- Laboratory Reimbursement
 -- Administrative Cost Savings
 "We're making some dramatic changes to ensure our subscribers get the most effective and efficient care available in our area," said Terry R. Rogers, M.D., senior vice president for Medical Affairs at KCM. "True health care reform at the state and federal level is going to take time. We're moving ahead now with a comprehensive package that addresses the cost-of-care issue, and we're implementing changes that will make a difference to everyone."
 Rogers said the changes, which will be "up and running" this month, could result in a cost savings to KCM subscribers of approximately half of billion dollars over the next five years.
 "By monitoring and controlling the use of health care resources, we can make health care more affordable -- and therefore, more accessible -- for everyone in our community," said Rogers.
 Here is a summary of KCM's managed care initiatives:
 MANAGED CARE/PHYSICIAN SELECTION: KCM is introducing "Selections," a managed care plan that utilizes a carefully selected network of doctors, hospitals and other providers. "Selections" is like no other existing managed care plan because of its unsurpassed method of provider selection. "Selections" providers will be carefully chosen for their practice style. Those providers who have demonstrated a commitment to appropriate, cost-effective treatment are invited to join the network. To help make its physician selections, KCM is using Pro/File(SM), a new highly sophisticated data and information system. This system analyzes physicians' practice patterns in KCM's service area and identifies those doctors who use health care resources the most efficiently and the most effectively and thus provide the most value. "Selections" will be available in King and Snohomish counties later this month.
 PHYSICIAN PAYMENT REFORM: KCM is shifting to a "resource-based relative value scale" (RBRVS) method of physician payment. This means KCM will no longer pay physicians based on "usual, customary and reasonable fees for service," but will set a maximum fee for each procedure based on the "reasonable value" of the procedure. "Reasonable value" is determined by the amount of physician time, skill and cost required for the service in a particular geographic market. No physician will be paid more for a procedure than his or her peers.
 HOSPITAL REIMBURSEMENT: KCM has been working with an advisory group, comprised of area hospital administrators and KCM staff. Rising health care costs have prompted efforts by KCM and others to find ways to "level the health care playing field." Until now we have had a variety of payment mechanisms for hospitals. Our goal in working with the advisory committee was to foster understanding of the operational issues on both sides and of the forces driving this change. Our new system recognizes the differences among hospitals in the amount of uncompensated care and direct teaching activities provided. KCM is moving to an "all patient diagnostic related group," (APDRG) reimbursement system, which means KCM will pay the same amount for a diagnosis regardless of which hospital provides it or how many supplies and services are provided. KCM and most carriers pay each hospital different amounts using different payment mechanisms.
 MANAGED CARE PRESCRIPTION DRUG PROGRAM: KCM will now offer physicians and subscribers a new program to help reduce the spiraling cost of prescription drugs. This new program will allow the company to better control use of prescription drugs and resulting cost increases. Through the program KCM will educate physicians by providing them with a "formulary," a preferred list of drugs by therapeutic class; contract directly with pharmacies to offer subscribers a drug card prescription program and a mail order drug service; and institute an electronic monitoring system that will improve pharmacy administration and allow for better management of subscriber drug use, including checking for prescription abuse or potentially dangerous drug interactions.
 LABORATORY REIMBURSEMENT: KCM has established a "maximum allowable" fee schedule for all laboratory procedures. An analysis of pricing in the area revealed a high level of diversity in charges and we expect to realize substantial savings. Second-party billing will no longer be accepted. All laboratory testing performed outside a physician's office will only be billable, and reimbursed to, the laboratory actually doing the tests.
 ADMINISTRATIVE COST SAVINGS: KCM will introduce access to a new electronic data interchange (EDI) system called EXCLAIM, which will serve the Washington and Pacific Northwest health care communities. It will link all providers and third-party health care payers through an online computer network. This will enable providers and payers to handle all eligibility, billing, benefits information, funds transfer and other communication needs electronically. EXCLAIM will reduce administrative costs for providers and payers and allow providers to focus on patient care instead of administrative tasks. And, it will allow providers to use one standardized system as opposed to several different systems, which is the case today.
 Rogers said the medical community is currently being notified of the changes.
 King County Medical Blue Shield is a nonprofit health care service contractor operating under the rules and regulations of the state of Washington. The company, founded in Seattle in 1933, serves 1,000,000 people in private and government programs. Ninety-two cents of every dollar received from subscribers is returned in benefits paid.
 -0- 1/14/93
 /CONTACT: Tracy Salter of King County Medical, 206-464-3789; or Kellan Owens of Elgin Syferd/DDB Needham, 206-223-6413, for King County Medical/


CO: King County Medical Blue Shield ST: Washington IN: HEA SU: PDT

JH-SW -- SE005 -- 4900 01/14/93 12:57 EST
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