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Oxford Health Plans, Inc.
(203)
459-6000
48
Monroe Turnpike,
Trumbull, CT 06611
www.oxhp.com
HMOs- Category Directory
PPOs- Category Directory
Group Health Insurance - Category
Directory
Sales
$5.5
billion
Business Description
Oxford Health Plans, Inc. (“Oxford” or the “Company”), incorporated under
the laws of the State of Delaware in 1984, is a health care company
providing health benefit plans primarily in New York, New Jersey and
Connecticut. The Company’s product line includes its health maintenance
organization plans (“HMOs”), exclusive provider organization plans (“EPOs”),
point-of-service (“POS”) plans, preferred provider plans (“PPOs”), indemnity
plans and several plans offered to Medicare beneficiaries. The Company’s
product line includes third-party administration of employer-funded benefit
plans (“self-funded health plans”). The Company also offers several
ancillary and specialty benefit plans. The Company’s principal executive
offices are located at 48 Monroe Turnpike, Trumbull, Connecticut 06611, and
its telephone number is (203) 459-6000. Unless the context otherwise
requires, references to Oxford or the Company include its subsidiaries.
The Company offers its products through its HMO subsidiaries, Oxford Health
Plans (NY), Inc. (“Oxford NY”), Oxford Health Plans (NJ), Inc. (“Oxford NJ”)
and Oxford Health Plans (CT), Inc. (“Oxford CT”), and through its insurance
subsidiaries, Oxford Health Insurance, Inc. (“OHI”) and Investors Guaranty
Life Insurance Company (“IGL”). OHI does business under accident and health
insurance licenses granted by the Departments of Insurance of New York and
Connecticut, the Department of Banking and Insurance of New Jersey and the
Commonwealth of Pennsylvania. IGL, a domestic California insurance company,
is licensed to write annuity, life and health insurance policies in most
states. The Company’s ancillary and specialty benefit plans are offered
primarily through Oxford Benefit Management, Inc. (“OBM”), a wholly-owned
subsidiary of the Company.
The Company is not dependent on any single employer or group of employers,
as the largest employer group contributed approximately 1.4% of total
premiums earned during 2003 and the ten largest employer groups contributed
approximately 5.3% of total premiums earned during 2003. The Company’s
Medicare revenue under its contracts with the federal Centers for Medicare
and Medicaid Services (“CMS”) represented approximately 12% of its premium
revenue earned during 2003.
Health Benefit Plans
Overview
The Company’s health benefit product lines include HMO, EPO, POS, PPO,
indemnity plans, and self-funded health plans with a full spectrum of
cost-share options and plan designs to meet the diverse needs of its
customers. For most of these products, the benefits to the members and the
reimbursement to the providers can be affected by whether the services are
provided by a “network participating provider” or a “non-participating
provider.” A network participating provider generally is one that has
entered into a contractual arrangement with Oxford, directly or indirectly,
to, among other things, accept certain pre-established compensation for
services rendered to Oxford members. Non-participating providers are
generally those that are not under contract with Oxford and, accordingly,
such non-participating providers have not agreed to any set level of
compensation. The contractual arrangements with the Company’s various health
care providers are described below under “Provider Arrangements”. Oxford
currently maintains two networks of participating providers for its
commercial business. The first is the Freedom network, which is Oxford’s
largest network of providers, and is offered in New York, New Jersey and
Connecticut (the “Tri-State Area”). The Company believes that the size and
quality of the providers in the Freedom network is one of its primary
competitive advantages. The second network is the Liberty network, which is
smaller than the Freedom network and is offered in New York and New Jersey.
The Company believes that the Liberty network is competitive in size and
quality to networks of certain other health plans in the metropolitan New
York City and New Jersey area. Lastly, Oxford covers certain out-of-area
employees of Tri-State Area employers. The benefits provided to these
out-of-area employees are provided on an in-network and out-of-network
basis, with the in-network portion being served by networks of providers
under contract with independent provider network companies that, in turn,
have contracted with Oxford. The networks of these independent provider
network companies occasionally serve Oxford covered employees of Tri-State
Area employers.
The provisions in each of the Company’s health benefit plans vary regarding
whether the member can receive coverage for services from non-participating
providers, what the financial impact to the member of doing so will be and
what benefits may be available to the member from a non-participating
provider. Most of the Company’s commercial plans are available with either
the Freedom network or the Liberty network as the primary network for
purposes of determining whether a provider is participating or
non-participating for that particular plan. The selection of the Liberty
network by an employer group usually results in lower premiums than
selection of the Freedom network. Under most of the Company’s products, the
benefits and corresponding costs, such as copayments, coinsurance and
deductibles, to the members are affected by whether the services are
provided by a participating or a non-participating provider. For example, in
Oxford’s POS plans described below, services rendered by a participating
physician are generally subject to lower member cost-sharing (copayments,
coinsurance and deductibles) than benefits obtained from non-participating
providers. The result is that services rendered by non-participating
providers will typically result in higher out-of-pocket costs for members.
Further, certain benefits are available only through participating
providers.
Certain factors, such as choosing the Freedom network rather than the
Liberty network, the members need to obtain referrals from his or her
primary care physician (“###”) before seeing a specialist and the level of
copayments, deductibles and coinsurance, all affect the premium cost of the
benefit plan purchased. As employer groups have become more sensitive to
cost, the Company has developed new products that reduce the cost to the
employer by increasing copayments, coinsurance and deductibles and otherwise
shifting certain costs to members.
The Company’s HMO membership was approximately 190,500 at December 31, 2003,
compared with 226,600 members at December 31, 2002. The Company’s POS, PPO
and other commercial membership was approximately 1,239,400 at December 31,
2003, compared with 1,252,900 at December 31, 2002. The Company’s Medicare
membership was approximately 70,800 at December 31, 2003, compared with
70,100 at December 31, 2002. Lastly, the Company’s self-fundleft"> The
Company maintains a small direct sales team that sells the Company’s
products to smaller employers. The Company also maintains a Medicare sales
force that sells directly and via telephone to Medicare beneficiaries. The
Company’s marketing department develops television and print advertising,
direct mail programs and marketing collateral materials for use by the
Company’s various sales representatives and independent brokers, agents and
consultants.
The Company maintains executive account representatives who deal directly
with employer groups exceeding 1,000 eligible lives as well as accounts
utilizing benefit consultants. Account managers are responsible for
servicing employer accounts generally exceeding 50 enrolled employees sold
either directly or through a broker or agent. These account managers are the
principal administrative contact for employers and their benefit managers
by, among other things, conducting on-site employee meetings and by
providing reporting and troubleshooting services.
Provider Arrangements
Physicians
Oxford’s Freedom network of participating providers consists of
approximately 68,000 physicians and other providers (compared with
approximately 53,000 in 2002), of which approximately 33,300 are in New
York, 16,000 are in New Jersey, 9,700 are in Connecticut, 8,000 are in
Pennsylvania and 1,000 are in Delaware. These participating providers
maintain approximately 94,000 office locations, of which approximately
45,000 are in New York, 23,000 are in New Jersey, 14,000 are in Connecticut
and 12,000 are in Pennsylvania and Delaware. The majority of Oxford’s
participating physicians have contracted individually and directly with
Oxford, although Oxford also has contracts with physician organizations,
individual practice associations, physician medical groups and third-party
vendors.
Exclusive of certain cost containment arrangements described in “Managing
Health Care Costs” below, Oxford compensates its participating physicians
primarily based on a variety of fixed fee schedules, under which physicians
receive payment for specific covered procedures and services.
The Company believes that its practice of inviting physician participation
into its clinical policymaking activities and obtaining physician input
concerning its programs strengthens its relations with the physician
community. A panel of physicians and local specialty societies have been
involved in the development of the Company’s policies. In addition, the
Company has over 100 practicing physicians from its service areas
participating on committees that advise the Company on the development of
treatment and payment policies and quality management issues.
Hospitals
The Company has contracts with approximately 350 hospitals in its New York,
New Jersey, Connecticut, Pennsylvania and Delaware service areas providing
for inpatient and outpatient care to the Company’s members. The Company
generally reimburses hospitals under these contracts based on negotiated per
diems, diagnostic related groupings (“DRGs”), case rates and fee schedules
and, to a lesser extent, at prices discounted from the hospital’s billed
charges. The Company believes that the rates in these contracts are
generally competitive.
The Company has numerous multi-year agreements with hospitals and hospital
systems that are designed to provide predictability with respect to hospital
costs and is currently negotiating with other hospitals and hospital systems
for similar multi-year arrangements. The Company estimates that
approximately 24% of contracted hospital spending will require renegotiation
during 2004. In addition, there has been significant consolidation among
hospitals in the Company’s service area, which tends to enhance the combined
entity’s bargaining power with managed care payors. As a result, the Company
has the risk that certain hospitals may seek higher rates or seek to impose
limitations on the Company’s utilization management efforts. The Company is
routinely engaged in negotiations with various hospitals and hospital
systems and, in connection therewith, such hospitals and hospital systems
may threaten to or, in fact, provide notice of termination of their
agreements with the Company as part of their negotiation strategy. Hospitals
have also threatened to terminate contracts when financial disputes arise.
The Company cannot guaranty that it will be able to continue to secure
multi-year agreements in the future. See “Cautionary Statement Regarding
Forward-Looking Statements”.
Ancillary Providers
The Company’s Freedom and Liberty networks include over 4,000 ancillary
providers and facilities for such services as home health and hospice care,
skilled nursing, dialysis and radiation treatment, family planning and
fertility, behavioral health, occupational, speech, infusion and physical
therapy, sub-acute care, imaging and related services. The Company also has
contracts for the provision of certain equipment or treatment aids such as
durable medical equipment, orthotics and prosthetics to its members.
Managing Health Care Costs
The Company’s medical management program establishes clinical policies and
procedures that govern payment policy and medical management processes and
assesses the clinical appropriateness of certain hospital inpatient,
hospital outpatient, ancillary, professional and pharmaceutical services to
ensure that payments for medical services are made in accordance with the
Company’s certificates of coverage for its health plans. The Company’s
medical management policies, procedures and programs are developed in a
variety of ways including using the clinical guidance of registered nurses
and physicians, established clinical practice guidelines, community norms
and other consensus guidelines or standards.
The Company manages the utilization of medical services through a variety of
programs including: referral management, precertification management,
concurrent review of inpatient services, complex case management, physician
profiling, provider credentialing and privileging and retrospective claim
review. These programs are administered by Oxford personnel and, in certain
cases, by independent administrative services or utilization review
organizations. When the Company delegates the responsibilities relating to
utilization management to a third party, it retains final decision-making
authority on coverage issues by retaining final control over denials,
limitations of coverage and appeals. The Company also supervises program
administration through oversight and program audits.
The Company’s claim review program incorporates a process that compares
services rendered by participating physicians to independently developed
patterns of treatment standards to identify procedures that were not
consistent with a patient’s diagnoses, as well as other billing
irregularities. Separate claims auditing systems are utilized for certain
hospital DRG payments and other surgical payments. Oxford also monitors
hospital claims through pricing reviews, medical chart audits and on-site
hospital reviews. Oxford’s claim auditing programs seek to identify aberrant
physician billing practices. The Company’s ability to apply all available
cost control measures is limited by regulatory considerations, the threat of
litigation or liability concerns, operational and systems issues and
relationships and arrangements with hospitals, physicians and other
providers.
To mitigate retrospective denial of inpatient payments for health care
services, improve communication and enhance customer service and improve
relationships with hospitals, the Company maintains its Day of Service
Decision Making program. As a result of the Day of Service Decision Making
Program, the Company’s use of retrospective denials of hospital days has
generally ceased except with respect to weekends and holidays when hospital
and Oxford utilization management personnel do not review cases, or in
unusual circumstances.
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