"Trust Negotiates Ceiling on Medical Costs"
News and Views, December 1982

Continuing its push for health care cost containment across Wisconsin, the WEA Insurance Trust signed a Preferred Provider Agreement November 16 with the Jackson Clinic of Madison. With this new contract, Trust participants in an area of about 450 square miles around Madison should be able to obtain necessary covered services at the clinic with no out-of-pocket costs after meeting deductibles and co-insurance sharing.

Under the agreement, the clinic agrees to freeze its fees to Trust Region I participants for an initial period, and then to place a ceiling on cost increases for a one-year contract term. These fees are, and will continue to be, on the Trust’s “reasonable and customary” level—the level at which it will pay for 100% of covered charges. In addition, the clinic will grant a discount to the Trust, and one to individual participants on any co-pay charges they may incur for clinic services.

According to Bernard Weidenaar, Trust executive director, “This Preferred Provider Agreement is the first time to my knowledge that a Wisconsin insurer and a large medical care provider have contracted to stabilize costs.” The Trust signed a similar agreement with Madison Family Dental Associates (formerly Doctors Park Dental Associates) on August 2.

Eligible participants may immediately begin using the Jackson Clinic facilities to take advantage of the extra savings this agreement makes possible. At this stage, use of the clinic is voluntary: participants may still use other providers and receive the same benefits as before. However; the Trust is now offering Preferred Provider contracts to districts willing to name a specific provider for participants to use. These contracts are available at lower premiums.

For some time now, the Trust has been conducting an aggressive search for immediate, practical ways of combating what has become an urgent nationwide problem. According to Peter Magnoni, the Trust’s professional relations and cost containment administrator, medical costs have been increasing at a rate far exceeding overall inflation in the U.S. According to Magnoni, health care costs rose by 12.2% in 1981, a rate 30% higher than the 8.9% Consumer Price Index increase that Year. In the first 10 months of 1982, the rate of health care cost inflation was more than double the overall inflation rate: in contrast with the CPI of 4.5%, health care costs rose 9.2%!

The Preferred Provider concept offers great promise in helping to halt this trend. Says Rohr, “Such programs are going to play a large role in the rest of the 1980s — we’ve already received calls from other organizations who have heard about our agreement with the Trust.” While these first two contracts with Madison Family Dental Associates and the Jackson Clinic affect only Region I participants, the Trust is negotiating similar agreements elsewhere in the state.