New momentum for Carol.com

Carol.com, which has struggled to attract users for its website selling medical services since its January launch, may be on the verge of a breakthrough.

Bloomington-based Carol is going to start offering health care packages -- diabetes care for a year, for example -- directly to employees of some of the biggest self-insured companies in Minnesota.

General Mills Inc., Medtronic Inc. and 3M Co. are among those who will be integrating the Carol.com packages in their employee benefits starting Jan. 1 in a yearlong pilot program. Park Nicollet Health Services and HealthPartners are among the providers.

That would not only introduce potentially thousands of new users to Carol, whose goal is to broker health services the way Travelocity does air travel, but it also would significantly alter the way consumers pay for medical care.

Offering one price for care over time -- for diabetes, coronary artery disease and asthma -- is revolutionary at a time when doctors are typically paid according to the number of procedures. It gives doctors an incentive to keep patients well, as they get to share in the savings.

The packages also include the kind of disease management currently done by health plans, such as the services of a health coach or a nutritionist, into one annual price.

The ultimate goal is savings down the road in the form of healthier employees.

"Minnesota has always been the nation's laboratory for health care reform," said Tom Forsythe, vice president of corporate communications at General Mills. "This is the next step in consumer engagement and testing different models of paying for care."

A new way to set prices

Clinics and hospitals are still working on what goes into each package and how to price the products.

"We expect it to cost more, not less, because the company is paying for things that may not currently be reimbursable, such as nurse consultations via phone," said Forsythe, the company's de facto health policy chief. The potential future savings come if the care packages prevent expensive chronic illnesses from progressing or prevent costly hospitalizations in the years ahead.

Employees will decide whether they want to buy the packages. How much they will pay and how much cost will be borne by employers is as yet unclear. "We're still on the bubble of deciding," said Jeanne Denz, director of global employee benefits for General Mills.

Carol.com was started by Tony Miller and other alumni from Definity Health, a company that pioneered high-deductible plans linked to health savings accounts. Definity is now part of Minnetonka-based UnitedHealth Group Inc.

When Miller launched Carol in January, the idea of a website where consumers could check prices and descriptions of medical services and buy them online as they would an airline ticket elicited excitement as well as skepticism.

It upended the current model where secret negotiations between insurers and health care providers determined the price and nature of care. The website also depended on the willingness of medical providers to go to the effort of packaging and pricing their services in new ways and renting space on Carol, without any guarantee that patients would come.

Carol banked on the idea that, with the growth of high-deductible plans -- 10 percent of insured Minnesotans now have them -- there would be a clamor for information about price and quality as people were forced to shop for medical care.

Many look, few buy

The website attracts about 20,000 visitors a month, but that has not translated into sales. Three providers have dropped out, including Ridgeview Medical Center in Waconia.

Carol had hoped to sell about 200 "care packages" a month. Eight months later, it has sold a total of 160. "We're off by a factor of a lot," admitted Miller, an evangelist for the consumer-driven health movement who peppers his speech with references ranging from Copernicus to George Costanza of TV's "Seinfeld."

In mid-September, Carol revamped its site, making it easier to use. Next week, it is launching in a second market -- Seattle.

Last spring, Carol began talking to large employers about what has become known as its "Value Health" initiative. If that takes off, the number of Carol customers could jump exponentially. 3M alone has 16,000 employees in Minnesota, many with family coverage.

Led by Denz of General Mills, Carol executives and the benefits chiefs of other large companies in March began meeting weekly. At the end of May, Carol invited representatives from the major health plans and medical providers in the state to come up with four packages of care -- asthma, diabetes and heart disease over a year, as well as acute back pain.

Again, there was skepticism. "We're a for-profit company in a nonprofit environment," Miller said.

Last week, the proposals were still coming in from providers. Employers are likely to start talking to their employees in November about the initiative for medical care during the next calendar year.

Employees don't have to sign up for anything if they don't want to. Those who are interested can log on to a micro-site on Carol.com that will offer a description of the packages, the prices and tell them how much their employers will pay and how much they will pay, as well as how it all works with their health plans.

If an employee decides to "buy" a year's worth of diabetic care, the medical provider pays Carol a cut of the transaction.

For 3M, the pilot fits in well with the company's other health initiatives. The multinational company's Maplewood headquarters has an onsite medical clinic and a fitness center. It is adding an onsite pharmacy next week.

"The way costs have gone up over the last number of years, we need some innovation," said Jack Arland, director of benefits at 3M.

Will this attempt work?

The pilot program is reminiscent of a groundbreaking attempt in the 1990s by national employers to buy care more cheaply by setting up their own health plan -- through the Buyers Health Care Action Group. That ultimately fizzled.

One by one, large employers defected to longtime health insurers who dangled better deals. The plan, called Choice Plus, was eventually sold to Medica.

How is this different?

This time "we're not trying to be a health plan. We're not set up for that," said Forsythe of General Mills, who was involved in the previous experiment. Also, because the current effort is limited to a few chronic conditions, he said, "It should not be threatening to health plans."

Chen May Yee • 612-673-7434