Managed Health Care: Effect on Employers' Costs Difficult to Measure
DIANE Publishing, Jun 1, 1994 - 43 pages
An examination of employers' recent experience with managed care in terms of cost control & employee perspectives. Charts, tables & graphs.
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average benefits biased selection choice of provider concurrent review Control Costs cost control cost savings cost sharing coverage Designed to Control differences enrolled in managed Evidence on Managed fee-for-service fee-for-service plans financial incentives financial risk Foster Higgins group and staff health care costs health care plans Health Insurance Health Maintenance Organizations health services HIAA hospital admissions indemnity plan premiums independent practice association KPMG Peat Marwick Managed Care Cost Managed Care Mechanisms managed care networks managed care plans managed indemnity plans Mechanisms Designed Medical Outcomes Study Medicare network physicians network-based managed network-based managed care out-of-pocket costs outpatient percent lower physicians and hospitals plan costs plan's pos plans ppos and pos practice patterns Preferred Provider Organizations primary care physician provider's reduce hospital referrals reimbursement reported select providers specialist and hospital staff and group staff model HMOs standardized payment rates tightly controlled utilization controls Utilization Review Techniques withhold and bonus
Page 3 - Costs Difficult to Measure (Testimony, 2/2/94, GAO/T-HEHS-Q-WI). Report on same topic (10/19/93, GAO/HRD-94-3). Although many employers believe that, in principle, managed care plans save money, little empirical evidence exists on the cost savings of managed care. Most studies that compare firms' health care costs for employees under managed care to those under indemnity plans do not adequately control for key factors affecting cost, such as employees
Page 8 - ... (1) provider networks with explicit criteria for selection, (2) alternative payment methods and rates that often shift some financial risk to providers, and (3) utilization controls over hospital and specialist physician services.
Page 33 - National Health Expenditures, 1990," Health Care Financing Review, Vol. 13, No. 1 (1991), pp.
Page 12 - Final Summary Report on Findings from the Evaluation," Mathematica Policy Research, Inc., February 18, 1993.
Page 30 - Under these arrangements, the plan withholds a portion of the physicians' reimbursement to establish a fund for rewarding physicians' performance. Often, the costs of referrals and diagnostic tests are deducted from the fund, with any remaining funds distributed to the physicians. The pressures on physicians to reduce utilization from withhold and bonus arrangements are strongest when the risk is based on the performance of individual physicians rather than large groups of physicians.
Page 3 - ... patients. We conducted our review between March 1992 and March 1993 in accordance with generally accepted government auditing standards. Our review focused on private employers' experience with managed care; we did not review the experience of public payers — Medicare, Medicaid,1 the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), the Federal Employees Health Benefits Program, or state or local public employee plans — with managed care. We limited our review to managed...
Page 13 - Even if a managed care plan lowers utilization, the savings may not be passed on to the employer in lower premiums. "Shadow pricing," which occurs when a health plan sets its premium at a rate near employers' other health plans regardless of the actual costs of the plan, can erode employers
Page 16 - Because little empirical evidence exists on the cost savings of managed care, employers are increasingly focusing on strategies to improve their ability to assess plans. They want reliable data on costs, outcomes, and consumer satisfaction so they can make meaningful evaluations. Ultimately, performance measures need to be developed that will allow employers to make informed decisions about health care plans and providers. Recognizing this growing trend in the market, many reform proposals call for...
Page 11 - ... authorization from a primary care physician or the plan.12 Many employees enroll in HMOS despite the limitations on choice. When offered multiple choices of plans, on average about one-third of employees enroll in an HMO. These employees are willing to accept HMOS' restrictions on choice of provider in exchange for reduced out-of-pocket costs and more extensive preventive care. HMOS generally require only minimal copayments and no deductibles. Well baby care and adult physicals, for example,...