Markets at Risk— Current and Future Challenges in a Managed Care Marketplace. E. Care Management Practices.


An additional indication of plan responsiveness to concerns of purchasers, consumers, and providers has been changes in the way in which health plans are managing medical care. Some of these changes have meant abandonment or reductions in the intensity of certain techniques. A number of plans discontinued primary care gatekeeping and permitted members to have direct access to specialists47. Others have reduced or eliminated pre-service authorization of admissions or selected medical procedures to reduce some of the intrusiveness these techniques have represented to providers, and to reduce their own administrative expenses which typically have resulted in relatively few denials48. A third area of activity has been the actual delegation of utilization management responsibility to risk-bearing provider entities, as discussed earlier, which then may determine if they wish to maintain, modify, or discontinue the conventional pre-service and concurrent review methods.

Plans have also adopted new approaches to care management at the same time as they phased out traditional ones. Disease/disease state management programs have come into widespread use for a number of chronic diseases including asthma, diabetes, and congestive heart failure49. These programs reflect a broad set of strategies to identify members with certain conditions, provide educational interventions with both patients and physicians, promote compliance and earlier detection of emergent problems, and systematically measure changes in outcomes. Plans are making investments in information technology to support care and disease management, and to bolster profiling and provider feedback programs that are used to monitor performance as authorization programs are discontinued.

Figure 9. Pct Increase in Rx Spending v. Total Health Care Spending

Figure 9. Pct Increase in Rx Spending v. Total Health Care Spending

Source: HCFA

One area where plans are becoming more, rather than less, restrictive is in management of pharmacy benefits. With prescription drug prices rising at 15 to 20 percent per year as shown in Figure 9, plans have turned to a variety of methods to try to slow this rate. Among the most rapidly growing techniques are those that impose additional cost sharing on members that will provoke them to use generic substitutes, rather than brand names. In some instances, plans are using three tier co-payments while in other cases they use proportional co-payment or coinsurance, that encourage members and their physicians to select the least costly clinically equivalent product50. As noted below, the current challenges represented by rising pharmaceutical costs is emblematic of intensifying pressures on plans to contain emergent technologies.

  1. D. Conrad, S, Koos, A. Harney, M. Haase, “Physician Practice Management Organizations: Their Prospects andPerformance, Medical Care Research and Review, 56(3):307-339.
  2. L. McNamara, “Healthcare Market Overview: Orange County, California, January 2000,” GartnerGroup RAS Services, 2000.
  3. T. Snail and J. Robinson, “Organization Diversification in the American Hospital,” Annual Review of Public Health , 19:417-453, 1998.
  4. J. Magel, “Consolidation in the Health Care Sector,” Journal of Health Care Finance, 25(3):22-27.